General Motors and Hyundai Motor Co. have announced their intention to explore collaboration in several areas, ranging from passenger and commercial vehicles to electric cars and raw materials. This potential alliance underlines the growing pressure on the automotive industry to cut costs and achieve massive production scale.
Agreement signed to assess opportunities
Mary Barra, CEO of General Motors, and Euisun Chung, Executive Chairman of Hyundai Motor Group, have signed a memorandum of understanding to “immediately evaluate” potential areas of cooperation and binding agreements. According to a joint press release issued on September 12, envisaged collaboration projects include vehicle development and production, internal combustion engines, and clean energy, electric and hydrogen technologies.
Objectives: improve efficiency and competitiveness
The two companies will also examine opportunities for pooling resources in sectors such as raw materials for batteries, steel and other areas. The aim is to improve efficiencies, boost competitiveness, share cost burdens and bring a wider range of products to market, faster.
Details still to be worked out
For the time being, details of capital investments or alliances remain unclear. No mention has been made of specific markets or implementation timescales. However, Barra hinted that this collaboration could enable a “disciplined allocation of capital”.
Global scale and strategic partnership
This alliance between the two leading automakers in the U.S. and South Korea could generate colossal production scale and leverage both companies' advanced technologies. Together, their sales exceed 10 million vehicles a year, putting them on a par with Japanese giant Toyota and German giant Volkswagen.
An unprecedented partnership for Hyundai
This is a rare move for Hyundai, which, despite having integrated Kia into its fold long ago, has little experience of deep cooperation with international competitors. For its part, GM has already explored several partnerships in the past, notably with Fiat, Suzuki and Subaru, and even today maintains a technological partnership with Honda in the fields of hydrogen fuel cell systems and autonomous driving.
An opportunity to turn things around in South Korea
General Motors has a strong manufacturing, design and development footprint in South Korea, inherited from its partnership with Daewoo Motors. However, in recent years, sales have fallen and costs have climbed, making the situation difficult. A tie-up with Hyundai could offer opportunities for a turnaround.
Towards broader regional cooperation
This rapprochement between Hyundai and GM follows a summit of political and economic leaders from South Korea, the USA and Japan, entitled “Trilateral Executive Dialogue”. This forum aimed to strengthen cooperation between the countries, with the participation of leaders from companies such as Toyota and Denso.
If this collaboration comes to fruition, it could enable the two automakers to better respond to the current challenges facing the global automotive industry in terms of costs, competitiveness and cutting-edge technologies.