General Motors (NYSE: GM) and Honda (NYSE: HMC) have joined forces in an automotive alliance that includes collaboration on future vehicles and storing purchasing costs. The companies will get started with their new vehicle lineup in 2021.
Under the deal, the two have agreed to share vehicle designs under their respective names, expanding the partnership to the research and development of both electric and petroleum vehicles.
The collaboration builds on from an announcement back in April when GM signed a deal to assist Honda in building two of their electric vehicles along with installing GM's battery technology. Within the details of the agreement, Honda will still create the interior and exterior.
"The alliance will help both companies accelerate investment in future mobility innovation by freeing up additional resources," GM President Mark Reuss said in a statement. He said the companies would get "significant synergies" in developing vehicles.
GM delivered 2.9 million vehicles in the domestic markets last year, and Honda delivered a total of 1.6 million. Combined, the total makes up more than a quarter of the U.S. market which gives them an edge against the competition.
However, the areas of focus for the vehicle makers are in two different realms. GM's main focus is on trucks, SUVs, and vans. These vehicles accounted for more than 40% of U.S. deliveries. Honda doesn't produce those types of vehicles. Half of Honda's U.S. deliveries were cars and mini-vans. GM doesn't sell minivans, and its lineup has reduced in the previous years.
GM and Honda both thrive in the crossover markets with their biggest sales in midsize pickups. This is an area of focus that could birth new cost-effective strategies by sharing vehicle platforms and other engineering practices.
"Through this new alliance with GM, we can achieve substantial cost efficiencies in North America that will enable us to invest in future mobility technology, while maintaining our own distinct and competitive product offerings," Seiji Kuraishi, Honda executive vice president, said in a statement.