US automaker GM and South Korea’s Hyundai have signed a non-binary memorandum of understanding to “explore future collaboration across key strategic areas”. In a future automotive environment that most pundits think will feature consolidation, the obvious train of thought is whether this could be first step towards a merger.
GM and Hyundai will particularly look for ways to reduce costs and bring a wider range of vehicles and technologies to customers faster. GM CEO Mary Barra talks of the “potential to make vehicle development more efficient by driving greater scale and supporting disciplined capital allocation”.
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Which sounds promising, except distractions such as maintaining ICE businesses and the dead end of hydrogen — which is already side-tracking cooperation between Toyota and BMW — appear to already be baked into their thinking. On a more positive note, the firms will “review opportunities for combined sourcing in battery raw materials”, as well as in steel and potentially other areas.
“GM and Hyundai have complementary strengths and talented teams,” says Barra. “Our goal is to unlock the scale and creativity of both companies to deliver even more competitive vehicles to customers faster and more efficiently.”
“This partnership will enable Hyundai Motor and GM to evaluate opportunities to enhance competitiveness in key markets and vehicle segments, as well as drive cost efficiencies and provide stronger customer value through our combined expertise and innovative technologies,” says Hyundai chairman Euisun Chung.
Filling in the gaps
GM has largely been reduced to a North American automaker that owns stakes in a couple of Chinese joint ventures (JVs). Its ambitions to re-enter Europe seem somewhat half-baked.
So, as the global automotive market increasingly evolves into being driven by growth of BEVs in three distinct spheres — a North America market (with a potential resurgence of interest in smaller vehicles) insulated from China; a market led by China where Chinese-made products can compete freely; and a market led by Europe where there will be restrictions on Chinese involvement in the value chain — GM has work to do but a decent starting base in the first two spheres, but is horribly positioned to tackle the third.
Hyundai’s experience in smaller US vehicles and its European position could thus be complementary. Given there are not an abundance of options for non-Chinese OEMs to consolidate — particularly given the cultural problems seen in Renault’s Japanese foray — closer links between GM and Hyundai, potentially up to and including a merger, do not seem illogical.
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