(Bloomberg) -- General Motors Co. is joining forces with South Korea’s Hyundai Motor Co. in a pact that may presage a deeper strategic relationship between the two major automakers to co-develop vehicles.
The agreement, which the car manufacturers announced Thursday, sets the stage for exploring joint development and production of gas-powered engines and vehicles, as well as clean technologies such as electric and hydrogen powertrains. They may also work together to procure parts and source raw materials like steel and critical minerals used in batteries, the companies said in a joint statement.
GM and Hyundai face increased competition around the world, especially from low-cost Chinese rivals, and soaring investments for their gas-fueled and electric vehicles. They are both looking for ways to minimize expenses.
The partnership marks the first time Hyundai has linked with another automaker for large-scale initiatives. GM already collaborates with Honda Motor Co. on EVs and hydrogen fuel cells. That Japanese company also owns a minority stake in GM’s Cruise self-driving unit.
Honda downsized its joint development with GM last year and recently solidified an alliance with Nissan Motor Co. But the relationship between GM and Honda remains intact, a spokesman for the Detroit-based carmaker said.
The GM-Hyundai cooperative framework is in the form of a memorandum of understanding signed by GM Chief Executive Officer Mary Barra and Hyundai Executive Chair Euisun Chung. It opens the door to pooling resources for more efficient capital spending and manufacturing operations in markets around the world.
“GM and Hyundai have complementary strengths and talented teams,” Barra said in the statement. “Our goal is to unlock the scale and creativity of both companies to deliver even more competitive vehicles to customers faster and more efficiently.”
While the deal doesn’t commit to anything specific, the companies said they will start looking immediately for opportunities to cooperate and a “progression towards binding agreements.”
“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,” Chung in the statement.
Hyundai has been growing in markets across the globe, but has been struggling in China as price competition from domestic players has hit its sales hard. GM has had similar problems as it mulls a restructuring of its Chinese operations after losing market share to the country’s homegrown automakers.
A deal with Hyundai could help GM obtain the type of scale economies it lacks after shrinking its global footprint. During her 10-year tenure as CEO, Barra has pulled GM out of India, Russia and Europe.
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