Honda, Hitachi to form $17bn car parts maker in merger

Bloomberg

Honda Motor Co and Hitachi Ltd agreed to merge four of their car parts businesses to create a components supplier with almost $17 billion in sales, joining a wave of partnerships sweeping the global auto industry.
Honda, Japan’s second-biggest carmaker, and Hitachi, one of the country’s biggest industrial conglomerates, said they will combine Hitachi Automotive Systems and Honda affiliates Keihin Corp, Showa Corp and Nissin Kogyo Co Following a tender offer and an interim consolidation.
Hitachi will own two-thirds of the new entity, with Honda owning the rest, the companies said. Shares of the partsmakers soared.
Faced with tectonic shifts towards electric vehicles and autonomous driving, automakers and their suppliers have been seeking allies to pool resources and know-how. Overnight, news broke that Fiat Chrysler Automobiles NV and French carmaker PSA Group are exploring a combination, and earlier Toyota Motor Corp agreed to boost its stake in Subaru Corp. Slumping demand for conventional vehicles and uncertainty over which technologies and businesses will prevail is forcing players in the industry to find partners.
“The car and motorcycle industry is facing a once-in-a-century major shift, with pressure to reduce environmental impact, cut accidents and improve comfort,” the companies said in a statement. “There’s intensifying competition in electrification, autonomous driving and connected cars.”
Hitachi Automotive Systems began testing autonomous and connected cars in North America in 2015 in simulated urban environments, and began verification of the systems on ordinary roads in Japan last year.