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in september 2024, hyundai motor group and general motors signed a memorandum of understanding for a partnership. specific studies are still needed and final approval is required. previously, the two companies had never officially cooperated, and this move fully illustrates the situation of the automotive industry in this era. efforts are currently being made to reduce costs in areas such as electric vehicle and software technology development. this also includes strengthening the presence in the chinese and american markets. the first thing to do is to reduce electric vehicle and software development expenses. basically, it is to reduce costs, and the ultimate goal is a new generation of cars and solve problems in the chinese market. let's take a look at the significance of the two companies' move to sign a partnership.

at the end of the 20th century, there was a wave of mergers and acquisitions in the automotive industry, with economies of scale as the background. the most representative one was the merger of daimler-benz and chrysler in 1998.

many media outlets made a fuss about the "merger of the century." but the result was a breakup in 2007. the core reason was that the integration of completely different cultures was not achieved.

another example is the renault-nissan alliance. although it is not a formal merger, renault has acquired 43% of the shares of nissan, which is about to go bankrupt, and has actual management rights, so there is not much difference. carlos ghosn, the so-called "cost cutter" who serves as ceo of both companies, was once regarded as successfully changing the corporate system of nissan, especially nissan. however, as the recent reduction of the shareholdings of both parties to 15% each shows, there are also differences in the internal management rights struggle in the merger.

during the same period, hyundai motor and kia motors also merged. hyundai motor had to merge with kia due to the asian financial crisis. the two companies were obviously merged, but from the inside, the real integration took a long time.

in particular, china joined the wto in 2001 and opened up its market. as a result, the merger of hyundai and kia has achieved results in the chinese market, the center of globalization, and has officially become on par with global automobile companies.

to a greater extent, daimler, chrysler, renault, nissan, and hyundai motor group all relied on the explosive growth of the chinese market as a backdrop to the economies of scale achieved in the late 20th century to reduce costs. toyota, volkswagen, and gm have all approached annual sales of 10 million vehicles.

when gm filed for bankruptcy protection in 2009, the global auto industry was once again consolidating. toyota also encountered the largest recall in history and was in dire straits. the globalization of parts manufacturers also caused quality problems, and recalls occurred one after another. toyota's recall broke out because it was unbearable, and there was also volkswagen's diesel scandal in 2015.

in this chaotic period, the stellantis group was born from the merger of fiat, chrysler and psa. because fiat and psa are dominated by small cars, gm also tried to merge with fiat, but failed.

[external disruptive competitors force traditional companies to make choices]

the biggest change is the rise of external competitors. various new hot spots have emerged in the automotive industry, such as electric vehicles and autonomous driving, batteries, semiconductors, and software-defined cars. the model of the automotive industry has changed, and tesla is leading it.

the user's view of the car as a product itself has changed. it is changing from driving centered on physical mechanical devices to "thinking and moving". the sensor, semiconductor and software industries designed for it are becoming the new center.

including batteries, sensors, semiconductors and software are the core, all of which need to be purchased from outside. when car companies develop all-solid-state batteries, they must not only solve battery problems by themselves, but also semiconductor and software problems by themselves.

therefore, volkswagen and gm have set up separate departments to solve software problems, but there has been no obvious progress so far. hyundai motor group has also set up a software research center in silicon valley, usa, which has an ecosystem. but he also believes that no results can be achieved in the short term and decided to change the car operating system to android operating system starting in 2026.

[correctly identify the interests of hyundai motor group and general motors]

it is against this backdrop that gm and hyundai have decided to form a partnership to leverage each other’s infrastructure and develop new-generation technologies faster with less investment. the main goal is to jointly develop new-generation vehicles such as electric vehicles and software. in the process, gm is seeking to cancel its joint development of a new generation of electric vehicles with honda and establish a partnership with hyundai. it is still at the memorandum of understanding stage, and the situation remains to be seen.

the two companies have never cooperated with other vehicle companies. if it is finally decided, both gm and hyundai motor group will become the first examples of establishing a partnership with other vehicle companies. in this case, by 2023, hyundai motor group's 7.3 million vehicles and gm's 6.18 million vehicles will total more than 13 million vehicles. more than toyota's 11.43 million vehicles.

first, the focus of the cooperation between hyundai and gm will be to reduce the cost of electric vehicle and software development. gm needs to rely on the strength of hyundai motor group when it can only rely on three korean battery companies. battery electric vehicles and hybrid electric vehicle technology capabilities also need the help of hyundai motor group.

from the standpoint of hyundai motor group, it can also be seen from the acquisition of gm's indian plant in 2023 that production facilities can be utilized. although the business environment in the united states is not optimistic, gm's equipment may also be diverted after expanding in relatively low-cost areas such as alabama and georgia. most importantly, gm's progress in the software field is relatively fast.

of course, this also includes the construction of a raw material supply chain. in electric vehicle markets such as china, the supply chain construction of the south korea-u.s. alliance is very necessary. in the north american market, there is only one competitor, tesla. currently, hyundai motor group has a 10% share of electric vehicles in the u.s. market, second only to tesla.

the revival of the chinese market is also an important issue. gm, like volkswagen, relies on china. but it has recently dropped to 1/3. hyundai motor group has also dropped from 1.74 million vehicles in 2014 to 250,000 vehicles in 2023. sales in the second quarter of this year fell by 40%. if hyundai motor group experienced the downturn in the chinese market faster, that is the difference.

in other words, the two companies are seeking to reduce the cost of developing electric vehicles in order to revive in china, the world's largest electric vehicle market. chinese auto companies are not only leading in electric vehicles, but also in software. this is one of the reasons why german companies have recently struggled in china.

at the same time, the two companies also aim to cooperate in the fields of internal combustion engine, electric and hydrogen-powered vehicles. however, the details of the cooperation are still under discussion.

gm ceo mary barra said gm and hyundai have complementary strengths and talented teams. hyundai ceo chung eui-sun said that through this partnership, hyundai motor and gm will not only have opportunities to enhance competitiveness in key markets and automotive segments, but also improve cost efficiency and provide stronger customer value.