On the surface, General Motors' engine-swapping deal with Honda Motor Co. looks like merely a technology exchange.
But a top GM executive says it's more than a swap. 'It's an issue, for us and Honda, of building a long-term relationship,' said Arvin Mueller, group vice president in charge of the GM Powertrain Group.
GM and Honda are looking at joining forces to tackle vehicle recycling in Europe and parts procurement throughout the world. Mueller suggested Honda also might use GM's new TradeXchange Web site for parts purchasing. GM is moving all of its suppliers and more than $87 billion in annual purchasing to the Web site by the end of 2001. 'I think it will go well beyond powertrain,' Mueller said.
NO EQUITY STAKE
But Mueller added that Honda is not interested in GM taking an equity stake in Honda, as GM did with Fuji Heavy Industries Ltd. earlier this month.
In the agreement announced last week, GM North America will get Honda-built Ultra Low Emission Vehicle V-6 engines. Honda in Europe will get diesel engines built by Isuzu Motors Ltd. GM owns 49 percent of Isuzu.
The companies would not estimate how many engines would be supplied through the deal, and would not identify the vehicle models involved.
GM already builds about 2.2 million V-6 engines per year. Mueller said the Honda low-emission V-6 does not bring anything to the table that GM can't do on its own.
That differs from the Fuji Heavy Industries deal, in which GM bought a 20 percent stake in Subaru's parent company. Fuji Heavy Industries can give GM all-wheel-drive and continuously variable transmission technology for smaller engines, something GM currently does not have, Mueller said.
DIESELS FOR EUROPE
On the diesel side, however, Honda will get much needed diesel engines for the rapidly growing light-diesel vehicle market in Europe. Honda makes no diesel engines of its own and currently buys some from Rover, a unit of BMW AG.
In 1999, Isuzu opened a new diesel-engine plant in Poland to supply small-car engines, primarily to GM's Adam Opel AG. Although Honda will likely get the same engines, Mueller said that will not put Opel at a disadvantage.
'As the diesel market explodes in Europe, you will see a more communal use of diesels in Europe,' he said.
During the past two years, GM has been increasing its ties with a host of Japanese automakers. In 1998 it increased its equity stakes in Isuzu and Suzuki Motor Corp. This year it formed a technical partnership with Toyota Motor Corp. to develop hybrid and fuel-cell vehicles and bought its stake in Fuji Heavy.