Hitachi, Honda suppliers to merge parts business to cut EV, self-driving costs

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Hitachi Ltd will merge its vehicle components unit with Honda's |7...

Shares in the three Honda suppliers all closed more than 20% higher on Wednesday. Hitachi ended flat and Honda fell 0.7%.

Hitachi Automotive Systems, whose name will be used for the merged company, produces a wide range of components from electric power steering systems, millimetre-wave radar used in self-driving cars, and EV invertors. “All of Honda’s suppliers have been a relatively small entities ... Now it can have a stake in a major auto parts supplier,” said Chris Richter, senior research analyst at brokerage CLSA.

Honda has struggled to shore up its automobile operations, as its profitability has more than halved in the past two years due to an ongoing series of quality-related issues, constraining its financial firepower to invest in new vehicle technologies.

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