General Motors and Honda have signed a deal to explore sharing vehicle underpinnings and propulsion systems in North America.

The companies said discussions on jointly-designed vehicles will start immediately and include vehicles powered by both electricity and internal combustion engines. Engineering work would begin early next year.

Honda and GM said in a statement on Thursday that they would also cooperate on purchasing, research and connected services.

The memorandum of understanding between the companies is not binding. But the move is another sign of increasing consolidation in the automotive business as companies face huge capital outlays to develop current products as well as new electric and autonomous vehicles.

Crosstown rival Ford finalised a similar deal with Germany’s Volkswagen earlier this year, while Italian-American auto maker Fiat Chrysler is finalising a merger with Frances PSA Peugeot.

In the GM-Honda deal, the companies say they’ll collaborate on a “range of vehicles sold under each company’s distinct brands” .

The announcement builds on the work the companies have been doing jointly on electric and hydrogen fuel cell vehicles, as well as pn an autonomous vehicle.

“The alliance will help both companies accelerate investment in future mobility innovation by freeing up additional resources,” GM president Mark Reuss said.

He said the companies would get “significant synergies” in developing vehicles.

“We can achieve substantial cost efficiencies in North America that will enable us to invest in future mobility technology, while maintaining our own distinct and competitive product offerings,” Honda executive vice-president Seiji Kuraishi said in the statement.