The company has just signed a $1,865 billion, 20-year lease agreement with Honda that includes the sale of an estimated 40% of the automaker’s global brands.
The deal, which is a significant step forward in Honda’s strategy to diversify its portfolio, is expected to close in June, when Honda expects to earn an estimated $1bn in gross margin and profit.
Honda, in a statement, said that the deal, if approved, would be the largest of its kind in the history of the company, adding that the lease deals with several major automotive brands are a “significant milestone” for the company.
It also noted that the sales agreement with BMW is expected “to further strengthen our automotive portfolio” and that Honda “will continue to aggressively invest in our product line to achieve our business goals.”
The deal includes a significant stake in the company’s brands, including the Lamborghinis of Lamborghin, Honda Civic, and Accord.
The lease agreement includes a commitment to sell all of the brands to the new owners.
It also includes a lease for a minimum of five years, subject to market conditions.
The purchase of the BMW brand, along with the Honda Accord, is another major step in the automakers goal to diversification.
Honda has said that its brand portfolio is growing by 50% annually over the past five years.
The company recently introduced the Accord as an SUV, and is expanding into electric vehicles.
“Honda has been a leader in the automotive industry for over 20 years and we look forward to a strong future together,” Honda’s chief executive, Akio Toyoda, said in a company statement.
“With the current growth of the auto industry, we need to be ready to take the next steps.
I look forward for the next five years to continue expanding our portfolio of premium vehicles to meet the needs of our customers and to strengthen our global brand.”