: Nissan-Renault and GM Alliance



thu
07-13-06, 12:32 PM
FYI.....

Ghosn Sees Benefits
In Alliance With GM

Nissan-Renault Chief Executive Says Talks
With Rival Shouldn't Be 'Too Long a Process'
By JOSEPH B. WHITE
Staff Reporter of THE WALL STREET JOURNAL
July 13, 2006 12:34 p.m.

NEW YORK -- On the eve of a crucial meeting with General Motors Corp. chief Rick Wagoner, Carlos Ghosn said he is convinced there is a big prize to be won from allying GM and the two companies he leads, Renault SA and Nissan Motor Co. But he said a deal would only work with the support of GM management.

Mr. Ghosn, who is scheduled to meet with Mr. Wagoner Friday, said in an interview in New York that he believes any alliance of GM, Renault and Nissan should be wide ranging, and involve cross shareholdings. He said he wouldn't necessarily have to play a direct role in GM management.

Speculation on how a three-way alliance would be led is premature, he said.

"I don't want to talk about how to unlock the value until we define what's at stake," Mr. Ghosn said Thursday. Still, he said a meaningful deal should involve Renault and Nissan taking equity in GM.


"You need some kind of a shareholding to make sure you are serious about it," he said. Cross shareholdings also allow the partners to benefit if the alliance is successful.

Mr. Ghosn said he would "never" pursue a hostile deal for control of GM. Any alliance with GM should preserve the separate identities of the partners, he said. "You don't want to give the impression that this company is under the control of another company. That is what I want to avoid," he said.

Asked if he believed a deal with GM could happen, Mr. Ghosn took a long pause. "I think it may," he said.

Mr. Ghosn declined to say how much money GM, Renault and Nissan could save by joint operations, or how much they might be able to grow. Combined, the three companies control about 24% of the world auto market and generate revenues of $327 billion.

Renault and GM are significant players in the brutally competitive European mass market and could over time save on production and engineering costs there by sharing basic vehicle chassis, or "platforms," and consolidating manufacturing. In Asia, GM has a dominant position in the rapidly growing Chinese auto market, but Nissan is stronger in other markets outside of China.

In the U.S., GM remains the No. 1 player, despite years of market-share declines. Renault left the U.S. market after selling its share of American Motors Corp. to Chrysler Corp. Nissan has a 6% market share in the U.S., behind Japanese rivals Toyota Motor Corp. and Honda Motor Co. In theory, GM and Nissan could share cars and factories in the U.S. over the long term.

Mr. Ghosn said the biggest benefits of an alliance would come in the long term, four years or more from now.

"I would not go through all this if I didn't think there was a big prize" to be won through an alliance with GM, he said. If there is a deal with GM, Mr. Ghosn said, it should be substantial. "This is not going to end up [as] we do tooling in Thailand," he said. "It's something big, or we are going to stop it."

Mr. Ghosn indicated a decision about whether to pursue an alliance should come soon. "I don't want too long a process," he said. Discussions would involve both a Renault team and a Nissan team, he said.

Mr. Ghosn's meeting with Mr. Wagoner comes amid a flurry of speculation about the motives of GM's increasingly restless No. 4 shareholder, billionaire investor Kirk Kerkorian. Mr. Kerkorian, through his Tracinda Corp., controls 9.9% of GM, and his senior adviser, Jerome York, has a seat on GM's board. Messrs. Kerkorian and York met with Mr. Ghosn several weeks ago to advocate the idea of an alliance that would involve Renault and Nissan taking significant minority stakes in GM.

Analysts view the approach to Mr. Ghosn and the proposed alliance, disclosed by Tracinda on June 30, as a sign of Mr. Kerkorian's growing impatience with Mr. Wagoner. Mr. York, in a speech in January, expressed admiration for Mr. Ghosn's handling of the turnaround at Nissan, which was teetering near collapse when Mr. Ghosn was dispatched from Renault to take over as CEO in 1999. Now, Nissan is among the most profitable of the major global auto makers.

The Renault-Nissan alliance is unusual among major automotive alliances because it is both broad-ranging and successful. GM has had a different experience. Upon taking over as GM's chief executive officer in 2000, Mr. Wagoner touted the potential benefits to GM of alliances with Italian auto maker Fiat SpA and Japanese auto makers Isuzu Motors Ltd., Suzuki Motor Co. and Fuji Heavy Industries Ltd., the parent company of Subaru.

In presentations to reporters and analysts at a resort in Brescia, Italy, in 2000, Mr. Wagoner said GM's "Alliance Strategy" was a capital-efficient way for GM to grow. He pointed out that taken together, GM and its then-allies could control about 24% of the world market.

But in the following years, GM's alliance strategy fell apart. The Fiat alliance collapsed in an acrimonious divorce that cost GM nearly $2 billion, on top of the $2 billion GM spent to buy its 20% stake in Fiat. GM later sold off most of its Fuji and Suzuki holdings, and restructured its ties to Isuzu. One success has been GM's effective takeover of Korean auto maker Daewoo, which now serves as a significant base of engineering and production for GM.

Mr. Ghosn acknowledged that he is "more bullish" about alliances than his counterparts at GM. He said a key reason why Renault and Nissan are able to collaborate is that the two companies have kept their individuality as French and Japanese companies. The two companies manage their alliance through a board that has equal representation from both sides, and is chaired by Mr. Ghosn.

Mr. Ghosn said any three-way GM-Renault-Nissan alliance would need what he called "a watchdog" to ensure that strategic plans were carried out. "In this business," he said, "strategy is 5%. Execution is 95%."

noahsdad
07-13-06, 02:49 PM
There won't be room for Mr. Ghosn and Mr. Wagoner. Kerkorian owns 9% and loves Ghosn. Add Nissan/Renault's 10% and suddenly there appears a very influential voting block. If this happens, GM will be a paper car company building ugly ass econoboxes powered by Nissan. Just ask the former management of Chrysler.

Sandy
07-13-06, 03:07 PM
It's good for the bottom line, i.e. sharholders, profits and inverstors. It's way baaaad for the car affectionados, and even WORSE for the individual divisions ! Poor Buick will become a floundering ill fish, Pontiac will have perhaps 2 or 3 lines of product. In the end, it will be Saturn, Chevrolet & Cadillac and Chevy & GMC Trucks, Oh, yes..... and Nissan and Nissan selling re-badged Renaults.

Encore Anyone ?:thumbsup:

(Okay, Okay....Encore was a model of the Renault line during the time they were sold witjh AMC/Jeep)

77CDV
07-13-06, 10:10 PM
It's good for the bottom line, i.e. sharholders, profits and inverstors. It's way baaaad for the car affectionados, and even WORSE for the individual divisions ! Poor Buick will become a floundering ill fish, Pontiac will have perhaps 2 or 3 lines of product. In the end, it will be Saturn, Chevrolet & Cadillac and Chevy & GMC Trucks, Oh, yes..... and Nissan and Nissan selling re-badged Renaults.

Encore Anyone ?:thumbsup:

(Okay, Okay....Encore was a model of the Renault line during the time they were sold witjh AMC/Jeep)

I'm looking forward to the LeSentraCarDorado. :eek:

davesdeville
07-14-06, 06:16 AM
If they could manage to keep GMs American identity it wouldn't be too horrible. I still don't think I want to see it happen.

gothicaleigh
07-16-06, 02:30 PM
http://www.renaultusa.org/alliance87.jpg

SpeedyArizona
07-16-06, 09:13 PM
The Fiat alliance collapsed in an acrimonious divorce that cost GM nearly $2 billion, on top of the $2 billion GM spent to buy its 20% stake in Fiat.

I still wonder why GM took over FIAT, didn't they knew what it stood for? FIAT- Fix It Again, Tony;)! Seriously, even though the price was right, it didn't mean they had to buy a rotten apple. Now it has a considerable amount of interest in Isuzu which I have yet to see profitable for GM.

I think GM has made too many shit-headed (sorry, there was no other word for it) decisions without thinking them through.

If I was the head honcho I would: Get ride of GMC all together, it isn't profitable and they're basically rebadged Chevys; make Buick into more of a near-luxury type segment; completely redefine Saab as a brand for the young crowd and have the pricing reflect that, and finally use Saturn as the work horse, test new designs, technology, etc.

Keep Cadillac as a luxury segment, keep Chevy as the all-around breadwinner, continue with the Pontiac brand which is doing ever-so-well, and Hummer....I still don't know.

I think this Nissan alliance is exactly what GM needs to get back on its feet.