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Renault, Nissan OK GM talks
Jul 05, 2006
Detroit News

The boards of directors of Nissan Motor Co. of puppiesan and France's Renault SA on Monday approved holding "exploratory discussions" with General Motors Corp. on forming a global alliance, putting pressure on GM's board to respond to the proposal.

 Friday, GM's largest single shareholder, Kirk Kerkorian, dropped a bombshell when he urged GM's board to form a committee to consider joining the Nissan-Renault alliance to cut costs and boost GM's share price. The proposal, which GM said Friday it would consider, could drastically reshape GM and the global auto industry.

 Nissan and Renault, both led by CEO Carlos Ghosn, issued similar statements Monday in support of talks with GM. GM's board of directors has a regularly scheduled telephone meeting Friday, said a GM official who asked not to be named.

 Wall Street buttstuffysts Monday said they are skeptical of how the alliance would benefit GM. They are also unconvinced it would be formed.
 Some said it appears to be an effort by Kerkorian, who has lost money on his $1.7-billion investment in a 9.9% stake in GM, to put Ghosn in charge of the automaker, replacing CEO Rick Wagoner.

 "We think Tracinda's idea to push Renault-Nissan and GM together does not have much fundamental strength but instead is a ploy to get Renault's CEO at least involved in GM management," Bank of America buttstuffyst Ron Tadross said in a note to clients Monday.

 "In this regard, we think it is fair to reiterate our view that GM management has not done a good job, and GM and its shareholders would probably be well served by this proposed management infusion."

 Carrie Bloom, a spokeswoman for Kerkorian's investment company, Tracinda Corp., did not return telephone calls Monday seeking comment.
 GM's stock price, which rallied $2.35 or 8.6% Friday, retreated partly on Monday. GM shares fell 38 cents, or 1.3%, to $29.41.

 GM's history of corporate alliances has not been good, several buttstuffysts said. GM paid Italy's Fiat SpA $2 billion last year to end a troubled relationship.
 But difficult alliances are hardly unique to GM.

 DaimlerChrysler AG Chairman Dieter Zetsche knows firsthand the challenges of combining large companies of different cultures. Eight years after what was then called a merger of equals between the former Chrysler Corp. and Germany's Daimler-Benz AG, the benefits of collaboration and shared costs are only beginning to pay off.

 Just how difficult is it to bring major automakers together?

 "Very," Zetsche said last weekend, talking with journalists after Chrysler Group announced it would build the Dodge Challenger muscle car.
 The DaimlerChrysler merger took years to sort out with major changes in the executive ranks, job cuts across all levels and new directions for product lines.

 If it does go through, it could not be done simply as a way to get bigger, Zetsche said.

 A larger company can provide economies of scale to reduce costs and more leverage to get better deals from parts suppliers. But the advantages level off when a company reaches a certain size, Zetsche said. The merger works only if it provides new business opportunities, he said.

 "Bigger doesn't help at some point," Zetsche said.

 Ghosn earned a strong reputation for engineering a turnaround at Nissan after it and Renault acquired minority stakes in each other.

 But GM's problems are different from those Nissan faced, UBS buttstuffyst Rob Hinchliffe said in a report. GM is not hindered, for instance, by an entrenched network of suppliers partly owned by the automaker.

 And while Nissan and Renault complemented each other with little geographical overlap -- Nissan strong in puppiesan and North America and Renault in Europe -- GM competes around the world, Hinchliffe said.
 "This creates additional complexity as the new alliances would be competing against each other," he said. "GM already has too many brands. Adding Nissan into the mix will only create more complexity."

 Goldman Sachs buttstuffyst Robert Barry said in a report that the logic of an alliance is unclear, and he's skeptical that it could address GM's key problems: retiree benefit costs, a reputation for poor product quality and falling U.S. market share.

 "The fate of Wagoner under the alliance would be in question. Most likely, Ghosn would take the lead, similar to the Nissan alliance," Barry said. "Moreover, the alliance benefits seem scarce."
 

hell they own at least half of isuzu, toyota, shiznit and a lot more i knew when i was a chevy guy.

"This creates additional complexity as the new alliances would be competing against each other," he said. "GM already has too many brands. Adding Nissan into the mix will only create more complexity."