GM, Renault/Nissan to Continue Alliance Talks

Posted 16 July 2006 @ 11:29 pm EET     Print     Reprint     E-Mail     Comments

DETROIT (AP) - United States General Motors, the world's largest automaker, and French-Japanese partners Renault and Nissan have rounded the first corner in exploratory talks for a three-way alliance.

Click to Enlarge Carlos Ghosn, chief executive of Nissan Motor Co. and Renault SA, addresses the ...

After a meeting in Detroit of their leaders, the companies announced they would conduct a joint review, in private, to assess the possibility of joining forces. Carlos Ghosn, president and chief executive of Renault and Nissan Motor Co., and Rick Wagoner, chairman and CEO of General Motors, held an "exploratory discussion" late Friday regarding the possibility of creating an industrial alliance, the automakers said in a statement.

"We had a good discussion today, and are looking forward to having our teams work together to explore our ideas," Wagoner and Ghosn said.
"It is important to let our teams work on this review without distraction and, therefore, we will not be providing further public comments about it at this time."

The automakers said they had agreed "to cooperate in an expeditious, confidential review of the potential benefits of such an alliance to each company and the feasibility of achieving them."
After a review, expected to take about 90 days, the companies will consider whether "further exploration of the alliance concept is warranted," they said.

GM's largest individual shareholder, Kirk Kerkorian, has pressured the company to launch the tie-up talks with Renault and Nissan. Under an alliance between Renault and Nissan agreed in 1999, Renault owns 44.4 percent of Nissan, which in turn owns 15 percent of its French partner.

Together, Renault and Nissan have global sales of over 5.7 million vehicles a year with more than 9.6 percent of the global market and boast numerous synergies in engineering, manufacturing, sales, information technology and purchasing.

GM, meanwhile, plans to cut 30,000 workers in the United States and to close several plants in the face of stiff competition from Japanese rivals. Before Friday night's discussions, Ghosn said he was optimistic about the prospects for an alliance with GM. But he stressed that he was not contemplating the kind of merger that created German-US automaker DaimlerChrysler AG in 1998.

The outcome of a GM tie-up could be much looser, with each company retaining a large measure of freedom and flexibility, Ghosn suggested during a news conference Friday at the Nissan Technical Center in Farmington Hills, Michigan.

"This is not hostile," he said. "This is something where were trying to join forces to create value for the three parties. We are not making a bid for General Motors. We are not trying to acquire anything. We are trying to partner with other people. Im always a bit surprised that Renault/Nissan is being compared to DaimlerChrysler," he said.

"DaimlerChrysler is one company, with one headquarters, with one board of directors, with one set of shareholders. Renault/Nissan is two companies with two headquarters, two executive committees, two board of directors and shares. You cant compare both of them," added Ghosn.

"One is a partnership and one is merger. The history is different. We dont have the same mind. We dont have the same approach". GM had been tightlipped ahead of the meeting.

Ghosn declined to discuss the pressure that Kerkorian, GMs largest individual shareholder, has applied to launch the talks between GM and Renault/Nissan. He also dismissed speculation that he might be after Wagoners job.

"Im not interested in his job. I am accountable for Nissan and Renaults development, growth and results," added Ghosn, who noted that both Nissan and Renault have very specific plans in place to boost sales and profitability over the next few years.

Ghosn noted that "the real growth of the industry is happening in the developing markets such as China, Russia, the Middle East, India. These are booming markets with double-digit growth rates."

Just this week, GM became the top-selling automaker in China and last month both GM and Nissan broke ground on new assembly plants in Russia, near Saint Petersburg.