News - Renault
GM-Renault talks cool
GM boss less than excited after alliance talks with Nissan-Renault's Carlos Ghosn
4 Oct 2006
By MARTON PETTENDY in PARIS
HOURS after his first face-to-face meeting with Renault-Nissan CEO Carlos Ghosn since the pair agreed to discussions on July 14 in Detroit, General Motors chairman and CEO Rick Wagoner emerged at the Paris motor show last week with more enthusiasm for GM’s rescue package than any potential alliance with the French-Japanese auto giant.
That same day, September 28, rebel GM shareholder Kirk Kerkorian, who has initiated merger talks between the two companies as the world’s largest car-maker attempts to recoup massive losses by closing 12 US plants by 2008, announced his desire to increase his shareholding in GM from 9.9 to 12 per cent.
According to US industry journal Automotive News, Mr Kerkorian’s Tracinda Corp, through representative and GM board member Jerry York, will also ask the GM board of directors at its next meeting on October 3 to hire an independent committee to study the deal, which would make the US-French-Japanese alliance the world’s only car company of its type and give it an unassailable sales advantage over world number two, Toyota.
The two car chiefs met in Paris on September 27 to discuss the progress of a 90-day investigation into various levels of industrial co-operation between the two car-makers. GM and Renault-Nissan issued a joint statement following the meeting which said both parties had agreed to continue discussions until the planned completion date of October 15.
"The teams are conducting a thorough and objective analysis of potential synergies between all three companies with a focus on how an alliance could generate significant shareholder value for each company," it said.
Less than 24 hours later, Mr Wagoner preferred to emphasise to journalists (including GoAuto) the success of GM’s financial turnaround plan rather than reveal specific differences of opinion with Mr Ghosn.
"I don’t think I want to talk about that," he said. "We have candid conversations and I think that’s important, but it’s not helpful to discuss those in detail.
"The studies have been very professional and very analytical and we’ve been trying to keep them that way and look forward to making a final resolution and an announcement in mid-October.
Left: Renault-Nissan CEO Carlos Ghosn.
"We’re working very hard and I think progress has been made and the teams are working well and the spirit of co-operation is that we have accurate data to make decision on the basis of benefit to each party, and so far that’s going very well.
"Our focus from day one is that we’ve had a very select expert team working on alliance and the opportunities there, but the vast majority of GM people around the world ... are working on great new products, working with our dealers, working on continued improvements in quality and costs structure, so that’s still going on and that isn’t going to change, frankly, no matter what happens.
"That’s what we’ve got to do. That’s what will ultimately determine the success of the business and there’s certainly reason to be optimistic if you look at the track record over the last year. If anything, I think the pace of the turnaround in North America has shocked people and we’re just going to keep pushing in that direction," he said.
Mr Wagoner has repeatedly said that GM’s first priority is focusing on its turnaround plan, not on an alliance.
"In North America we’ll cut costs in the span of one year by nine billion dollars. To the best of my knowledge I don’t think anyone else has done that in any business. So if there’s any question about our interest or our ability to cut costs I’d say we’re probably the benchmarks in that area and we’re going to keep focusing on it.
"If by co-operating with Renault and Nissan or other people around the world from time to time as we do, if that presents opportunities to either reduce our costs or improve our representation, then we going to keep focused on that." Asked what outcomes may be expected in mid-October, Mr Wagoner said: "We obviously have to complete our studies and review them with our board and make decisions. You’ll see, not the final conclusion, but you’ll see a conclusion, which could range from continued studies, to decisions to proceed, to decisions not to proceed." According to The Wall Street Journal, GM is expected to ask for a multi-billion-dollar payment from Renault-Nissan before it agrees to a three-way alliance, as compensation for the greater value GM believes it would bring to any partnership.
According to The Detroit News, the Renault-Nissan boss was expected to tell Mr Wagoner that GM could save at least $US10 billion annually within five years by forming an alliance.
For his part, Mr Ghosn told Automotive News on September 27 that he would continue to search for a North American partner if the GM deal fell through. GM and Ford last week denied reports the pair had discussed a merger or alliance since GM-Renault-Nissan talks began in July.
Much of the $US10.6 billion GM lost last year was due to slow SUV and truck sales in the US, and production of GMC’s all-new Sierra and a redesigned version of GM’s top-selling model, the Chevrolet Silverado pick-up, was due to begin on October 2 – a day before Mr Wagoner met the GM board to deliver his management team’s analysis of the proposed alliance.
GM’s share price rose to a 12-month high on September 28, and Mr Kerkorian appears determined to be the greatest benefactor no matter what decision is made.
Nasser meets FordFORMER Ford Motor Co chief executive and one-time head of Ford Australia Jac Nasser was seen meeting executive chairman Bill Ford – the man who sacked Nasser in 2001 and took over the company himself – in Dearborn, Michigan, late last month.
An Automotive News report this week quoted a source close to Bill Ford who said there was nothing "in particular" on the agenda at the meeting.
However, as the article indicates, Mr Nasser was the architect behind Ford’s Premier Automotive Group (PAG) and now heads a private equity group that is believed to be looking at PAG assets, particularly Jaguar and Land Rover.
Ford executives at the Paris motor show last week denied the two British brands (and Volvo) had joined Aston Martin in being placed on the market – but acknowledged that could change.
Could Jac now have a role in demolishing PAG by thrashing out a deal with another former Ford Australia chief (and now Jaguar and LR boss) Geoff Polites?
The Road to Recovery podcast series
Click to share
Motor industry news