Sun, Jul 16, 2006 - Page 11 News List

GM, Renault, Nissan to study alliance

WORKING TOGETHER Two weeks after receiving letters from billionaire Kirk Kerkorian suggesting that they join forces, the automakers agreed to study the idea's feasibility

NY TIMES NEWS SERVICE , DETROIT

Carlos Ghosn, CEO of Renault and Nissan, talks to reporters at Nissan's Technical Center in Farmington Hills, Michigan, on Friday.

PHOTO: EPA

General Motors Corp, Renault SA and Nissan Motor Co agreed on Friday night to begin studying whether they want to form a three-way alliance that could change the shape of the global automobile industry.

The American, French and Japanese companies, in a statement, said the review would take about 90 days.

"The potential benefits of such an alliance to each company, and the feasibility of achieving them" will be examined, the statement said. Once the review is concluded, GM, Renault and Nissan said they would "consider whether further exploration of the alliance concept is warranted."

The statement, issued on Friday at 10:30pm, followed a dinner in Detroit attended by Carlos Ghosn, the chief executive of Renault of France and Nissan of Japan, and Rick Wagoner, who runs General Motors.

The dinner came two weeks to the day after GM's biggest shareholder, the billionaire Kirk Kerkorian, sent letters to the three companies suggesting that they explore a deal.

"We had a good discussion today," Wagoner and Ghosn said in the statement, "and are looking forward to having our teams work together to explore our ideas."

They added, "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 decision to study the alliance comes as GM, the world's biggest auto company, is wrestling with a restructuring plan in its North American operations. GM lost US$10.6 billion last year, and its share of the American car market continues to slide.

If GM were to merge with the other two companies, which is not yet being discussed, the trio would hold about 24 percent of the global car market. As a stand-alone company, GM, with just over 14 percent, holds a slim lead over Toyota, which has about 14 percent.

Some analysts have predicted that Toyota could pass GM as soon as this year as the world's biggest automotive company.

Ghosn, in interviews this week, said that he was not after a merger similar to the one that linked Daimler-Benz and Chrysler in 1998.

Rather, he wants the same type of link that joined Renault and Nissan in 1999. The two companies have separate headquarters and product lineups, but share engineering, purchasing and other operations.

Most significant, they are each led by Ghosn, who captured international attention for his swift, clearly stated turnaround at Nissan, which was near death when he was sent from Paris to run it.

But Ghosn, in a round of interviews this week, made it clear he does not want to run GM.

His enthusiasm for the deal has been a sharp contrast to Wagoner's caution.

In the interviews, Ghosn said he wanted teams from both sides to examine the potential synergies among the auto companies, and come to a conclusion about whether discussions would go forward.

For his part, Wagoner has given the impression of being pushed reluctantly into the talks.

His most candid moment came in an interview on Thursday with USA Today.

"I didn't know it was going to happen, and it's not the way I would have done it, and it's not particularly helpful," USA Today quoted Wagoner as saying.

Wagoner told the newspaper that he would have preferred to have considered a potential alliance after more work had been done on the turnaround.

"It has led to unending speculation that I generally think is not helpful to our business, and runs the risk of defocusing people who are working on other things," he said in the interview.

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