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Speculation rife of deals between big automakers

"It would surprise me if there were a coming-together on the grand level."

David Cole, chairman of the Center for Automotive Research

General Motors Corp's talks with Renault SA and Nissan Motor Co on a possible alliance -- and reports Ford Motor Co may be pursuing a megadeal, too -- show how automakers constantly turn to each other even amid fierce industry competition.

GM and Ford declined to comment on Monday on an Automotive News story that their top executives had discussed a merger or alliance.

Ford also declined comment on last month's Wall Street Journal report that Ford proposed its own deal with Renault and Nissan.

In July, GM, Renault of France and Nissan of Japan announced a 90-day review of a possible alliance among them.

Auto executives talk frequently about "what-if scenarios" and possible deals large and small, said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan.

"These kind of discussions go on all the time," Cole said. "Collaborating ... is part of how they're doing things."

These talks have yielded a growing number of joint efforts on everything from hybrid vehicles to better automatic transmissions, he said.

GM and Ford have been slashing their work forces and closing plants in efforts to reverse multibillion-dollar losses in the face of tough competition from Asia-based automakers.

On Friday, Ford announced deeper job cuts as part of its "Way Forward" restructuring plan.

GM lost US$2.9 billion, or US$5.19 per share in the first half of this year, while Ford lost US$1.3 billion, or US$0.70 a share.

Both companies declined to comment on the Automotive News story that quoted several unidentified people who said senior GM and Ford executives had begun talks in July but that the talks are not taking place now.

"My job is to keep everybody focused on our Way Forward plan and accelerating our results," Mark Fields, Ford's president of the Americas, said on Monday. "If we discussed all the speculation that was out there, I think we'd probably spend a couple of days."

GM spokesman Brian Akre said company officials "routinely discuss issues of mutual interest with other automakers." He said such talks are private and "in many cases do not lead anywhere."

Cole said an outright GM-Ford merger is unlikely and said that the firms carefully weigh antitrust issues during the lower-level cooperation that now takes place on such issues as hybrid vehicles, production technology and components.

"It would surprise me if there were a coming-together on the grand level," said Cole, but said Ford and GM very well could start more joint efforts similar to their current work to develop a six-speed automatic transmission

Even if GM and Ford don't merge, some other automakers will as the industry further consolidates, Cole said.

Ford's chronic labor cost problems and its shortage of interesting models give GM little reason to seek a close alignment, said analyst Charles Fleetham of Project Innovations in Farmington Hills.

"I don't see it from a business standpoint," he said. "They have the same high health costs, high union costs, ineffective white collar work force that they want to get rid of."
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