Nissan's shares surged 3.5 percent yesterday as investors reacted with relief to news that General Motors (GM) called off talks on possibly creating a three-way alliance with Nissan and partner Renault.
The three-month-long talks came undone as Nissan Motor Co and Renault SA of France declined to pay a premium for reaping what GM said would have been a disproportionate share of the benefits, according to a joint statement issued by the companies.
"We've somewhat expected the outcome so we just take it as is," Nissan Chief Operating Officer Toshiyuki Shiga told public broadcaster NHK. "A deal like this is difficult unless each participant is positive about an alliance as a benefit."
Nissan's stock jumped on the news, climbing 3.5 percent to close at Yen1,369 (US$11.65) yesterday.
GM a burden
Investors and analysts had worried that a tie-up with GM, faced with towering health care costs and struggling to turn around its business, would burden Nissan and Renault, which hold stakes in each other.
With the proposal out of the picture "a risk is gone," said Shotaro Noguchi, an analyst with Mitsubishi UFJ Securities, allowing Nissan to concentrate on its own business and rebuilding falling sales in Japan, North America and Europe.
"The market never believed anything was going to happen anyway, so it's hard to say it should be disappointed," said Kurt Sanger, an analyst with Macquarie Securities in Tokyo.
General Motors Corp, the world's largest automaker, lost US$10.6 billion last year, shuttering plants and has been steadily losing market share to Asian rivals. But last quarter, if not for restructuring charges, the company would have logged a hefty profit -- proof, management says, that a turnaround is underway.
Nissan said it was still open to an alliance with a US automaker after the failure of talks with GM, amid speculation Ford Motor Co could be next to the negotiating table.
"We are still open to an alliance with a third partner, including a North American one," Nissan spokeswoman Mia Nielsen said.
US-based JP Morgan Chase auto analyst Himanshu Patel said Ford "may be a more willing partner" for Renault-Nissan despite the US company remaining in family control.
Renault owns 44.4 percent of Nissan, Japan's second-largest automaker which in turn owns 15 percent of its French partner.
Together, they have sales of over 5.7 million vehicles a year with nearly 10 percent of the global market.
They are already strong in Europe and Asia and analysts have said it makes sense for Renault-Nissan to seek a US partner to enable them to create a challenger to Japan's Toyota Motor Corp, which is on track to overtake GM as the world's top carmaker in terms of output.
"An alliance is a good opportunity to learn from one another and improve the performance of both companies," Toshiyuki Shiga, Nissan's chief operating officer, told reporters on Tuesday.
"Renault and Nissan are enjoying the full benefits of such alliance. If such alliance is felt beneficial for a third partner, the door is always open. It would be quite natural to include an American partner as well," he said.