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Wed, Dec 13, 2006 - Page 10 News List

Carlos Ghosn says Nissan under no pressure to merge

TWO'S COMPANY The auto giant's chief executive said it was not necessary to add a third partner to the Nissan/Renault partnership

AP , ATSUGI, JAPAN

Nissan needs to boost production capacity in the US to meet growing demand for new models but is under no pressure to merge with a new partner following the break-up of alliance talks with General Motors, chief executive Carlos Ghosn said yesterday.

His comments follow scuttled talks between Nissan, France's Renault and US automaker General Motors Corp (GM) on a merger that would have produced an automotive juggernaut spanning North America, Europe and Asia.

Nissan Motor Co was seen as pursuing a partnership with Detroit-based GM to take advantage of using some of factories that its US rival was bringing off line amid widespread downsizing. Ghosn said yesterday that Nissan still needed boosted capacity in North America but that a slowing market would put that on hold.

"There is no doubt in our mind, depending on the environment, that at a certain point of time, we're going to need more capacity. The question is when," said Ghosn, who was in Atsugi, southwest of Tokyo, for the opening of Nissan's new design studio complex, which will become the central hub for about two-thirds of its worldwide auto designers.

Ghosn said Nissan is "not foreseeing any better conditions" in the US automarket next year, compared with an already sluggish environment this year and said any increase in production capacity would be long-term.

"It's must be something that would come when we think conditions are appropriate, and it is not an urgent issue," Ghosn said.

Regarding the search for a possible merger partner, Ghosn said Nissan and its French partner Renault have a combined annual output of roughly 6 million vehicles, together making them the world's No. 4 carmaker.

Nissan formed an alliance with Renault SA in 1999. Renault owns a 44 percent stake in Nissan, which in turn holds 15 percent of the French auto maker.

"We're not at the level of the biggest, but we can compete fairly well," Ghosn said of Nissan's current status. "I don't think that adding a third partner is a necessity when you already have a scale like this."

Ghosn held open the possibility of a further merger, but said it would depend on other factors. He did not name any potential candidates.

"It's more a question of opportunity," he said.

In early October, GM torpedoed three months of negotiations with Renault and Nissan. The talks ended when GM sought payment from the other two companies for what it said would have been a disproportionate share of the benefits of an alliance.

Proponents argued that the alliance would create significant savings, but critics said it could be a distraction from GM's efforts to return to profitability.

While Ghosn was coy about further mergers, other Nissan executives have been more eager. Dominique Thormann, Nissan North America's senior vice president for administration and finance, said last week that the talks with GM showed that expanding to a third party "makes sense."

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