GMRN Update

There’s a few good stories around at the moment about an issue that does have a boatload of potential implications for Saab – the proposed GM-Renault-Nissan alliance.

The last big meetings between the head honchos of each company were held in Detroit back in July. These were highly publicised affairs given the gargantuan nature of the proposal. Both companies vowed (1) to have serious discussions within a 3-month time frame, and (2) to not say anything about the process until mid-October.

They’ve been pretty faithful on both accounts. The discussions have taken place in backrooms in various locations and on GM’s side, have primarily involved CFO Fritz Henderson. This week, with the Motor Show just days away, GM CEO Rick Wagoner is in Paris and will join in the continuing talks.

There hasn’t been much in terms of leakage from the meetings, but the Detroit News is reporting the following today:

Patrick Pelata, who is leading the talks for the Renault/Nissan side, said he believed his side had made a strong case in favor of a deal, which he said could help GM fend off a strong challenge from Toyota, which ranks No.2 behind GM worldwide.

But he said he was not sure if the case had been strong enough to convince GM, whose biggest shareholder, Kirk Kerkorian, proposed the arrangement in mid-July.

Pelata, a close associate of Carlos Ghosn, the chief executive of both Renault and Nissan, said members of GM’s negotiating team, including its chief financial officer, Frederick A. Henderson, have said they were wary of Renault and Nissan’s claims because of GM’s experiences in its alliances with global auto companies.

This snippet pretty much sums up the whole proposal in my eyes. Renault-Nissan have everything to gain from this deal and they say as much in a related article in the Detroit Free Press:

Pelata said that in particular, Renault-Nissan could benefit from GM’s engineering and technology expertise.

“GM has a lot of engineering resources,” said Pelata, who also spent six years as an executive at Nissan. “They are better at localizing products for individual markets than we are. … They also have better information technology and software.”

Renault-Nissan gain engineering, software and other expertise – and they offer…….???

Some extra numbers so GM can say “Well, we’re holding off Toyota (wink wink)”

This is a one-way street and I wouldn’t be surprised if Carlos Ghosn was told this quite directly over the next week or so. Of course, GM will drag it out to the full three months in order to satisfy Mr Kirkorian, the old-git-shareholder that forced the discussions, but that’ll be it.

If you’re interested in reading more about GM’s current situation, there’s an excellent article at Bloomberg that Eggs n Grits pointed me towards earlier today. It’s a look at the company from a global perspective. North America is still GM’s bread and butter and they have to get things right there. What this article shows, however, is that there are so many other emerging markets that GM are well-placed in, which is why I believe Rick Wagoner’s going to be giving Carlos and Kirk the finger in the next few weeks.

GM has a 5-year-and-longer plan for Saab and I think it’s going to be worth sticking around for. Any shared investment by Renault-Nissan could pose a decent size threat to that plan. Just my 0.02c.

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4 Comments

  1. There have been commments in Swedish press over tha last weeks that Ghosn think that GM is not interested and that thet did this becuase the it got such an attention. As it stands now, Ford seems to be in much more trouble than GM and a more likely candidate for Renault-Nissan…

  2. I think that Carlos Ghosn understands that for any alliance to be successful, it has to get going NOW. (Maybe last year?) If GM has any reluctance (and they do), an alliance will fail simply due to the timing. Ford seems more desperate, therefore more willing to conform right away.

    By the way, if I believe what Ghosn believes, that Toytota is the real threat and the only way to handle it is to gang-tackle them, I’d be pretty keen on an alliance with DaimlerChrysler. There’s a bunch with their act together, new products in the pipeline, THE halo brand to end all halo brands and a footprint in ultra-mini cars that are the growth engine in developing countries. The question is this: how does DaimlerChrylser see him?

  3. GM NA needs fresh/er product. At present GMEuropes offerings amount to maybe 50K? Saabs. Opel makes some interesting models that may be helpful in the $20-45 range. Theres no point to dating RN when this alternative apparently hasnt been explored. Also the problem of too dam many urban/suburban GM dealers needs to be resolved…4,5 brands competing with basicly the same vanilla is pointless and profitless.
    And as always…get light-duty diesels over here ASAP. If DCX can get 6 cylinder Ds to miss CARB NOx by .01g/m then smaller displacements are a cinch. E85 and hydrogen remain hoaxes.

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