All eyes are on Detroit - via Paris - these days. This is a big deal, but a complicated one.
General Motors toughened its public stance on proposals that the U.S. carmaker join an alliance with Renault and its sister company, Nissan, adding to uncertainties weighing on the industry as the Paris Motor Show opens its doors Thursday.
Apparantly GM doesn't like the size of it's slice of the pie.
Here's part of the reason for the talks.
Urged on by billionaire investor Kirk Kerkorian, who owns 10 percent of the company, GM agreed in July to enter confidential exploratory talks with Renault and Nissan — but has been coming under increasingly public pressure to sign up to a three-way alliance.
But lately, there's been some rumblings from Detroit.
GM sees a smaller payoff for its own shareholders than for those of Renault and Nissan, spokesman Brian Akre said, and is seeking compensation for that imbalance as part of any deal.
There are those who think GM's survival is at stake.
In a briefing with newspaper and magazine journalists earlier this week, senior Renault negotiator Patrick Pelata said GM needs the savings an alliance would bring to fight off ever-tougher competition from Japan’s Toyota Motor Corp. The alternative, Pelata was reported as saying, was to “wait for a miracle, or an earthquake in Japan.”
That's actually a funny line. But what Toyota has done over the past decade or so isn't so funny.
GM has recently announced plans to close 12 plants by 2008, slash its work force and cut costs, amid intense competition from Asian rivals.
So it would seem GM would be looking for savings anywhere they could find them.
(Nissan CEO Carlos) Ghosn’s team has identified $10 billion in annual savings for GM if the alliance goes ahead, according to a report in The Detroit News that cited a person close to Renault among its anonymous sources.
Anonymous sources don't often breed a lot of confidence, though. But confidence is flagging elsewhere.
“Although we expect the companies to continue discussions, we view a major agreement to be unlikely,” Standard and Poor’s analyst Efraim Levy said in a note to investors.
The parties have set an October 15th deadline for a decision to proceed. If not, other possibilities could be available.
Industry-watchers have suggested that Renault and Nissan could turn to Ford Motor Co. if the discussions with GM break down — a possibility Ghosn has never ruled out. “I have said from the beginning that the expansion of the Renault-Nissan alliance to a North American partner makes sense,” he told an industry conference later Wednesday.
Hmmm. A little bluff there? We'll see if GM goes 'all in' soon enough.
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