Commentary: The GM-Nissan-Renault Alliance

[Bravada]

I wouldn't say so. Generating loads and loads of negative publicity around this might at least somehow discourage some parties or encourage parties within GM and R/N that oppose that "merger". Send loads and loads of emails to GM, Renault, Nissan, and especially to journalists to make them aware of new great topic to cover, "auto enthusiast apalled by merger plans", "will GM and Nissan sales plummet?" "Major automotive commentator M.G. Escuro views Renault-GM alliance as not making business sense" etc.

[mgescuro]

Originally Posted by Bravada

Major automotive commentator M.G. Escuro views Renault-GM alliance as not making business sense" etc.

yeaaaah right

[Infiniti Z350]

Couple of counterpoints for you...

Originally Posted by mgescuro

Terry Christiansen, Mr. Kerkorian’s lawyer stated that if Nissan and Renault were to form this alliance with GM, the companies could draw from one another's expertise in manufacturing, engineering and product development. In short, the 3 companies could for synergies that will help them compete in the increasingly difficult global auto market. On the surface, it makes obvious sense. But as you dig into it more and more, you find that there really are not any real synergies to be had. So what’s the point?

...
[*]GM has Ethanol and Hybrid technology, not to mention Electric and Hydrogen technology. R-N doesn't have any of that. But that's not synergy.

Nissan does have experience in all of those alternative fuel-technologies you mentioned:

Ethanol (see Titan)
Hybrid (see Tino Hybrid sold in Japan)
Electric (see Altra and Hypermini)
Hydrogen (see X-Trail FCV et al)

Which brings me to the ultimate reason as to why Kerkorian dropped this bombshell – Carlos Ghosn. Mr. Cost-Cutter. Running a quick-and-dirty analysis of this proposed in my head really proves that this makes absolutely no sense, aside from the fact that the Renault-Nissan alliance has Carlos Ghosn. With Kerkorian able to influence 30% of GM’shares, he would be in a strong position to oust Wagoner in about a year’s time. I think Kerkorian is hoping to do just that.

How will this occur? You get GM to accept the alliance. In about 6-9 months time, the alliance should pass regulatory scrutiny. There is no doubt in my mind, Renault-Nissan will ask for no less than 2 board seats. After which time, Kerkorian will presumably have enough influence on the Board to motion for Wagoner to step down and suggest Gohsn to take over. This would put GM into late-2007/early-2008. And Gohsn will take over come mid-late 2008. And that’s not such a bad idea to have Gohsn take over GM. However, getting to that point, you have GM completely distracted from its core mission – producing cars. The board is in meetings. Wagoner’s running strategy meetings regarding the alliance and not the car market. You have political in-fighting among the divisions and engineering and their territory. It’s a mess.

...

The only two benefits I can see is opening up new markets, but that hasn’t been fruitful in the past, and bringing in Goshn, which is sure to bring a turmoil at GM at a time it doesn’t need the turmoil. I believe the alliance is a complete waste of time, and Kerkorian had best rethink his strategy. We all know he's in it for the cash, but implementing incompetent strategy to get there is bad business.

You say bringing in Ghosn now would be an ill-timed maneuver but Nissan at one time wasn't in the most healthy shape either when he he was brought about. Now they're are one of the most profitable companies out there. The benefits seem to have won out over the risk. Besides, if not now when? Would you wait until GM is literally at bankruptcy's door?

Would bringing in Ghosn cause a shake-up within GM? I suppose there's that possibility but look at it like this: When doctors issue treatment to or perform surgery on patients, do they not do it when the patient is stronger and stands a better chance at surviving it? They don't wait until they are on the verge of death to do something.

[ChevroletRevived]

Originally Posted by mgescuro

Nope. Absolutely nothing we normal people can do.

I can't believe that. YES, there IS things you can do. Vote in the poll against it, write to GM/White House/Local Representatives/Newspapers. Start a blog..get angry. An uproar. Strike, boycott anyone? We can make a difference, we really can. Here's a link to check out for people who want to:
Do you care? Then Take Action!

[mgescuro]

Originally Posted by Infiniti Z350

You say bringing in Ghosn now would be an ill-timed maneuver but Nissan at one time wasn't in the most healthy shape either when he he was brought about. Now they're are one of the most profitable companies out there. The benefits seem to have won out over the risk. Besides, if not now when? Would you wait until GM is literally at bankruptcy's door?

Would bringing in Ghosn cause a shake-up within GM? I suppose there's that possibility but look at it like this: When doctors issue treatment to or perform surgery on patients, do they not do it when the patient is stronger and stands a better chance at surviving it? They don't wait until they are on the verge of death to do something.

Gohsn coming in now would be ill-timed. GM is already in the middle of a turnaround. Accepting a new leader -- whever it may be -- would disrupt the change in progress. It's a completely stupid move. It affect the corporate culture. It disrupts the new processes in place. It adds more time to effect the changes to the company with new leadership involved. Now... GOhsn coming in AFTER the changes are in place and running... sure. I have no problem. But not in the middle of it. if Gohsn came into GM 1-1.5 years ago... that owuld have been fine too. But not now.

Nissan had a good run. But if you look at the business processes in place, there were none when Gohsn came on board. Also, the majority of new products that Gohsn put out, were already in the product pipeline. So, GOhsn came in, cut costs, and did nothing with the product, as it was already there. This is much the same thing when Lutz came into power at GM. He could do nothing with the products that were already in the pipeline, unless he could effect a delay in launch (STS).

Nissan hasn't been doing well for the past 2-3 quarters. They've been experiencing a decline. Now the question is... now that Nissan has gone through all its cuts and stuff... what next?? There's no real plan. And that's the question surrounding GOhsn's leadership. He's good to cut and right the ship. But then after that, he's ineffective. He's working on cuts at Renault, but he's going to run up against the French unions... which makes the UAW look like a buncha pansies. So... we'll see.

The alliance of Renault-Nissan and GM just makes no sens at this time. There are no synergies... especially, as you pointed out, they already have alternative drive technologies. So... no sense.

[CobaltSScrazy]

Originally Posted by Infiniti Z350

Couple of counterpoints for you...



Nissan does have experience in all of those alternative fuel-technologies you mentioned:

Ethanol (see Titan)
Hybrid (see Tino Hybrid sold in Japan)
Electric (see Altra and Hypermini)
Hydrogen (see X-Trail FCV et al)



You say bringing in Ghosn now would be an ill-timed maneuver but Nissan at one time wasn't in the most healthy shape either when he he was brought about. Now they're are one of the most profitable companies out there. The benefits seem to have won out over the risk. Besides, if not now when? Would you wait until GM is literally at bankruptcy's door?

Would bringing in Ghosn cause a shake-up within GM? I suppose there's that possibility but look at it like this: When doctors issue treatment to or perform surgery on patients, do they not do it when the patient is stronger and stands a better chance at surviving it? They don't wait until they are on the verge of death to do something.

they are STILL failing to hit THEIR predicted sales targets, the "renaissance" at NR is stalling as of now. If you interpret the merger as Ghnosen running GM, then we should just hire him! But I think R. Wagoner, Duke Alumnus, is making gradual progress and will lead us out of the woods just like BLutz stated a year ago that he would.

Its easy to get to the top, its hard to stay there, just as Nissan that ? and Cadillac is having a hard enough time maintaining all their gains, the CTS will be extremely telling of the staying power of this "New" cadillac.

Someone thinks that you may be favoring this buyout b/c then you could say you are actually "Buying American" on the technicality that it would be a French-Japanese-American company, but its just a shot in the dark

What really frightens me is this definitely without any doubt sounds like a takeover, WHY DOESN'T GM GO BUY 10% OF EACH OF THEIR RESPECTIVE COMPANIES, i mean, heck we have 1.5 times as many employees, 2x as much revenues, and about 2x-2.5x as much marketshare in the US and Globally???? Anyone feel free to "clue me in" as i truly don't understand this? Also, there are only two companies I would "takeover" if I were GM, Toyota or Ford, buy into the most efficient highest quality car company in the world and call it GM-Toyota (like Daimler-Chrysler, not Toyota-GM...there is no such thing as a merger of equals) and make Toyota truly american as it seems thats what they want to do anyways, i mean they practically wrap themselves in the USA flag in every single commercial and car-related event they seem to be in (cough nascar cough). Or just create a "SuperAmerican" GM-FORD alliance/merger and have at least one US company left standing...

I read in the Free Press today quoting Ford President of Americas stating to Congress that the last US Car company IS a national treasure.

Lastly, I was at the hospital working last week and was chatting with this other nursing assistant, she said she and her hubby worked for DCX, I said that I was part of a GM family, she said "Oh, hmmm" I said "hey at least you're buying american (meaning chrysler, even if they are only .5 american ) as opposed to a Toyota or Honda, I'd much rather see you purchase an American vehicle" preferably a GM, but a Ford is great to purchase too as is a Chrysler/Jeep/Dodge as opposed to a toyohondassanundaikia if you are catching my drift. I really shocked her with that thinking, I believe more people should follow that philosophy before we don't have any american car companies left!!!

[mgescuro]

Originally Posted by ChevroletRevived

I can't believe that. YES, there IS things you can do. Vote in the poll against it, write to GM/White House/Local Representatives/Newspapers. Start a blog..get angry. An uproar. Strike, boycott anyone? We can make a difference, we really can. Here's a link to check out for people who want to:
Do you care? Then Take Action!

Ummm... all of which is really ineffective anywyas.

[ChevroletRevived]

Why, may I ask?

[ChevroletRevived]

Originally Posted by CobaltSScrazy

I believe more people should follow that philosophy before we don't have any american car companies left!!!

I totally agree with you..it's scary! Can you believe that if this happens, Ford will be the only true American car company? We used to have GM, Ford, Chrysler, AMC, Hudson, Studebaker, etc. Sad, sad...do we want to emulate Britain who has NO volume car companies left?

[CobaltSScrazy]

Originally Posted by mgescuro

Gohsn coming in now would be ill-timed. GM is already in the middle of a turnaround. Accepting a new leader -- whever it may be -- would disrupt the change in progress. It's a completely stupid move. It affect the corporate culture. It disrupts the new processes in place. It adds more time to effect the changes to the company with new leadership involved. Now... GOhsn coming in AFTER the changes are in place and running... sure. I have no problem. But not in the middle of it. if Gohsn came into GM 1-1.5 years ago... that owuld have been fine too. But not now.

Nissan had a good run. But if you look at the business processes in place, there were none when Gohsn came on board. Also, the majority of new products that Gohsn put out, were already in the product pipeline. So, GOhsn came in, cut costs, and did nothing with the product, as it was already there. This is much the same thing when Lutz came into power at GM. He could do nothing with the products that were already in the pipeline, unless he could effect a delay in launch (STS).

Nissan hasn't been doing well for the past 2-3 quarters. They've been experiencing a decline. Now the question is... now that Nissan has gone through all its cuts and stuff... what next?? There's no real plan. And that's the question surrounding GOhsn's leadership. He's good to cut and right the ship. But then after that, he's ineffective. He's working on cuts at Renault, but he's going to run up against the French unions... which makes the UAW look like a buncha pansies. So... we'll see.

The alliance of Renault-Nissan and GM just makes no sens at this time. There are no synergies... especially, as you pointed out, they already have alternative drive technologies. So... no sense.

, just curious Mgescuro, how can you make that assumption and what do you base it on? And don't you think that their governement has more interventions in place supporting their French manufacturing base where ours leaves the Domestics out to dry and wilter till their hopefully never-to-happen takeover?

[mgescuro]

Originally Posted by ChevroletRevived

Why, may I ask?

It doesn't do anything.
Blogging? Voting in poll? Unless you're voting on the Board? Not gonna do anything. Unless you can prove to the regulatory commission that this alliance is anti-competitive, it's not gonna do anything.

All you can do is hope the GM board has enough sense to realize that the alliane really doesn't make any real business sense for anyone.

[CobaltSScrazy]

Originally Posted by ChevroletRevived

I totally agree with you..it's scary! Can you believe that if this happens, Ford will be the only true American car company? We used to have GM, Ford, Chrysler, AMC, Hudson, Studebaker, etc. Sad, sad...do we want to emulate Britain who has NO volume car companies left?

lets hope not, I'll buy from GM for my entire life barring 3 conditions:

One: I am rich enough to purchase a Red or Black Ferrari with a tan interior convertable

Two: As long as my family works their I will support GM (you don't cut off the hand that feeds you, its ludacrous, irrational, illogical, and unethical) not to mention just plain wrong.

Three: Gm is bought out by a non-US company, then I'll buy Ford, and if no americans are left, then shootman, IDK, I hope it never gets to that point. Probably a BMW then, as they are awesome driving cars and I'd rather support a German company over a japanese company (I can't believe i just typed who i'd rather support that is non-american, thats just sad,) or maybe a Maserati if I'm rich enough

[mgescuro]

Originally Posted by CobaltSScrazy

, just curious Mgescuro, how can you make that assumption and what do you base it on? And don't you think that their governement has more interventions in place supporting their French manufacturing base where ours leaves the Domestics out to dry and wilter till their hopefully never-to-happen takeover?

THe French unions are world reknowned for being very tough. They will strike on everything. They will strike because they need an extra croissant for breakfast.
That's the reason France has some of the worst unemployment in the EU. Unions there make it impossible for companies to set up shop there and get things done. That's why the French leave country borders and do their shopping. That's why they pass stupid laws like the Online Music DRM law, which essentially shuts down ALL online music sales and MP3 player sales in France.

Sorry... Les Francais sont tres stupide.

[New_Mexico_Sunset_on_Rt66]

Number 1, I'm not sure what expertise you have in analyzing this possible alliance.

My feeling is that this is just Kerkorian forcing GM to restructure more, and faster.

I'm gonna be listening to the Wall Street analysts in the coming weeks to get their anaysis of these developments.

In the meantime, here is the transcript of an analysis from the 'Nightly Business Report' of Friday June 30, 2006:

Analysis of a Possible GM, Nissan, & Renault Alliance
Friday, June 30, 2006
SUSIE GHARIB: General Motors` shares were in overdrive today, up $2.35 or almost 9 percent to $29.79. Behind the rise, word that the company`s largest shareholder, billionaire investor Kirk Kerkorian`s Tracinda Corp., is urging GM to join a three-way alliance with Japan`s Nissan Motor and France`s Renault. In exchange, those auto makers would each buy a minority stake in GM. Nissan and Renault confirm they were approached by Kerkorian and Tracinda and say they are open to the idea, but that GM will have to make the next move. GM would only say its board will take the matter under advisement. A Detroit trade magazine says GM called an emergency meeting of its board today to weigh the Nissan-Renault partnership. GM would not comment on that report. Joining us now for more analysis of this possible partnership, John Casesa, president of Casesa Strategic Advisors, a New York consulting firm. Hi, John.

JOHN CASESA, PRESIDENT, CASESA STRATEGIC ADVISORS: Hi, Susie.

GHARIB: Does a GM-Nissan-Renault alliance make sense to you?

CASESA: I think there is some long-term investor logic. Nissan is a company that would like to be bigger in North America. Nissan in turn could offer General Motors access to Japan, which is impossible without a Japanese partner. And collectively this could be a very big force in the global auto industry.

GHARIB: Do you think that Nissan and Renault can really bring additional quality and technology to General Motors as well as cost savings?

CASESA: Well, look, I think that`s looking very far ahead. I think in the long run the answer is yes. But I think right now there`s two or three things that are interesting about this development. One is that, you know, it`s a serious development. I think Tracinda released this letter because it is for real; it is not a bluff. Secondly I think it is just too early to tell what form the operational partnership would take. And then thirdly, even if there is no deal, at the very least what this development does is increase the pressure on GM management to accelerate the change at the company. It is -- it is in a way a sign of impatience of the company`s largest shareholder.

GHARIB: And it also increases the pressure on CEO Rick Wagoner. As you know there has been a lot of talk and rumors about his tenure at the company. And there has been speculation that it is going to take an outsider who can really overhaul General Motors. Is Carlos Ghosn of Nissan the man for the job, if this deal goes through?

CASESA: This is an extremely difficult job. And I think despite Wagoner`s considerable accomplishments in recent months, the development tells that you there is not unanimity on the board for this to be public. Now even if a deal is done, it doesn`t mean that Gone would run this alliance. I think for some time Gone and Wagoner would be partners in this. Eventually one CEO is going to have to run the whole group. And I would say in the long run, which could be quite a ways from now, Gone would be very well positioned to do it. He`s got a great track record at Nissan. And I think he would get a lot of support from investors.

GHARIB: Is GM stock a buy at $30 a share? CASESA: I`m not in the stock business any more. I used to be, but I think if you look at what some analysts are saying like my successor at Merrill Lynch, John Murphy, this company right now is exceeding what had been very low expectations. It`s downsizing rapidly. It`s taking heads out. And I think today`s development is quite positive for shareholders. This is something that tells there is an activist shareholder pushing an aggressive agenda for restructuring.

GHARIB: How do you think this whole thing is going to play out with or without the alliance?

CASESA: Well, I --

GHARIB: What is the future for GM? Is it going to be able to reinvigorate itself?

CASESA: I think one certainty is that GM won`t have to undergo a much more radical restructuring than it has already even begun. What it has done so far is just resize itself. The next thing it has to do is restructure, change the company, streamline the brand portfolio, consolidate the dealer network and then finally step three is reinvest in what`s left. And so I think we are only at step one. Step two and three are ahead. My guess is that this will happen outside of Chapter 11 because I think the union will cooperate. But you never know. And whether Renault is in the picture or not, these things have to happen in GM in North America for it to be competitive.

GHARIB: All right. We will have to check in with you again and see how things play out. Thank you so much, John, hope you have a nice weekend.

CASESA: Thanks, Susie.

GHARIB: We`ve been speaking with John Casesa, president of Casesa Strategic Advisors.

http://www.pbs.org/nbr/site/onair/transcripts/060630a/

[CobaltSScrazy]

again i ask:

What really frightens me is this definitely without any doubt sounds like a takeover, WHY DOESN'T GM GO BUY 10% OF EACH OF THEIR RESPECTIVE COMPANIES, i mean, heck we have 1.5 times as many employees, 2x as much revenues, and about 2x-2.5x as much marketshare in the US and Globally???? Anyone feel free to "clue me in" as i truly don't understand this? Also, there are only two companies I would "takeover" if I were GM, Toyota or Ford, buy into the most efficient highest quality car company in the world and call it GM-Toyota (like Daimler-Chrysler, not Toyota-GM...there is no such thing as a merger of equals) and make Toyota truly american as it seems thats what they want to do anyways, i mean they practically wrap themselves in the USA flag in every single commercial and car-related event they seem to be in (cough nascar cough). Or just create a "SuperAmerican" GM-FORD alliance/merger and have at least one US company left standing...

???