Possible Nissan-GM tie-up receives lukewarm response in Tokyo

Posted by: Ian Rowley on July 3, 2006

Reports over the weekend that Nissan and Renault may add GM to their alliance have been greeted cautiously in Japan. While Nissan’s stock price traded marginally higher on the news that Nissan and Renault may enter negotiations with GM, analyst aren’t so sure that a tie-up makes sense for the Japanese automaker. “There is no guarantee whatsoever that just because the Nissan turnaround succeeded, an attempt to turn GM around would succeed,” notes Nikko Citigroup analyst Noriyuki Matsushima. He says one difference at Nissan was that Renault took full control in 1999, allowing Ghosn and other managers to lead rapid change. CSFB analyst Koji Endo warns that “for Nissan to invest in GM right now is going to be a big risk for the Nissan-Renault alliance because it will probably take a decade for GM to revive and be a complete partner.”

In any case, others reckon that Ghosn, who has been head of Nissan and Renault since last year, has enough on his plate already without getting involved with GM. Sales at Nissan are slumping in the U.S. and Japan, while the company’s industry-busting margins are also under pressure. A raft of new releases in the U.S., including new Sentras and Altimas, should help, but at home tensions continue to mount. Last week, the Nihon Keizai Shimbun warned that Nissan suppliers are frustated at Ghosn’s calls for cost savings. The report on June 29 said that some Nissan suppliers had approached Toyota for business in response to Nissan’s latest cost cutting plans. Toyota, apparently, is less demanding. Two days earlier at Nissan’s annual shareholder meeting Ghosn warned that Nissan’s domestic sales might undershoot this year.

Reader Comments

Joel A

July 5, 2006 3:39 PM

Thanks for providing the Japanese perspective which seems to have gotten lost in the mainstream media. I, too, don't really see a material benefit for any of the three except for investor Kerkorian.

Tracy Dawson

July 7, 2006 10:14 PM

Could be the alliance that makes history...or notoriety.

acne

July 10, 2006 7:34 AM

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RT

July 15, 2006 6:51 AM

I don't see any sense in an alliance of Nissan/Renault and GM. When Renault and Nissan merged, the benefit was that none was strongly represented in the other's market, and this there was no problem differentiating the brands. If R/N uses the same platform for the Laguna and Altima for example, noone would mind, because these cars do not compete against another.

Merging R/N with GM and cooperating on platforms would only emphasize the problems GM itself already has. GM already has four brands sharing one platform (Uplander anybody?), and quite some problems explaining the differences among them (are there any?). In the end, most people end up buying the cheapest model using the platform. I doubt that a merger among the compaies would solve this problem.

Richard Bond

August 13, 2006 5:00 AM

The idea of GM merging with Renault is just another distraction to get some heat-off GM USA which is getting some rotten headlines. The point is that the GM/FIAT merger was a disaster because in Europe GM is making popular top-selling cars and real profits. Except in diesel technology FIAT was rejected by the OPEL crowd as a waste of space. A marriage with Renault would be undermined by the Germans at OPEL as they rejected the FIAT management style. GM needs surgery in North America only.

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