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.