Nissan stock climbs as GM alliance talks fail

Posted by: Ian Rowley on October 5, 2006

Nissan, Renault and GM might have failed to forge an alliance, but it hasn’t hit the Japanese automakers stock price. In Tokyo trading today, Nissan’s shares rose 3.4% yen to 1369 yen ($11.60). Given that some investors were opposed to alliance—analysts in Tokyo reckoned Nissan should focus on a sales recovery rather than look for a deal with GM— that’s perhaps not a huge shock.

Whether that will be enough to cheer up Nissan and Renault chiefs, though, is harder to say. For one thing, a statement released by Nissan this morning in Tokyo makes it pretty clear which party alliance execs blame for the failed talks. Nissan accepts that GM disagreed over how big likely synergies would be and how equally they’d be distributed between the three firms. But the release also confirms—somewhat tersely—that GM’s demand for compensation if it were to benefit less than the other two was a stumbling block. “Renault and Nissan consider that the principle of compensation is contrary to the spirit of any successful alliance,” the statement notes. Perhaps Ford will be more amenable.

Reader Comments

Herault

October 5, 2006 4:23 AM

Any proposed alliance between GM and Renault-Nissan was probably doomed from the start. The GM-Toyota JV operation in California would have been compromised. The problem for RENAULT is that they need a heavy-weight partner to make luxury cars. With GM that would require a link-up by RENAULT with OPEL and that would fail given the resistance to the previous GM-FIAT merger by OPEL. The big question now is if RENAULT approach FORD to formulate a deal over VOLVO. FORD needs to make itself a bigger player in Europe with the Germans taking all the profits in the luxury market. Renault have the expertise having learnt a few tricks from NISSAN. The problem is that once again FORD of Europe is basically managed by the Germans who may not be too keen on any working relationship with the French who are considered too nationalistic. Culture clashes remain a problem in Europe. Whatever happens; next year will be a rough ride for all European based auto manufacturers; especially if the US dollar continues to lean backwards.

phil

October 5, 2006 3:04 PM

There are always winners and losers in a game, but each would have benefited from this alliance. Nissan's powertrain technology (CVTs and V6s specifically) would have been a great boost to GM's quality quotient. Nissan would have gained access to GM manufacturing base which would have saved Nissan billions. GM may not need any help, but let's consider this: GM copied Hyundai to boost their quality perception and their sales are still down. Toyota has proven that with a strong reputation you can deflect many problems even there will always be problems.

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