Renault’s board will meet today to discuss a proposal by Kirk Kerkorian, one of the largest investors in GM, that GM, Nissan and Renault consider a three-way partnership, according to Reuters.
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French Finance Minister Therry Breton told a radio station that the meeting would take place ‘possibly on Monday’.
In a statement released on Monday, Renault said: “The Renault-Nissan alliance is an open partnership, which has never been restricted to two partners. Under the right circumstances and with the appropriate partners, the alliance could be expanded further. Such an expansion would only be considered by the alliance if it were executed in the full spirit of the alliance, which is founded on trust, transparency, performance and the full respect for individual corporate and brand identity.
“Mr.Ghosn, President and CEO of Renault and Nissan was approached by Mr.Kerkorian, Mr.York and representatives of Tracinda Corporation to assess the merits of GM joining the Renault Nissan Alliance.
“At this point, it is necessary that GM Board and top management fully support this project in order to start the study of this opportunity after agreement of Renault and Nissan boards.
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By GlobalDataGM shares rose on Friday on speculation that Renault is considering a global alliance with GM. GM’s board held an emergency meeting on Friday to discuss the proposal, reported Automotive News.
Renault and Nissan are reported to be considering a capital investment in the company, which would equate to around a 20% shareholding.
According to dpa-AFX, there was speculation in
Kirk Kerkorian, a multi-millionaire and major GM shareholder, is pushing for the alliance. His investment firm, Tracinda Corporation, has reportedly written to GM CEO Rick Wagon, saying that Renault and Nissan would be interested in buying a significant minority stake in GM. Kerkorian holds around 9.9% of GM’s stock.
The Renault-Nissan has resulted in considerable development, production and marketing synergies. Tracinda is reported as saying that similar synergies could be realised allying Renault and Nissan with General Motors, and that this would underpin shareholder value.
According to automotive market forecaster CSM Worldwide (CSM) an alliance between General Motors, Renault and Nissan as proposed by Kerkorian would create a one-of-a-kind global enterprise that would hold dominant positions in at least three of the world’s major vehicle markets. According to figures compiled by CSM, the GM-Renault-Nissan combination would dominate vehicle sales and production in North America, Europe and
Global sales would total 14.3m vehicles and it would rank number one in North America with sales of 6.3m vehicles and number one in
CSM says that benefits of an alliance would be platform consolidation with higher economies of scale for each OEM. Importantly the global footprint of the combined company would be well-balanced among North America, Europe and
Powertrain consolidation and part commonisation opportunities could provide substantial cost savings over time.
Disadvantages of an alliance are that it could be difficult given that Renault is currently undergoing its own restructuring. Disparate corporate cultures may not be easy to integrate.
CSM also says that opportunities for comprehensive synergies could be limited without strong and centralised leadership and commitment throughout the organisations, a point that Renault management may already be taking on board, according to dpa-AFX, which has said that Renault will need reassurance that the GM management is fully behind the alliance.
CSM also notes that with the exception of E-segment and full-frame vehicles, there is a high degree of overlap in the OEMs’ product portfolios. In addition further cost savings through supply chain price concessions will be difficult to achieve due to the fragile financial state of the supplier industry. Finally, an alliance between the OEMs would increase risks associated with the 2007 UAW negotiations.
