A clearer look at the GM-Nissan-Renault.... and perhaps, why.

I've been pretty glued to the news and various sites following this Nissan-Renault-GM saga/hysteria lately. I've read posts about how this is "Armegedon" for GM's turn around & I've made quite a few posts about why replacing Wagoner is a terrible idea right now. Yet, as far as I can tell, no one (me included) has answered "why".

DaimlerChrysler attempted to run a 3 continent company, and fell flat. The companies that GM is loosing share to are independant (Toyota & Honda) and GM still has manufacturing ties to both. Nissan is doing well in North America, why tie up with a company that's down?

Then I noticed some intresting things.


First, since last May (when GM seemed destined for bankruptcy) Kirk Kerkorian began buying up extra shares of General Motors. $1.7 billion dollars worth!! He's now one of GM's biggest (if not the biggest) shareholder, owning just under 10% of GM. He hasn't become a multi billionaire by purchasing shares in companies that are tanking.

Second, of the stockholder value of the 3 companies, GM's would be the lowest. According to Evok, GM's share of this combined merger would be 17% (Renault's would be 32%, Nissan would be 52%). I may not be the smartest guy on the block but if I owned 10% of GM now, I would own just 3.2% of this new company. The French government owns 15% of Renault which would be something like 6% of this new mega-company, making my influence pretty small not just next to the French government, but in the whole scheme of things.

Finally, why is GM's board even considering this? If anyone is aware of GM's turnaround plans & how close the turnaround is, it's them. Yet the board is taking the time to look into it and see what & how it benefits GM... and make no mistake about it...if it doesn't benefit GM, it's going to be a non-starter.



Then you look at what practical advantages this would bring to the table.

GM recieves their money through increased stock value as well as sales of vehicles and loans. The idea that rases their stock value would make loans cheaper and raise the value of the company.

The French government is Renault's biggest investor. Opel (if I remember) has a bigger market share than Renault and has many models that compete head to head in Europe. In a merger, there would be more pull by Renault and it's investors than GM and theirs. This would mean that there's the potential of pulling plants into France and helping employment in their country, lowering the government's payouts on unemployment which is pretty generous & expensive in France.

Finally, there's Nissan... a direct competitor to Toyota. Toyota is now the world's biggest automaker. General Motors stocks are dirt cheap right now. Even people living in mountain caves in Tibet know that General Motors has a very ambitious, product driven turnaround a mere few years away. GM also is the dominant automaker in China, something Nissan can't even imagine trying to do. A link up with GM would not only give them an inside track into potentially the biggest automarket on the planet, but would make Nissan part of a company that would dwarf Toyota.




At the end of the day, it seems a picture begins to form of what might be going on.

Kirk Kerkorian is an extremely clever old man who is all about making money more than anything else. He's been doing it since most of our grandfathers were young, and I'm sure he knows he doesn't have alot of years left. By the time GM's cars get out, he could easily be incapacitated.. or worse.

Kirk Kerkorian's bought up a gaggle of GM stocks at a time when GM was selling for peanuts. He managed to use leverage to get an auto industry finance expert who happened to be on his payroll on GM's board of directors. Finally, he plays on another automaker who is very merger friendly intrested in General Motors.

While these talks are ongoing (remember he's got an inside guy, Jerry York) GM's stocks are going to continue to go up. If the merger doesn't happen, he cashes out with a profit. If the merger does happen, GM's stocks shoot up, and he makes a bigger profit.

Just a 5% rise in GM stocks (very easy within the next year) net's Kirk Kerkorian a cool $85 million! What if GM's stocks rise 20-25% as the result of all this? :eek:

I suspect all this is just a ploy by Kirk Kerkorian to make a gaggle of money on a "No Lose/No Risk" proposition.

Pretty clever.

I read another article similar to what you have said on one of the other news cites. My question is, if this is so, why wouldn't such an action to create news for stock jumps by one who has board control/influence not be a violation of federal securities laws?

If it is, this sure seems like a risky move for this clever man. Especially when you have an number of analysts saying the same thing about the means and motive.

I keep reading about GM's turnaround, but honestly do you all believe it is happening? The only way they increase sales is by giving cars away at invoice or by having 0% for eternity. The cars that GM produces can't sell themselves on their own merit. They have to have a deep discount for most people to consider them.

General Motors allied with the french gov't. :mad: This WILL put the kabosh on any turnaround for gm, as myself and many patriotic Americans will not do business with those people plain and simple. Why? Oh I don't know there are any # of books that might help one understand our hatret for that gov't, and what they are doing to US. Eric Shawn " The U.N. Exposed " , Col. David Hunt, " They Just Don't Get It" Great reads, both of them. But I suspect the liberals among us wouldn't be able to handle the truth. Let me say I love gm products, they are the best in the business, as I have said here many times, however I Love this country even more, and if this happens, I honestly don't know what I will do. Is this the begining of the end of this great country.........I sure hope not! I want a new Camaro really bad, and have been a Camaro fan for as long as I can remember, not to mention they pretty much did everything I wanted them to do on the car, but if the timelines ( for production) we've been hearing are correct, and this disgusting bastardization of the greateast American company goes through, this means my $$$ goes to the french gov't! I don't think so. :mad:

... But I suspect the liberals among us wouldn't be able to handle the truth.

Let's not resort to stupid & ridiculous labels on this, or turn this into another retarded political debate.

Last I heard, the UAW and a good portion of Michigan was was democratic, & I'm pretty sure they have pretty strong opinions on this, while the opposite gang tends to favor free trade and internationalism, including the fellow who's proposing this merger.

Keep politics out of this. You don't want to go there. :rolleyes:
Let me say I love gm products, they are the best in the business, as I have said here many times, however I Love this country even more, and if this happens, I honestly don't know what I will do. Is this the begining of the end of this great country.........I sure hope not! I want a new Camaro really bad, and have been a Camaro fan for as long as I can remember, not to mention they pretty much did everything I wanted them to do on the car, but if the timelines ( for production) we've been hearing are correct, and this disgusting bastardization of the greateast American company goes through, this means my $$$ goes to the french gov't! I don't think so. :mad:

I'd be willing to bet you are already sending money to the French via products you buy (and the heavy taxes businesses pay there) without knowing it. ;)

Anything that's coming in the next few years aren't going to be affected. This means Camaro.

If I know about it, I will put an end to it. I am just running out my last dunlop on the Buell. Are Pirellis made in france? HMM! I certainly don't like political arguements, and that is not my intention. But to say the least I am mad as hell about this abomination. And sick too. And now the GF is pissed at me too. I will just have to face the fact that happiness is for other people, not me. Oh well like sucks then you die, once you bury all those who you care about! I guess this merger is great news for those who don't like me. Anyone know the cost of tattoo removal? Kidding I wouldn't go that far. There is this awesome kit car I was thinking of building, and I already have a tremec, and some small blocks I could build. I really wanted a new Camaro too! Why ken lay couldn't it be this rich a-hole?

Well that's 30 seconds of my life I'll never get back. Way to buzzkill an otherwise interesting thread.

If I know about it, I will put an end to it.

Rant much?

Rant much?
Yes. When I'm this passionate about something, I do. I have been listening to these bums blast GM for years and now they've gotten many of us to foolishly believe their lies to the point that the company's stock has been dropping, and now low & behold what are they looking to buy. Again they must think we are complete dumb asses over here! Well some of us are not. And many of us are being led like sheep right into our own slaughterhouse. Mark my words no good for GM will come from this abomination. And remember, " What's Good for GM is Good for The Country", and vise versa. Wake up people! The rug is being pulled ever so slowly from under your feet, and you don't even realize it. We never realize what we had till it's gone. Going, Going,............................................ ......................................:alert:

Well that's 30 seconds of my life I'll never get back. Way to buzzkill an otherwise interesting thread.

The guy's been trying to turn this forum into his own version of the O'Reilly Factor for a while now. Ignore him.

Guy,

Kerkorian's obviously in this for the money. That, after all, is the whole idea of investments. After stupidly buying shares at $32 last year (made possible by him talking up the stock for no reason when it was around $26), extreme measures would likely be necessary for him to recover his investment.

I think that Nissan/Renault are primarily interested in access to China via GM's presence there.

I think if it wasn't for the Chinese market, Ghosn wouldn't heve even taken a minute to decide not to pursue it.

At any rate, the more I think & read about it, the less likely I think it will happen. However, just the fact that GM and R-N are actually taking the time to look at it (no doubt owning 10% of a corperation and having your man on the board has benefits on what you can force the board to do) is going to send the stocks of GM enough for Kirk to not just cash out, but perhaps even have advance notice (I know, inside trading) before hand. :think:

BTW, FWIW: I don't even think O'Rielly has that much hostility... and a good portion of what he does have is just for the camera and to sell books. He's friends with alot of the people he lays in to. :lol:

Well mybe he'll (Special K) cash out in a couple months and GM can continue with its revolution and its Hero (Camaro)

He's more like Michael Savidge (sp) and Ann Coulter.

Well mybe he'll (Special K) cash out in a couple months and GM can continue with its revolution and its Hero (Camaro)

Bad thing is, if he cashes out suddenly or all at once, GM's stock is going to crash. Dumping shares tends to do that. :(

He's more like Michael Savidge (sp) and Ann Coulter.

Ann Coulter. Now there's a piece of work. :no:

Bad thing is, if he cashes out suddenly or all at once, GM's stock is going to crash. Dumping shares tends to do that. :(


The more I think about it the more sense it makes. One of your biggest share holders wants this thing considered. Either at least give it a serious look or risk him selling immediately. If there is no benefit for GM then at least you can say you reveiwed it. He may sell anyway but at least you postponed it. If there is mutual benefit then great, see if something can be worked out.

maybe thats wrong or maybe yall figured this out long time ago. I just thought that this was pretty much a sure thing till now.


Ann Coulter. Now there's a piece of work. :no:

If we're going to TRY to avoid politics, can we do it together please?

Guy, any word on if these products will actually deliver? The promise of a better tomorrow is a little stale. Seems like a good number of people were hopped up on the Malibu, and then we see pictures of a reskinned Aura?

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(Fortune Magazine) -- Carlos Ghosn circumnavigates the planet in his Gulfstream 550 once a month. He typically spends two weeks in Paris, ten days in Tokyo, and what's left of his time in the U.S. and the rest of the world.

But now the Nissan (Charts) and Renault CEO - the first person ever to run two companies on FORTUNE's Global 500 simultaneously - has decided he doesn't have enough places to go.


At the invitation of financier Kirk Kerkorian, Ghosn has proposed an alliance between his two auto companies and General Motors (Charts) that could put him at the helm of the troubled industry giant.

Add Detroit to the flight plan! Putting one man in charge of three companies separated by thousands of miles in an industry as complex and competitive as automobiles is a bizarre prospect and at the moment still an uncertain one.

The boards of Renault and Nissan backed Ghosn and have expressed wary interest in the proposal, under which each would buy 10% of GM's shares.

But their support is conditional on GM's management and board endorsing the plan. The current forecast is for a lengthy GM study of the arrangement, with no guarantee of a favorable conclusion.

Still, Kerkorian, who owns 9.9% of GM's stock, wants action. He is known to be unhappy with the pace of change under current CEO Rick Wagoner and has been prodding him to do more.

Ghosn is equally impatient. He performed a historic turnaround of Japan's Nissan after taking charge in 1999, embarked on a similar effort with France's Renault a year ago, and has reportedly been considering new strategic options for both companies.

Despite GM's gargantuan problems - it lost $10.6 billion last year - Ghosn would find the challenge of fixing it appealing, particularly if he could benefit Renault and Nissan by doing so.

Even if Ghosn doesn't end up in charge at GM, it's useful to contemplate just what the world's most celebrated auto executive might change at the world's largest auto company.

Some of GM's problems, such as its huge health-care and retiree obligations, seem relatively intractable.

For the others, a playbook already exists - the history of the Nissan turnaround that Ghosn has taken pains to document. Here's the path he might take.

Kill a few brands.

Critics love to point out that GM divides its 24% U.S. market share among eight brands, while Toyota, two-thirds GM's size and growing, makes do with three.

Kerkorian advisor and GM board member Jerry York has publicly recommended getting rid of Saab and Hummer; others have advocated dumping Pontiac and Buick.

But GM was pummeled for giving up on Oldsmobile a few years ago and could face billions of dollars in claims from dealers for effectively putting them out of business.

Besides, engineering among the brands is so intertwined - Cadillac and Saab share a platform, as do Chevy and Hummer - that getting rid of one or more of them wouldn't necessarily save tons of money.

Super Carlos, as he is sometimes known, might have no qualms about killing all four brands, and perhaps Saturn and GMC too, as part of a big initial write-off.

In return, he could offer dealers Renault franchises so that they could introduce U.S. buyers with Francophile tastes to such exotic models as Kangoo and Clio.

Invest in small cars.

GM has suffered no end of embarrassment this year after launching gas-hungry SUVs and pickup trucks when a barrel of oil costs $75.

The company's managers aren't quite as boneheaded as that makes them look - product decisions about this year's models were made three or four years ago, before fuel prices skyrocketed.

Nonetheless, Ghosn's Nissan was significantly more prescient. The company is coming out this fall with a new version of its Sentra small car and a new, even tinier car called the Versa.

Ghosn, since he works in Tokyo and Paris, knows the value of small cars - he sees them parked on city sidewalks every day. Attractive new ones would go far in creating a more favorable image for General Motors.

Step back from alternative fuels.

Small cars would do for Ghosn what technology won't - boost fuel economy without costing a bundle.

Being a numbers guy at heart, Ghosn is deeply suspicious of hybrid and alternative-fuel engines - expensive new technologies for which customers have so far displayed limited willingness to pay.

He has invested only reluctantly in hybrid power trains at Nissan. So he would probably scale down GM's investment in hybrid trucks and eliminate entirely its space-shot effort to put a fuel-cell car on the road by 2010.

Find the elusive synergies.

At Nissan, Ghosn used cross-functional teams to burrow into the company's innards, uncover waste and duplication, and improve productivity.

He's told Kerkorian he can do the same at GM, locating billions of dollars in savings from synergies among the three companies.

But he's going to have to look hard. GM has already made substantial progress in bulk buying and parts sharing by clustering its products worldwide around a few platforms.

Lehman Brothers analyst Darren Kimball believes that savings from shared purchasing and engineering would be more than offset by organizational complexity and the stifling of creativity in a combined GM-Nissan-Renault.

He thinks Kerkorian's plans have less to do with synergy than with "his desire to bring in someone he perceives is a more effective manager."

Keep score.

Public targets are anathema to Wagoner. Risk-averse at heart, he prefers to keep his cards close to his chest and reveals information only grudgingly.

As a lifetime GMer, he has been embarrassed too often by having to explain why GM missed a profit or market-share target.

Ghosn brags about his ability to set financial and performance targets three years out - and meet or exceed them.

At Nissan he even offered to resign if he missed. How many other CEOs have done that?

Magnify the myth of Carlos.

Although still shiny, Ghosn's star has lost some sparkle this year as Nissan sales in Japan and the U.S. have slipped and Renault has issued profit warnings.

"Ghosn is not a miracle maker," says one longtime industry observer. "He was merely a gaijin who did the unpalatable things [at Nissan] that a Japanese couldn't do."

Some analysts view him as a turnaround specialist who is less effective at actually running a business. But rescuing the ultimate basket case would make Ghosn nearly immortal.

"It is very tempting for Ghosn to try to prove he can fix GM - what some may define as the ultimate auto-industry challenge," writes Goldman Sachs analyst Robert Barry.

"Ego often trumps logic." Then again, ego could also prompt Ghosn to take the sort of shockingly bold steps probably needed to get GM back on track.

With his multi-continental monthly commute already beginning to wear, Ghosn, 52, may have his eye fixed on his legacy.

What could be better than being remembered as the man who saved General Motors?

There is no synergy in this merger for GM.

What's Nissan got that GM wants?

Erm... NOTHING. Their cars are lame, the trucks are worse, and they're skidding precipitously in market share right now.

How about Renault?

Even less...



From a purely market-driven standpoint, what's the best fit for a merger?

GM and Honda.

GM owns trucks, and Honda makes very good cars - particularly small cars - and couldn't build a truck to save their lives.

There is no synergy in this merger for GM.

What's Nissan got that GM wants?

Erm... NOTHING. Their cars are lame, the trucks are worse, and they're skidding precipitously in market share right now.

How about Renault?

Even less...

The one thing Nissan seems to be capable of doing that GM can't is making cars that people want to buy without resorting to unprofitable pricing in order to sell them.

Though Nissan has lost me as a fan in the process of doing this as their quality has gone far down hill in the process.


GM and Honda.

GM owns trucks, and Honda makes very good cars - particularly small cars - and couldn't build a truck to save their lives.
I'd agree with that. I think it'd be very beneficial to both brands.

The one thing Nissan seems to be capable of doing that GM can't is making cars that people want to buy without resorting to unprofitable pricing in order to sell them.


Apparently not:

"But Nissan has struggled in the U.S market this year, and its June sales tumbled by 19 percent.

Nissan's difficulties have included a disruptive move in its headquarters to Nashville, Tennessee, slower sales, production cuts and an embarrassing recall of some four-cylinder Altima and Sentra sedans due to evidence of engine fires."

Oooops...


Nissan incentives:

http://www.automotive.com/2006/12/nissan/armada/rebates/index.html

http://www.automotive.com/2006/12/nissan/xterra/rebates/index.html

http://www.automotive.com/2006/12/nissan/altima/rebates/index.html

And... bestest of all...

Remember all the smack talkin' about the Titan?

Heh...

http://www.automotive.com/2006/12/nissan/titan/rebates/index.html

They've got... oh... about a month until the GMT-900's hit and the REAL a$$-whippin' begins...

Apparently not:

"But Nissan has struggled in the U.S market this year, and its June sales tumbled by 19 percent.

Nissan's difficulties have included a disruptive move in its headquarters to Nashville, Tennessee, slower sales, production cuts and an embarrassing recall of some four-cylinder Altima and Sentra sedans due to evidence of engine fires."

Oooops...


Nissan incentives:

http://www.automotive.com/2006/12/nissan/armada/rebates/index.html

http://www.automotive.com/2006/12/nissan/xterra/rebates/index.html

http://www.automotive.com/2006/12/nissan/altima/rebates/index.html

And... bestest of all...

Remember all the smack talkin' about the Titan?

Heh...

http://www.automotive.com/2006/12/nissan/titan/rebates/index.html

They've got... oh... about a month until the GMT-900's hit and the REAL a$$-whippin' begins...

I don't care what rebates or discounts there are or aren't - that can all be nothing but marketing for what we know - unless we can see some insider price sheet that has Nissan's rough cost per vehicle, the only thing we can look at is the fact that they've made a major turnaround in profitability in the last decade or so. Then again I can easily see this hurting them in the long run much like the shoddy crap GM put out in years past seems to be haunting them, even still today. (ie: road to redemption)

From a purely market-driven standpoint, what's the best fit for a merger?

GM and Honda.

GM owns trucks, and Honda makes very good cars - particularly small cars - and couldn't build a truck to save their lives.

I'd have to agree with you that GM could certainly benefit from a partnership or merger with Honda. I really doubt that Honda sees GM as anything worthwhile though. GM could very easily sink Honda after a merger if GM made enough mis-steps.

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Soooo...lemme get this straight. You kill brands that are already established here, and then make way for a return of freaking Renault, a company that got its rear handed to them in the U.S. and haven't dared to return??? Would anyone be interested in purchasing a French car in America these days?

This whole thing just gets more lame every time I read something new. I cannot believe this is even being considered.....

Soooo...lemme get this straight. You kill brands that are already established here, and then make way for a return of freaking Renault, a company that got its rear handed to them in the U.S. and haven't dared to return??? Would anyone be interested in purchasing a French car in America these days?

This whole thing just gets more lame every time I read something new. I cannot believe this is even being considered.....

I agree. The whole thing just doesnt feel right at all. Seems to me that Nissan-Renault have alot more to gain outta this than GM does. The only thing that Renault makes that is mildly interesting is the Clio and thats pretty much it. And throw in that Nissan has slid in the past few years :no:

GM has suffered no end of embarrassment this year after launching gas-hungry SUVs and pickup trucks when a barrel of oil costs $75.

The company's managers aren't quite as boneheaded as that makes them look - product decisions about this year's models were made three or four years ago, before fuel prices skyrocketed.

Nice.... :rolleyes:

I dont care what anyone says, that first line was an underhanded cheap shot at GM thrown in to make no particular point other than a simple cheap shot.... nothing more. Certianly not talent in journalism either.

I dont care what anyone says, that first line was an underhanded cheap shot at GM thrown in to make no particular point other than a simple cheap shot.... nothing more. Certianly not talent in journalism either.

I will never understand WHY GM gets the criticism they do for redesigning their trucks...as if no other company sells full-size trucks and SUVs....what is so G.D. boneheaded about redesigning the vehicles that own over 60% of the market and sell millions every year, regardless of the "Sky Is Falling" presentation of gas prices in the media?????

Just once I'd like to see somebody present a fair and unbiased view of the automotive industry, and Detroit in particular.

Here's an outstanding article written by someone who is sometimes critical of GM, and is now critical (to say the least) of this "alliance".

http://www.detnews.com/apps/pbcs.dll/article?AID=/20060710/AUTO02/607100327/1148/AUTO01

http://www.usatoday.com/money/autos/2006-07-10-ghosn-cover-usat_x.htm


Here's another one. This deal sux.

Super Carlos, as he is sometimes known, might have no qualms about killing all four brands, and perhaps Saturn and GMC too, as part of a big initial write-off.
Ok, I know he actually didn't say this and it is just conjecture based on the authors's opinion but does anyone actually have a ballpark figure how much killing another brand would cost?

Olds had WAY less dealers than either Buick, Pontiac, GMC, or Saturn (and there were many paired with Chevy dealers as well). And I am sure it costs many, many multi-Billions of dollars to kill that brand.

From a purely market-driven standpoint, what's the best fit for a merger?

GM and Honda.

GM owns trucks, and Honda makes very good cars - particularly small cars - and couldn't build a truck to save their lives.


I tried to say the same thing but I guess not as well as you did. Imagine Chevy with Honda econo cars, Or GMC/Buick/Pontiac/Honda.

http://web.camaross.com/forums/showthread.php?p=3958225#post3958225