All Cars, All the Time

Let the Hostilities Begin


Rick Wagoner and crew are set to discuss potential arguments against the Renault-Nissan alliance at a board meeting tomorrow (Friday). I believe that Wagoner is taking the right approach: give due diligence to the proposal, but with the understanding that it was brought forth in a hostile manner by Kirk Kerkorian. Just because Kerkorian and Carlos Ghosn had dinner together, doesn’t make this a great idea. Who know how much wine Carlos drank? Actually, I’m not sure that Ghosn even drinks.

The ghosts of mergers past still haunt the hallways, so it’s very easy to be skeptical about this proposal. GM has gone through a major makeover, getting rid of its entanglement with Fiat and selling of stakes in manufacturers like Suzuki and Subaru, why would it want to jumble things up again after it has just cleared its decks? As one analyst said, "It'd be pretty messy on paper having these three companies in a loose alliance."

Certainly this alliance would give GM some spending money. It’s also true that after some gestation, all companies involved could realize some economies of scale. But I’m just not convinced that it’s worth it. GM has recently seen 35,000 workers accept buyout and retirement incentives. GM has also recenly reorganized its global structure, but that plan is only in its early stages of implementation. Recent products from GM have been some of the most compelling models in a very long time. A new lineup of pickups is about to hit and there are more exiting cars, such as the next CTS, that will be shown in Detroit. On the flip side, Nissan sales have been taking a beating (although a raft of new products may reverse that slide), it is still settling down in its new digs in Nashville with a lot of positions to fill, plus there is a recovery plan at Renault to worry about. How much time could Ghosn possibly dedicate to GM?

The bottom line is, Kerkorian should not be allowed to fast track a questionable move. An alliance may have benefits, but what is the rush? A calm a reasoned approach should be the order of the day.