General Motors and Renault: another bad idea
General Motors was created in a series of mergers engineered by one of the most stubborn men in the auto industry, William Durant, who nearly bankrupted the company twice and was ejected from it both times. However, as the world’s largest automaker, one would think it would be time for GM to stop and work on internal repairs rather than continue to buy out other companies. Kirk Kerkorian, though - one of the two men most responsible for the destruction of Chrysler Corporation (the largest American automaker to not make munitions for Hitler) - has other ideas. Presumably he has been trying to figure out a way to get a quick stock market list and sell his massive holdings in GM at a huge profit, rather than a huge loss, and mergermania naturally came to his mind.
Analysts have pointed out (with the 20/20 hindsight they are so good at) that the only merger in recent history to have really worked well has been Nissan and Renault, and the reason - in our opinion - why that worked out is because it was not an actual merger, but a stock-sharing agreement with close ties between both companies, but not a total devastation of one company’s identity for the sake of another. It’s no surprise that Mitsu backed out of the DCX deal, nor that Hyundai probably never even took it seriously as an option. Who outside of Mercedes really wants to spend their lives working for the glory of Mercedes, especially when they will never, ever get any credit for their work? (I don’t think it’s any secret that Mercedes, despite its terrible quality ratings, bumbling old-fashioned assembly techniques, and consistent losses over the years is still the sole raison d’être of DaimlerChrysler, and that all other companies live to support its lavish, wasteful lifestyle.)
The tie-up of GM and Renault, in contrast to Renault and Nissan, would apparently be one of total bondage, a megamerger of the DaimlerChrysler type. Which one would be dominant is hard to tell, though since GM is several times the size of Renault, we’d guess it would be GM.
The last study I saw on mergers, by the way, estimated that 80% fail. That’s not great odds. What makes Kerkorian so sure that GM and Renault would be a perfect match?
If Kerkorian is serious about long-term investment, then he’s guilty of the standard American sin of believing that CEOs are magical leaders who can save the world with their fairy dust, and that Mr. Ghosn, who helped turn Nissan around, can do the same for massive GM. In the real world, it requires more than one leader, even a great leader, to accomplish real change; indeed, the leaders who recognize that are the ones who achieve the most. So far the jury is really still out on Nissan long-term, and we really don’t think throwing Mr. Ghosn at GM will fix it any more than throwing Bob Lutz at GM fixed it. Perhaps this is Kerkorian’s way of trying to shove out Richard Wagoner; if so, it’s really overkill.
General Motors is the world’s largest auto company. Their fall would be devastating to America’s economy. Kerkorian should perhaps work on replacing Richard Wagoner with Bob Lutz instead of engineering yet another megamerger.
Quick hits:
Ghosn achieved his turnaround with lots of hacking and cutting, and indeed Nissan seems to have gone off track lately.
Kerkorian is just in it for the money and the ‘fun’, same as with Chrysler. Long term isn’t in his resume. Nothing else is on his radar screen, and this could bring nothing but bad things for GM. Or Renault/Nissan for that matter, but Ghosn is to blinded by his own to see that. While this isn’t shaping up to be a “merger” in the DCX sense, it’s still not anything anyone involved should really take seriously.
Maybe they should all read ‘Taken for a Ride’.
And once this is all said and done, I bet Ford will be hoping for ol’ Kirk to kick off before he looks in their direction.
Your short opinion of a proposed GM/Renault/Nissan alliance didn’t examine any of the possible benefits which might be gained from the arrangement. Most notabily access to GM’s vast unused capacity which would benefit all three automakers or any other that would choose an arrangement with GM. The effects would give GM much needed cash and Renault or Nissan US manufacturing capability. Sort of a Win/Win situation.
Steve posted an interesting point, however Dave isn’t alone, there similar critics on Autoblog and the GM Forums fansites GMInsidenews http://www.gminsidenews.com and Cheersandgears http://www.cheerandgears.com
I found a French link about this who can be interesting to read at http://www.renaultusa.org/renaultgm.html you need to use Google translation or Alta-vista to translate from French to English. The main obstacle will be in Germany when a combined Renault and Opel would face the opposition of anti-trust monopoly laws. Unless putting a modern “sloanism” stucture in Europe Chevrolet the lower-priced entry, Renault as a lower mid-priced line-up while Opel is the upper mid-priced line-up, Saab and Cadillac takes the upper-priced levels by playing the niche market cards.
However, Bill Ford seems interesting to an “alliance”, perhaps Ghosn will use plan B if the deal with Kerkorian and Wagonner don’t go furter.
Then Toyota almost reached GM spot would have to work hard again to reach “GNR”/”GRN”/”GMNR” or “GMRN”
Maybe it might be the time to open in the weblog, the following subject, “Ford and Renault, better idea then GM and Renault?” ;-)
there lots of talks about it at
http://www.gminsidenews.com/forums/showthread.php?t=36105
http://www.cheersandgears.com/forums/index.php?showforum=45 (I mistyped the url of http://www.cheersandgears.com sorry for the inconvience ^^;)
in my idea of modern “Sloanism”, I forgotted to mention Infiniti and Nissan. I taugh about how it could be positionned, a) the 1st way is letting Cadillac going more upscale against Maybach, Rolls-Royce, Bentley, letting the void for Infiniti. or b) Infiniti could be positionned below Cadillac current position and taking the role of “Junior Companion”, a role a bit similar to what LaSalle http://en.wikipedia.org/wiki/LaSalle did from 1927 to 1940 as a companion of Cadillac , Infiniti will be positionned to sold only RWD vehicules (with optionnal AWD/4WD system) while Saab will stay in FWD territory. Then there Nissan who’s more difficult to position.
Here what I think of modern sloanism for some markets from entry-level to “high-top upper level”
1)Europe
-Chevrolet
-Renault
-Nissan
-Opel
-Saab (FWD only)/Infiniti (RWD only)
-Cadillac
-GMC Trucks
2)North America (US and Canada)
-Chevrolet
-Pontiac
-Saturn
-Nissan
-Buick
-Saab (FWD)/Infiniti (RWD)
-Cadillac
3)Latin America (Mexico, Brazil, Argentina, Chile, Columbia, Venezuela, Costa Rica,…)
-Chevrolet
-Nissan
-Renault
-Saab/Infiniti
-Cadillac
I guess Oceania (Australia-New Zealand), Southeast Asia, India, Africa and the Middle-East will have the same sloanism structure as Latin America
Too many brands for people to keep track of, and I don’t think we can really go back to the simplistic “increasing size and luxury” model. For example, does BMW make luxury or performance cars? How is Pontiac different from Buick? Infiniti currenly makes a car above Cadillac’s best (Q45) as well as one below Caddy’s lowest. I don’t see them giving up the Q easily.
Really, GM is big enough. They are the world’s largest automaker. To stay that way they don’t need to waste their time on digesting another company. they need to focus on what MADE them the world’s largest automaker. The leadership can’t divert their attention from the all-important task of getting everyone’s nose to the grindstone (to grind their metal better, not their noses, by the way) and streamlining/modernizing the behemoth.