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Nissan, Renault to court GM

GM sign

TEXT OF STORY

MARK AUSTIN THOMAS: Directors at Nissan and Renault have both approved opening talks on whether to buy a major stake in General Motors. GM's June sales are down more than a quarter from last year and it recently bought out 35,000 workers to cut costs. Could an alliance be the answer to GM's problems? Stacey Vanek-Smith has more.


STACEY VANEK-SMITH: General Motors has gotten a shot in the arm from news of a possible alliance with Nissan and Renault.

But why buy a stake in the struggling carmaker?

LAWRENCE ULRICH: General Motors, for all its problems, is still the world's largest automaker.

Industry analyst Lawrence Ulrick says the alliance would be a mistake. He says to get healthy, General Motors needs to thinka€¦smaller.

ULRICH: That's the tendency, when you're struggling, is to think you need to get bigger and merge resources. But in my mind, General Motors has to resign itself to being a smaller, nimbler company. For all the cars they sell, they're losing money on each one. They need to sell fewer cars and make money.

But Ulrick says the whole deal could just be smoke and mirrors.

Last week, billionaire mogul Kirk Kerkorian announced that Renault and Nissan were interested in the alliance. Kerkorian is a major stake-holder in GM and Ulrick says he maybe using the threat of a takeover to push management to cut costs even more.

I'm Stacey Vanek-Smith for Marketplace.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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