GM mulls alliance plan

Amy Scott Jul 7, 2006
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GM mulls alliance plan

Amy Scott Jul 7, 2006
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MARK AUSTIN THOMAS: Let me set the picture for you. On this side is General Motors. On the other side, two competitors, Renault and Nissan. Today the GM board will discuss a possible alliance with the other two companies. This idea is the brainchild of Kirk Kerkorian, one of GM’s biggest shareholders. Marketplace’s Amy Scott describes how it would work.

AMY SCOTT: The proposed deal would have Renault and Nissan each buying a 10 percent stake in GM for a total of about $3 billion. The three companies would then save money by sharing parts and technology.

Analysts expect GM CEO Rick Wagoner to lobby against the deal today. GM lost more than $4 billion in a previous failed alliance with Fiat and may be loathe to try again.

Burnham Securities analyst Dave Healy says Nissan’s got problems of its own, despite CEO Carlos Ghosn’s celebrated turnaround tactics.

DAVE HEALY: Nissan’s North American margins have collapsed, and so have their sales. And Ghosn himself has summoned hundreds of rescue workers from Japan to clean up after himself.

Others say GM’s board is obligated to at least consider the arrangement. GM lost more than $10 billion last year and the jury’s still out on its own plans for a turnaround.

In New York, I’m Amy Scott for Marketplace.

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