GM-Renault-Nissan: An alliance to dominate auto sector

US auto major General Motors may initiate discussions with Nissan and Renault to form a three-way alliance and would create a group which would control nearly one-fourth of the global auto market.

General Motors, world's largest automaker, may take a lifeline from rival automakers Renault SA and Nissan Motor and form a three-way alliance to reverse its rapidly declining fortunes. The company's board is expected to meet later this week to consider initiating discussions with Renault and Nissan.

The boards of Japanese car major Nissan and French auto manufacturer Renault have already authorised Carlos Ghosn, CEO of both the companies, to explore an alliance with General Motors.

A three-way alliance between GM, Nissan and Renault would create a very dominant player globally. With a combined output of nearly 15-million units per year, the alliance would have a global market share of close to 25 per cent.

Renault currently holds a 44-per cent stake in Nissan, which in turn holds a 15-per cent stake in the French company. Renault controls Romanian auto maker Dacia and also has a minority stake in Swedish truck maker Volvo. Renault may possibly sell its Volvo shareholding to acquire the GM stake, if an agreement is reached.

Billionaire Kirk Kerkorian, whose investment company Tracinda Corp holds a 10-per cent stake in GM s reported to have mooted the idea of the three-way alliance to rescue the ailing auto giant. Jerome York, former CFO of Chrysler and IBM and Kerkorian's nominee on the GM board, met Carlos Ghosn and initiated the discussions on a possible alliance. This was followed by a meeting between Kerkorian and Carlos Ghosn where Ghosn reportedly indicated willingness to acquire up to 20 per cent of GM.