Nissan-Renault ends talks with GM; eyes Ford

By Rex Mathew
05 October 2006

The three-month long ongoing negotiations between Nissan-Renault and GM for a global alliance have ended with the companies unable to agree on the specifics of the tie-up and financial commitments. The talks were initiated in mid-July after Kirk Kerkorian, GM's largest individual shareholder, forced the GM top management to explore an alliance with the Japanese-French combine.

GM's board decided yesterday to end alliance talks with Nissan-Renault. Jerome York, the former Chrysler executive representing Kirk Kerkorian on the GM board, also voted in favour of the decision to end talks.

Neither side has given any specific reason for the failure of talks, but it has been reported that GM was demanding a high initial payment from Nissan-Renault, which the latter was unwilling to consider. GM was of the view that it would bring more value to such an alliance and needed to be compensated.

Both GM and Nissan are facing heavy competitive pressure from Toyota and have seen their North American market shares decline. Renault is having a tough time in Europe as main competitors like Peugeot-Citroen and Fiat are steadily eating into its market share. An alliance, though difficult to implement, would have been beneficial for all three companies.

Nissan-Renault is still interested in an alliance in North America. Carlos Ghosn — CEO of both Nissan and Renault — had stated last month that the combine would continue to seek an American partner. A Nissan spokesperson reiterated this view yesterday, stating that a North American partner would make sense from a 'strategic perspective and under the right conditions'.