GM and Renault-Nissan Deal Fizzles

fourwheeldriftHow surprising was today’s announcement that GM would not merge with Renault-Nissan?  Let’s just say that it was as predictable as President Bush uttering the phrases “stay the course” and “cut and run” in his last speech.

From day one this rumor-turned dead-end proposal was simply a way for GM shareholder Jack “don’t call me Dr. Kevorkian” Kerkorian to up his shareholder value.  I just hope he sold some shares while the price was inflated.  Let me take that back, Kerkorian represents the type of stupid short-term stock-value mindset that landed GM and Ford in the dire situations that they both face today.

For the record, GM actually ended the talks on the basis that the R-N team, in GM’s opinion, was undervaluing it’s potential partner.  In other words, R-N was trying to lowball  GM.

Carlos Ghosn is no dummy…actually, far from it — he might be one of the smartest guys in automobiles.  He is definitely one of the most honest and charasmatic.  Ghosn was only interested in GM for its plant and distribution network.  Everything else, including contracts for parts and labor, current model lineup, R+D pipeline, and financial situation made sharing a bed with The General look a lot like sharing a bed with Danny Bonaduce.

So Ghosn valued GM like he was looking at a project car he had no intention of ever restoring: low enough so if the seller was desperate, he could buy it and flip it for enough profit to justify the hassle of winching it up and trailering the mess home.

To be fair, GM would have been foolish to walk into a deal with Renault-Nissan. R-N’s presence in America is mediocre, at best.  No doubt that Infiniti is a true bright shining star, but Nissan is Japan’s Chevrolet — offering a rental car quality product line with sub-par reliability. (The Titan pickup is a lone exception.)   GM would have picked up business in Europe with Renault’s good lineup of compact and subcompacts.

So in other words, GM would have gained one competitor of Cadillac and Saab, another for Opel, and a major competitor for Chevrolet and GMC.

We need to call this for what it was: a blind date with absolutely no chemistry.  Ghosn and GM CEO Rick Wagoner had dinner, made some small talk, went to a movie, then decided to just be friends.


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