By on March 12, 2010

Flirtation between Nissan and GM has a rich history, dating back to 2006, when the two firms nearly merged, in a move that would have left Nissan-Renault’s Carlos Ghosn in charge of French-Japanese-American juggernaut. GM fought off Ghosn’s advances (and a stockholder rebellion) to stay independent, but with a post-bankruptcy IPO now looming, Ghosn has once again appeared on GM’s horizon. In a bit of in-depth speculation at Dow Jones Investment Banker [via the WSJ [sub]] Jamie Miyazaki and Alessandro Pasetti break down the pros and cons of a Renault-Nissan hookup with GM. Their conclusions: although, Renault is currently playing footsie with Daimler:

Over the long haul, looking west to General Motors in the U.S. could prove more fruitful for Renault than strengthening partnerships in Europe’s saturated market. Taking an equity stake in a reborn, and eventually relisted, GM would give the Renault-Nissan alliance exposure to the U.S. auto giant’s diverse geographic presence… GM [has] shifted about 37% of its total 2009 sales in Asia, South America and Eastern Europe, according to J.D. Power & Associates data. Throw in GM’s plans to ramp up its Indian operations and its large presence in the Brazilian market, where Renault is investing to roughly double its market share to 10%, and the Detroit giant’s allure is obvious.

Paging Captain Kirk!

Miyazaki and Pasetti figure the Renault-Nissan flirtation with Daimler is a limited deal that

wouldn’t be transformational — rather, it’s a game several European automakers have been playing since 2007 with the upshot that there are not too many eligible partners left.

That certainly adds up: the Renault-Nissan/Daimler deal is about one thing: a subcompact FWD platform to replace Renault’s flopping Twingo and give Mercedes the downmarket reach to meet Europe’s aggressive emissions standards. A long-term hookup would usher in a DCX 2.0 debacle of nightmarish proportions. The two firms are simply too strong in the same markets.

But GM and Renault-Nissan? Let’s put it this way: how often do bailed-out automakers hold IPOs? Besides, their market shares by region show that synergies are possible. On the other hand, this could just be a rumor designed to make the speculators think Ghosn will snap up a large chunk of GM’s IPO, thus inflating the value of GM’s debt and IPO. In fact, until we hear something a little more concrete, we have to assume that IPO speculation is the real motivation behind this “what if” scenario. If we’re wrong, we’ll literally have years to watch this deal unfold, as it would be one of the biggest, most complex mergers in car biz history.

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6 Comments on “Wild-Ass Rumor Of The Day: Renault-Nissan Considering A Stake In GM?...”

  • avatar
    crash sled

    What makes you think Ghosn would have to secure an “equity stake” in Government Motors? Fiat didn’t have to do so with Chrysler, why should Nissan have to?

    Everybody thinks this magical IPO is gonna move like cotton candy, but I don’t see it. Credit markets will be tight for a while now, especially with Uncle Sugar borrowing a couple trillion dollars every year as far as the eye can see.

    Government Motors will have to package this up in some convoluted way, to try to fool the taxpayers into believing they got their money back. Ghosn will play along with that, and lie faithfully, and say it is so. But follow the money, and none of it will be his I bet.

    If you want to wind up with a profitable sale of Government Motors, somebody better put a call-in to the Chicoms. They got cash money.

    • 0 avatar

      +1. Any deal between GM and Renault-Nissan would be smoke-and-mirrors theatre, and part of a political exit strategy by the Obama administration. Renault-Nissan will be bribed to help Washington solve its political problem, and every dime of private money that “investors” conspicuously provide will in fact be backstopped by government guarantees, in true Fannie/Freddie/HUD style.

    • 0 avatar

      A reformed GM, with less debt could more easily become profitable. Chrysler was by far in more trouble and continues to be so. Fiat didn’t put up any money up front, but I bet they are paying a large amount now.

      I don’t think people are thinking about the IPO the same way for everyone. Say, the GM IPO goes for 40b. Just picking a nice round, not unobtainable number.

      If you look at market caps for auto companies out there…
      Toyota is 120b
      Honda is 66b
      Diamler is 47b
      Ford is 44b
      VW is 41b
      Nissan is 34b

      If you think GM could be successful in the long term, buying in at a market cap of 40b would be great. People could easily see that the company is undervalued and want to invest in it. Honestly, at a 40b market cap, I would put a lot of money into it and probably get a good gain on it in the short term.

    • 0 avatar

      Problem for GM is that it is strong in the North American market. The American market requires cars that can’t be exported to other markets and as such are a distraction for a successful car company

  • avatar

    Edward, you really want to claim that Mercedes and Renault are strong in the same market? Because i don’t see it.

  • avatar

    I was surprised nobody has commented here on the fact that the WSJ blog referred to “CEO Bob Lutz.”

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