Detroit, the "Motor City" of the United States, has long been known for its summer shutdowns, but General Motors (GM) is now more active than ever. When reporters call GM’s headquarters for updates, spokesperson Gina Troya often responds with the same message: “I’m sorry, but there’s no new news at this time. The board is seriously considering an alliance proposal.†This statement has become a common refrain for many incoming calls.
On the 30th, GM’s largest shareholder, Kirk Kerkorian, proposed that the company join the Nissan-Renault alliance. Industry analysts believe that if this deal moves forward, it could shake up the global auto industry structure. Detroit, always sensitive to major changes, has taken notice. Local newspapers have run front-page headlines for days, and even *The New York Times* remarked that such a big headline is usually reserved for war announcements.
Kirk Kerkorian’s “bombshell†came as a surprise. According to insiders, the GM board held an emergency meeting on the day the proposal was made, and another one is scheduled for the 7th to further discuss the alliance. The urgency of these meetings shows how serious the board takes the proposal. *The Detroit Free Press* called it a “bomb†thrown by Kerkorian.
Despite being the world’s largest automaker, GM’s performance has lagged behind European and Japanese competitors. Meanwhile, Nissan and Renault have formed a powerful alliance, led by Carlos Ghosn, who has driven both companies to remarkable success. Over the past seven years, Nissan and Renault’s stock prices have tripled, while GM’s has dropped by 60%. Kerkorian, clearly frustrated with GM’s decline, proposed that Renault and Nissan invest $3 billion in GM for a 20% stake. Analysts suggest that if successful, the alliance could lead to cost savings through shared production and R&D, helping GM recover from its current struggles.
This development has sparked a power struggle within GM. CEO Rick Wagoner has recently pushed for internal reforms, but the unexpected alliance proposal has disrupted his plans and may lead to major leadership changes. As *Detroit Media* put it, this is a “power game.†On one side is Kerkorian, a dissatisfied investor, and on the other is Wagoner, struggling but still holding onto power.
Morgan Stanley analyst Steinmetz noted that while confidence in Wagoner still exists, the board and shareholders are watching Ghosn’s impressive results closely. Some sources suggest that certain directors are open to the idea of Ghosn taking over GM.
However, concerns about the potential alliance remain. Mergers in the auto industry are rare successes, and GM’s previous attempts—like its acquisition of Fiat—ended in failure. The financial burden of those subsidiaries hurt GM. Analysts also worry that the alliance could create internal competition. For example, Nissan’s focus on Japan and North America doesn’t align well with Renault’s European market. Adding GM into the mix could complicate things further.
Swiss bank analyst Hilcliffe warned that the alliance might bring more problems than solutions. He pointed out that the three companies would face internal competition, and with GM already having multiple brands, the situation could become even messier.
Despite the uncertainties, some believe this could be the start of a new era in the global auto industry. Ghosn has long spoken about expanding the Nissan-Renault alliance to include more automakers. While he hasn’t mentioned GM specifically, Kerkorian is pushing for GM to explore other partnerships, including Toyota, Honda, or BMW.
Analysts predict that if the tripartite alliance succeeds, it could put immense pressure on competitors like Ford, Toyota, Honda, and DaimlerChrysler. These companies may respond by forming their own alliances. In a recent report, JP Morgan stated that the auto industry will see more mergers and collaborations in the next two to three years, potentially involving European giants like Ford Europe, Peugeot-Citroën, and even BMW.
Whether the alliance happens or not, one thing is clear: the automotive landscape is changing, and the stakes have never been higher.
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