Flint dissects GM and Nissan/Renault joining
With Kerkorian's proposal of a General Motors and Nissan/Renault merger still sending shockwaves throughout the auto-sphere, auto curmudgeon Jerry Flint steps up to the podium to give his thoughts on 'Global Motors'.Flint immediately sees a conflict between the automakers over who would be top dog. He sees no 'merger of equals' here any more than the DaimlerChrysler union was and, worse for GM, the world would not expect Ghosn to take a back seat. GM would be run by Ghosn and Nissan/Renault, not Detroit.
He also doesn't see the money savings in the merger, which analysts state is the long-term goal. Which manufacturing plants, for example, would be closed? In France? Detroit? Germany? And how would the brands be dealt with? Rebadge Tennessee-built Nissans as Chevys? Close the French design staff and have GM's designers in Germany develop new Opels? Even before these questions are answered, the involved automakers would need to deal with GM's union contracts and legacy costs that make the original Nissan/Renault merger look like a cakewalk.
Flint concludes his thoughts on Toyota Motor Co., which many merger advocates point to support their idea. The world's second largest automaker continues its relentless march towards Number One and no automaker has come close to stopping it, especially not any domestic ones. Would a Nissan/Renault/GM company be able to even slow down the Japanese juggernaut? Flint points out that it took years for Nissan/Renault and DaimlerChrysler to begin profiting from their mergers, and there are carcasses aplenty of other former mergers (e.g., GM/Fiat; Studebaker/Packard, etc.) littering the ground of history. By the time Global Motors would resolve its issues, Toyota could be unassailable.
Your thoughts on Flint's thoughts?
Related:
Kerkorian: Merge GM with Nissan/Renault?
Toyota buys GM and other improbables
General Motors, more cuts now, says Kerkorian's advisor
Armchair management: what would you do to solve GM's problems?
[Source: Forbes]
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Reader Comments (Page 1 of 3)
GhostDoggy 9:48AM (7/04/2006)
How many consumers really care? Now, I am talking about consumers, not stockholders. Consumers are buying GM, but mostly, these days, based on over-enticements that barely keep the boat afloat for GM.
If you ask Joe Six Pack (driving his overpriced Chevy 2500 pickup) if he cares about a merger between GM and Nissan/Renault and he'll looked stunned, then say 'buy American', etc., etc., etc.
Maybe the best thing going for GM is to dissolve itself futher and either shutdown or sell certain divisions. Then one has to ask itself if, for instance, Chevrolet could exist all by itself, etc.
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G 9:59AM (7/04/2006)
I found it interesting to note that Renault owns an American icon already - Mack Trucks.
http://www.automobilesdeluxe.blogspot.com
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Jason 10:05AM (7/04/2006)
GM was once considered unassailable too. Does nobody think of anything except today?
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Rob Lowe 10:28AM (7/04/2006)
GM is the Woolworths of the 21st Century. Just like AT&T was brought to it's knees by myopic CEOs and incompetent staff, GM is nothing but the longest running sob story in recent corporate history. 30 years after the first oil crises they still can't build a decent, profitable and reliable small car nor can they can build a Honda Accord or Toyota Camry.
Is Ghosn the answer? Absolutely not. Where is Bill Gates when you need him?
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arnie 10:28AM (7/04/2006)
I think Flint is missing the point. He is right as far as it goes but what everybody should be thinking about is what is really going on. I don't believe that this was a sudden decision by Tracinda and Ghosn/Renault just said "hey what the hell let's check it out." There is absolutely no doubt that there is some kind of plot behind this. Kerkorian, Ghosn et al. and probably some unnamed GM shareholder have a plan. This plan involves taking over GM with the help of Renault. Each party to the plan has an angle and that's what we should be focusing on. What we have here is a hostile takeover attempt. The guys behind it are not interested in maintaining GM as a vital part of the US economic engine. Ghosn would fire every single worker in the US and move production somewhere else without hesitation if he thought it would lower costs. Kerkorian does not care whether people live or die, as long as he makes some bucks. These are the guys assaulting the bedrock of American manufacturing. And let's not forget who calls the shots at the end of the day. The French State is Renault's biggest shareholder. This all sounds like a dream come true for US manufacturing.
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gbh 10:29AM (7/04/2006)
There will be no 'merger', 'strategic partnership', or anything else that matters. If there is a public deal that gets anybody else involved, it is merely a positioning tactic for the inevitable bankruptcy. In it's current form, GM has nothing to offer anyone but a total write-off of any investment made.
The only way to save some parts of GM are to CH 11 the whole shootin' match. If there were ANY possible way to *manage* the current GM out of it's death spiral, Buffett would have bought the company, not a Caddy.
Too many promises exist that could only be fulfilled by a GM that has 40%+ market share, and sells most vehicles at a profit. The only way out of those ridiculous deals will be to eat the gun.
This is just a big dog and pony show to serve Kirk's interests, and maybe, the real plan.
GM's future in the US is producing cheap "domestic" fleet vehicles, trucks, and maybe a few car lines. Some of the world divisions actually have OK product, so they'll be snapped up by the other car companies.
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Mal Fuller 10:59AM (7/04/2006)
Yesterday's news. Ghosn said NO.
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Lithous 11:06AM (7/04/2006)
"Just like AT&T was brought to it's knees by myopic CEOs and incompetent staff,..."
You better stick to acting. The U.S. gov't brought AT&T to their knees. How could you not know that?
"30 years after the first oil crises they still can't build a decent, profitable and reliable small car"
Since the Saturn SL series was very decent and very reliable I'd say perception is the only thing that stops many GM vehicles from being profitable.
"nor can they can build a Honda Accord or Toyota Camry."
I'd rather take a bus to work than own one of those appliances.
"Where is Bill Gates when you need him"
LMAO. Bill Gates only knows how to win when there the odds are stacked for him 1000%. Not only did he "borrow" technology from Apple (which borrowed it from Xerox) but he "borrowed" technology from IBM after cutting off the OS2 and Windows joint venture and coming away with NT but you ever hear of Stacker? More "borrowed" technology. But what about forcing PC manufacturers to pay for Windows even when they aren't putting Windows on their machine?
All this may be good business practices to some but the problem is that he wouldn't be joining the car industry early enough to have such advantages like in software.
MSN tried to take over Internet service like MS does everything else and they were not successful.
MS killed Netscape by owning the operating system and offering the browser free of charge and then telling us how the browser couldn't be separated from the OS.
How often does Windows slow down, lock up and show a blue screen?
If 100% profitability is what you want from one of the Big 2 then MAYBE he could do that (but as I've stated before he does well when he has an early advantage and can do a lot of "borrowing" so it is hard to tell what he really could do in a situation like GM's) but forget great product (of course you've seen the "If Microsoft made cars" thing) and forget any environmental cares and oh, wait, not a single piece of Microsoft hardware is made in America. There goes all the U.S. manufacturing jobs.
You guys don't get it at all.
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Lithous 11:12AM (7/04/2006)
But I'd love to see Bill Gates try and run GM. Then all you import fanboys would (not really) shut up about GM management because he would fail. Though the import fanboys would be saying how bad previous management did GM and it wasn't Billiam's fault. It is a win-win situation for him, so PLEASE write him and tell him to do it.
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FM 11:14AM (7/04/2006)
Nissan isn't that stupid. They don't want corporate suicide.If they do,we have the next DCX in our hands.
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BW 11:26AM (7/04/2006)
Sorry, just not a case of GM having a brand new pair of roller skates and Renault having a brand new key.
8 years later, DCX is worth 40% less than Daimler and Chrysler were on their own.
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David 11:27AM (7/04/2006)
Lithous:
Walk away from your computer, you pasty geek. Stop your ridiculous whining from the basement -- there's a whole world out there of sunshine and people.
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AnonymousInsights 11:28AM (7/04/2006)
'Global Motors' is not only the appropriate name but the future of any successful car company. Flint points out all the things that are challenges but keep in mind that if Nissan/Renault take over, Nissan/Renault will TAKE OVER! Then you will have Dr. Z and Dr. G (Daimler and Renault). Even the discussion of this merger is further sign of America's downfall and Europes impending domination of the economy. Get used to this because it is the future.
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Don 11:29AM (7/04/2006)
Didn't Renault pair up with AMC in the 1970's with disasterous results? Renault was forced to leave the U.S. market to recoup their losses and AMC was sold to Chrysler. Is history repeating?
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AnonymousInsights 11:33AM (7/04/2006)
Oh and the bigger picture of Euro-domination, which is a reality soon to be, is not necessarily about this merger succeeding but about getting power out of American hands and under Europeon control. Some of you think this is about car sales? Naive!
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CH 12:00PM (7/04/2006)
# 2
Renualt (the car company) doesn't own Mack Trucks. Mack Trucks and Renault Trucks are both owned by Volvo Group AB, the entity that used to own Volvo Cars.
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robert bell 12:05PM (7/04/2006)
Renault and Nissan have major issues to face on their own. Adding GM to Mr. Ghosn's plate would overload him.
GMs problems are due to archaic labor contracts, legacy costs and a management culture driven by numbers crunchers and not car guys. How is Carlos Ghosn on his own going to change this. He would have to be able to blow up the whole organization and that is not going to happen.
For better or worse, GM is going to have to sink or swim on its own; the sooner shareholders, labor and management figure out they all have to give the sooner they will be able to move to a smaller, more nimble company that can survive in the global market.
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laserwizard 12:07PM (7/04/2006)
I agree with Arnie - this smells like a plot to take over GM - and with Tracinda to takeover GM through means of acquiring other's stakes. Consider this as a way to force a change at the helm of GM - a management team that has underperformed so consistently that they should be fired and sued for malfeasance. I doubt seriously that this is about synergy or efficiency of scale because the last place you'd look for efficiency is in France. And, with Nissan slowly sinking under its morass of awful design, Tracinda could be hoping to allow the two to pay a high price and to force them to sell lower as GM continues to go down the tubes.
I'm actually enjoying this - considering my loathing for Putz and Wagoner.
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AnonymousInsights 12:09PM (7/04/2006)
'8 years later, DCX is worth 40% less than Daimler and Chrysler were on their own.'
.....my point exactly that it is not just about successful mergers and car sales.
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skaz 12:21PM (7/04/2006)
It seems like a good idea to kick around in theory, at least. But I'd be very wary of Renault if I were any car company. It's not that they're big and vicious, it's that they can and will dump you once things look sour.
AMC would have been fine if Renault had never taken a majority share -- the Hummer was due out in a year or two when AM General was forced to split from AMC. I know GM is not in the same boat, but the French government is not stupid, they will not lose money on another American car company.
At least from GM's side, this could only be bad. It can only drive them further into bankruptcy.
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