Saturday, July 01, 2006

GM Collaboration with Nissan/Renault?

The buzz on Wall Street yesterday (not that I was on Wall Street to hear the buzz, but I do read the Wall Street Journal online) has been about major GM shareholder Kirk Kerkorian advocating some sort of strategic tie-up between General Motors and the Carlos Ghosn-led Nissan/Renault collaboration. In my perspective as a GM fan and Nissan owner, I don't think this is as big of a deal as my co-members of GMInsideNews do. There is an ongoing thread right now advocating writing to the government and to GM to kill this idea (the thread is here), and here were the thoughts that I just posted on that site:

I dunno, personally I don't see this as such a huge deal. It's a collaboration with an equity stake, so that Renault/Nissan has some "skin in the game." Personally, I don't think that Nissan's powertrains and engineering are superior to GM's (perhaps cheaper, but maybe not), but let's consider what each company's core strenghts and weaknesses are.

GM Strengths:
- Powertrains
- Fuel economy
- Size of dealer base
- Market share
- Exciting new models
- Actual quality on the upswing

GM Weaknesses:
- Market perception lagging reality
- Dowdy image
- Marketing
- Financial

Nissan Strengths:
- Marketing
- "Performance" image (convincing buyers that a Quest is the Z of minivans)
- Financial

Nissan Weaknesses:
- Interior quality (appears to be improving in recent models, i.e. 2007 Altima and G35)
- Fuel economy
- Quality scores (particularly with the Canton plant)
- Smaller US market share

There definitely appear to be opportunities for either company to help the other. Many of GM's weak points are strong points with Nissan, and vice versa. It's not like Nissan is going to purposely screw Chevy over just to sll more Nissans, because if they end up owning 20% of the company, they would have every incentive to make that 20% worth as much as they can.
  • Originally posted by ChevroletRevived: GM's engines, expertise, marketing, entrance into markets across the globe. There's no synergies.
  • Originally posted by Ming: If an "alliance" means GM's white-collar powertrain engineers are let go and replaced by Nissan engineers as GM's cars become "Chevy" in name only, powered by Nissan engines and transmissions, then there would be no reason for me to remain a "GM fan". Same with a Toyota merger. If GM engineering is lost in some amalgam of global engineering with Nissan (or Renault) taking the lead, and GM's brands become like Dodge or Chrysler, then I will cease to support GM because there will be nothing sufficiently unique to support any longer.
The way I see it, as I discussed above, it will be a blend between what ChevroletRevived said (Nissan/Renault getting expertise from GM) and what Ming said (GM getting expertise from Nissan/Renault). You two said basically completely the opposite thing - ChevRev said that Nissan would take all the good stuff from GM and give nothing in return, and Ming said that Nissan would shut down GM's engineering and force-feed thirsty VQ V6s down everyone's throat. :) You can't both be right, but the reality would probably be somewhere in between.

I doubt that anyone at Nissan/Renault is drooling over the prospect of getting their hands on GM's marketing expertise. Frankly, it pretty much stinks. Wouldn't it be nice if the car buying public actually thought GM's cars were better than they really are, rather than thinking they are worse than they really are for a change? Basically, that is what Nissan's marketing has done - the buying public thinks their cars are better than the quality scores have proven.

Finally, I think that it would be a bad idea for the government to interfere in this. If we start interfering with every merger with foreign companies (either US company buying, or being bought), the US will become a less and less attractive place for companies to do business, and that will harm our economy. The Dubai Ports deal, which I was uncomfortable with, just made the rest of the world wonder whether we have a free market economy, or whether the government will interefere in politically unpopular deals.

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