Talks aimed at building a three-way partnership of General Motors Corp. and the Renault-Nissan alliance have ended in disagreement over GM's insistence that the French and Japanese companies should pay it a multibillion-dollar premium to go ahead with the proposal.
GM Chief Executive Officer G. Richard Wagoner Jr. said a partnership under the terms Renault and Nissan Motor Co. demanded would have benefited them the most while preventing his company from pursuing ties with other automakers.
The breakdown opens the way for Ford Motor Co., which has lost $1.44 billion in the first half of this year and said last month that it would consider exploring an alliance of its own with Renault and Nissan.
Carlos Ghosn, chief executive of both companies, said last week that if the talks with GM ended, he would seek another North American partner to join the alliance, formed in 1999 when Renault took a controlling stake in a then-failing Nissan.
"Assuming he was sincere, Ford looks like the next candidate for the job," Banc of America securities analyst Ron Tadross wrote in a note to investors yesterday.
Both GM and Ford are trying to recover from decades of slumping U.S. sales in the face of increasing competition from Asian automakers, particularly Toyota Motor Corp. Nissan's larger Japanese rival surpassed Ford to become the world's No. 2 automaker in annual global sales and is on track to knock GM from the top spot within a few years.
Wagoner said the automaker's board had voted unanimously on Tuesday to table the talks, a position GM management recommended, although the initial schedule called for negotiations to continue at least through Oct. 15.
The alliance was proposed in July by GM shareholder Kirk Kerkorian, whose Tracinda Corp. owns 9.9 percent of the automaker. Even Jerry York, who represents the billionaire as a member of the board, ultimately voted with management, Wagoner said.
Neither York nor Kerkorian could be reached for comment yesterday.
Tracinda issued a statement saying it still believed that "a global alliance with Renault and Nissan would have enabled GM to realize substantial synergies and cost savings."
Renault and Nissan, in a statement, said they considered GM's demand for payment to be "contrary to the spirit of any successful alliance."
Breakdown of the negotiations had little apparent effect on GM's stock price, which dropped 9 cents to $33.36.
Wagoner, who last week stated bluntly that GM did not need a partner to survive, said much the same in a news conference yesterday. GM, which lost $10.6 billion last year, will concentrate on its own turnaround, he said.
Wagoner said GM had made "a shocking amount of progress" in the last year in cutting health care costs, dramatically paring U.S. and Canadian payrolls, shedding underperforming assets, revising its marketing and warranty programs and speeding the launch of crucial new vehicles such as the redesigned full-size pickup trucks and sport utility vehicles that bring in much of GM's profit.
"Wagoner and crew are pursuing the right course," said auto industry analyst David Healey of Burnham Securities. GM is "stabilized in the U.S. and exploding overseas. It's doing fine, now, on its own."
John O'Dell writes for the Los Angeles Times.