Renault and Nissan open to GM alliance talks

Carlos Ghosn has been authorised by Nissan to pursue discussions about an alliance. Picture / Reuters

PARIS - French carmaker Renault SA and its Japanese partner Nissan Motor Corp. have said they are prepared to start talks with General Motors Corp. about forming an alliance that would create the world's largest auto group.

Renault's board met to discuss a proposal made by billionaire investor Kirk Kerkorian intended to prod GM into consideration of an expanded alliance with Renault and its partner Nissan.

"Exploratory discussions with General Motors, concerning an alliance, could start if General Motors Corporation makes the proposal," Renault said in a statement.

A GM spokeswoman was not immediately available. The automaker's board met on Friday to consider the Kerkorian proposal, saying it would take the matter "under advisement."

Carlos Ghosn, chief executive at both Renault and Nissan, also was authorized by Nissan's board to pursue discussions about an alliance.

Renault has a controlling 44-per cent stake in Nissan. The French state has a 15.33 per cent stake in Renault.

Kerkorian owns 10 per cent of GM, and analysts have said his attempt to broker a deal between the three parties increased the pressure on GM's current Chief Executive Rick Wagoner and opened the door to a greater role for Ghosn, who is credited with driving Nissan's revival from 1999.

The latest moves came as GM posted a 26-per cent decline in June auto sales from a year earlier in the US market, where the automaker has been struggling to shore up its market share as it cuts 30,000 jobs and shutters a dozen factories.

A tie-up with GM, the world's largest carmaker by volume, could put the Brazil-born Ghosn at the helm of a group that would be breathing down the neck of Toyota, which has a market value of some US$190 billion ($313bn).

But analysts doubted that the deal would benefit Renault because of the risk involved just as it has embarked on a recovery plan drawn up by Ghosn after he turned around Nissan.

GM shares rose as much as 8.56 per cent on Friday on Kerkorian's proposal and prospects of a speedier turnaround at the US automaker, but shed 1.28 per cent on Monday.

Some analysts estimate the stake could cost Renault about €2.6 billion ($5.48bn).

Renault already owns the Romanian Dacia brand and has a stake in Samsung Motors of Korea. GM is the maker of Cadillac, Corvette, Saab, Hummer, Opel/Vauxhall and Chevrolet cars and has a stake in GM Daewoo of Korea.

Renault shares closed 0.24 per cent up at €84.20 ($177.73), partly on a rise in June French car sales.

- REUTERS