Nissan & Renault to buy 20% of GM

[MKII]

CVT torque handling capability is limited by the strength of their belt or chain, and by their ability to withstand friction wear between torque source and transmission medium for friction-driven CVTs. CVTs in production prior to 2005 are predominantly belt or chain driven and therefore typically limited to low powered cars and other light duty applications. More advanced IVT units using advanced lubricants, however, have been proven to support any amount of torque in production vehicles, including that used for buses, heavy trucks, and earth moving equipment.


The first workable CVT, called Variomatic, was designed and built by the Dutchman Huub van Doorne, co-founder of Van Doorne's Automobiel Fabriek (DAF), in the late 1950s, specifically to produce an automatic transmission for a small, affordable car. The first DAF car using van Doorne's CVT was produced in 1958. Van Doorne's patents were later sold to Volvo along with DAF's car business and CVT was used in Volvo 340.

In the 1980s and 1990s, the Subaru Justy was offered with a CVT. While the Justy saw only limited success, Subaru continues to use CVT in its keicars to this day, while also supplying it to other manufacturers.Subbie Keicars-Subaru 360, Subaru R1, Subaru Rex, Subaru Vivio. 
Keicar manufacturers-Daihatsu, Honda, Toyo Kogyo/Mazda, Mitsubishi Motors, Nissan, Smart (the only non-Japanese company), Fuji Heavy Industries/Subaru, Suzuki .



Nissan first introduced CVT in the 1992 Nissan March with a unit sourced from Subaru. In the late 1990s, Nissan designed its own CVT that allowed for higher torque, and includes a torque converter. This gearbox was used in a number of Japanese market models. Nissan is also the only car maker to bring roller-based CVT to the market in recent years. Their toroidal CVT, named the X-troid, was available in the Japanese market Y34 Nissan Gloria and V35 Skyline GT-8. However, the gearbox was not carried over when the Cedric/Gloria was replaced by the Nissan Fuga in 2004.

After studying pulley-based CVT for years, Honda also introduced their own version on the 1995 Honda Civic VTi. Dubbed Honda Multi Matic, this CVT gearbox accepted higher torque than traditional pulley CVTs, and also includes a torque converter for "creep" action.

Toyota introduced the E-CVT in the 1997 Prius, and all subsequent Toyota and Lexus hybrids sold internationally continue to use the system (marketed under the Hybrid Synergy Drive name). Although sold as a CVT it is in fact not such a device as the gear ratios are fixed and the transmission is actually a torque blending device, allowing either the electric motor or the ICE (Internal Combustion Engine) or both to propel the vehicle. The response of the complete system (under computer control) is similar in feel to a CVT in that the ICE speed is relatively low and constant under low power or high and constant under high power.

BMW used a belt-drive CVT as an option for the low and middle range MINI in 2001, forsaking it only on the supercharged version of the car where the increased torque levels demanded a conventional automatic gearbox. The CVT could also be manually 'shifted' if desired with software simulated shift points.

General Motors designed a CVT for use in small cars, which was first offered in 2002. After just three years, however, this transmission will be phased out in favor of conventional planetary automatic transmissions.

Audi has, since 2000, offered a chain-type CVT as an option on some of its larger-engine models, for example the A4 3.0 L V6.

The 2005 Ford Freestyle and Five-hundred use a new chain-driven CVT allowing engine torque to go up to 300 N•m. The transmission was designed in cooperation with the German Company Sachs - ZF and is currently produced in Batavia, Ohio. The CVT is computer controlled and combines fuel efficiency and smooth riding.

Sachs - ZF supplied its belt drive CVT unit to many car manufacturers including BMW and MG Rover.

Contract agreements were established in 2006 for the first full toroidal system to be manufactured for outdoor power equipment such as jetskis, ski-mobiles and ride on mowers.

[AVToller]

Thanks for the post. I was too lazy to even look up DAF. 

[safristi]

Buddy had a DAF after high-school...he never lived it down........POOPED out at every light......prolly the cause of the "POOP &SCOOP LAWS!!!".............NOW if they had called it the "SAF".....hell it wooda been a nuvver MicroSOFTIE, BURK_SURE THATAWAY, or even a A WALLY_SMART......

[a4_tom]

My dad's 1st European car, Volvo 345DL, was equipped with the 1st CVT developed by DAF. Since Volvo co-developed 300-series with DAF, also made in the factory, its unsurprisingly it used the DAF CVT.

[Trainman]

Opinon piece from CBC:

Full article here (it is long): http://www.cbc.ca/news/background/realitycheck/20060707sheppard.html

INDEPTH: REALITY CHECK

Is America's carmaker up for brie and sushi?

Interesting quote from the above:

"If this deal goes through, a combined GM-Renault-Nissan would manufacture nearly a quarter of the vehicles on the planet, well ahead of Toyota with about 14 per cent. But in some ways it has to be seen as a coalition of losers.

In the June numbers that just came out, GM's sales were down 26 per cent from a year ago in the U.S., Nissan was off 19 per cent and Renault was down 3.2 per cent worldwide.

The difference among them is that Renault and Nissan are profitable and GM is decidedly not (though it did edge back into the black this first quarter of 2006). General Motors is the world's largest maker of automotive vehicles and a behemoth by almost any account.

But its share price has fallen so low, its market capitalization is only about $17 billion US, compared to Renault's $31 billion US, and Nissan, the poor sister among the Japanese carmakers, at $49 billion US."

[smainville]

...as well Nissan, although ready now, did not have a small car offering to compete with Fit, Yaris, Accent, Rio, Aveo etc.  The new look Sentra should be an interesting one to watch.  Model year transition also means stopped production and gaps.  On the other hand GM has models of all kinds coming out the ying yang and still numbers are down.

[tpl]

I worked with a guy who had a DAF with a cvt, his would have been an early 60s model. IIRC it used two quite standard sized v belts, the same size as on a current Ford in the UK and they were quite easy to replace.

[Snowman]

Toyota's clout looms over alliance talks
A Renault-Nissan, GM marriage would bring in cheap manufacturing, slow Japanese growth.
Kae Inoue / Bloomberg News

TOKYO -- Carlos Ghosn's Nissan Motor Co. and Renault SA decided last week to pursue an alliance with General Motors Corp. to slash development and production costs. The real motivation may be to take on a common enemy: Toyota Motor Corp.

"Toyota is so dominant in the global car industry and they are growing so fast and so steadily that no one can really catch up," said Atsushi Osa, who helps oversee $4.1 billion at Sumitomo Mitsui Asset Management Co. in Tokyo. "Ghosn may want to use GM's assets and resources against Toyota."
Toyota, the world's biggest automaker by market value, is speeding up its expansion as GM and Ford Motor Co. close factories and cut jobs. The Toyota City, Japan-based company will spend an average of $1.3 billion every month this year to build at least six factories, including plants in Texas, Russia, Canada, Thailand and China.

Ghosn, 52, could use GM's idle manufacturing capacity to increase production cheaply. An alliance would also help him compete in China, share the cost of developing fuel-cell and gasoline-electric hybrid vehicles and fend off Toyota's expansion in Europe. Billionaire Kirk Kerkorian, 89, GM's fourth-largest investor, proposed the tie-up to help revive the Detroit-based automaker, which had $10.6 billion in losses last year.

General Motors' board on Friday authorized Chief Executive Officer Rick Wagoner to study the proposed link. Ghosn, CEO of Nissan and Renault, on July 3 received permission to begin talks.

Nissan and Renault may buy a combined 20 percent of GM, people familiar with the talks said. The stake is valued at $3.3 billion.
Toyota moves in on Renault

Toyota and its affiliates plan to sell 10.3 million vehicles by 2010, up from 8.85 million in 2006. Nissan and Renault together sold 6.13 million cars and trucks in 2005
.
In Europe, Toyota is attacking Boulogne-Billancourt, France-based Renault with small cars it makes with PSA Peugeot Citroen in the Czech Republic. In the first five months of 2006, Toyota increased its market share in Europe by 0.2 percentage point to 5.7 percent. Renault's share fell by 1.1 points to 8.9 percent.

"Toyota knows how to sell, how to make a good car and at a good price," said Edwin Merner, who runs $1 billion as president of Atlantis Investment Research Corp. in Tokyo. "At this time Nissan and GM cannot catch up; at best they can just hold their own."
Nissan spokeswoman Mia Nielsen declined to comment on Toyota's influence on Nissan's strategy.

Tokyo-based Nissan vied with Toyota to be Japan's No. 1 automaker in the 1960s. By the time Ghosn took charge in 1999, the company was close to bankruptcy after selling bland vehicles. Ghosn stopped building cars such as Pulsar NX compact, dubbed the Ugly Duckling in Japan, and closed 10 percent of the dealerships.

Return on capital

Ghosn aims for a return on invested capital of 20 percent. That's led to a strategy of buying technology and vehicles from other automakers when it's cheaper than in-house development. Nissan may team with GM to develop hybrids, diesels and cars powered by hydrogen fuel cells, said Norihito Kanai an analyst at Meiji Dresdner Asset Management Co. in Tokyo.
"One of the biggest benefits out of a possible alliance will be the ability to share the massive financial burden for developing advanced technology," Kanai said.

Toyota had 1.57 trillion yen of cash and stocks at the end of March, almost four times what Nissan had. It used some of those funds to buy GM's stake in Fuji Heavy Industries Ltd., the maker of Subaru cars, last year. Toyota plans to make 100,000 Camry sedans a year at Fuji Heavy factory in Indiana, without the expense of building a new plant.

Unused capacity

Nissan may emulate Toyota by converting space at GM's underused factories to build its own cars and trucks in North America. GM is planning to shutter 12 North American plants by 2008. The company's U.S. market share slumped 2.8 percentage points to 24.3 percent in the first half.

"The only major attraction to GM I can think of is its huge and soon-to-be idle production capacities in the U.S. and its relatively strong foothold in emerging markets, particularly in China," said Amir Anvarzadeh, director of Japanese equity sales at KBC Financial Products in London.

GM's profit in China, the world's third-largest vehicle market, doubled in the first quarter. Nissan would be able to supply small cars to GM in China, while GM could sell its Buick minivans through Nissan, Koji Endo, a Credit Suisse analyst said. Nissan became the last of Japan's three biggest automakers to start producing vehicles in China in 2003, six years after GM.

Nissan and Renault could buy auto parts and raw materials jointly with GM, Endo said. The two companies already save about $868 million annually by combining $59 billion of purchasing, he estimates. Nissan and Renault don't disclose how much they save.

Ghosn, dispatched from Renault in 1999, has led Nissan from a record loss to six straight years of record earnings.
"Ghosn's role has always been turning around something bad," said Ichiro Takamatsu, chief investment officer at Alphex Investments Co. in Tokyo. "Ghosn doesn't want to end his career with a failure, so he wouldn't take any bets if he thinks he would lose."

[Mitlov]

Do not see a lot of vehicles that may get used in tough going, like SUV's or pickup trucks, in that list.

I really like the idea, always have, but just not sure it is ready for prime time use in Canada’s climate over the long haul.  Hope they all work out, then I can get one 

Well, it hasn't endured any trial-by-fires yet, but the Jeep Patriot has a CVT and is intended to be used in rough situations (or one would presume from the standard skid plates and the approach/departure angles roughly equivalent to an FJ Cruiser).

[Trainman]

From Reuters:

http://money.excite.com/ht/nw/bus/20060713/hle_bus-wat006034.html

Love the line about "Wagoner also stipulated that GM did not need an alliance to be successful. "We have a good plan, we're turning the business. ... We're going to be in a position to be a successful business."


GM to move "expeditiously" on possible alliance

Thursday July 13, 12:18 PM EDT

WASHINGTON (Reuters) - General Motors Corp. (GM) Chief Executive Rick Wagoner said on Thursday he wants to move "expeditiously" to review a possible alliance with Renault and Nissan Motor Co. but the U.S. auto giant did not need a deal to turn itself around.

"Everyone would want to move to a yes or no decision promptly on something like this," Wagoner told reporters after testifying at a Senate committee hearing on retiree health care costs.

"I think we want to move expeditiously," he said without elaborating on a time frame.

Wagoner is scheduled to meet on Friday with the head of Renault and Nissan for exploratory discussions.

"We're willing to sit down and talk about the full range of options," the GM CEO said.

Billionaire investor Kirk Kerkorian, whose Tracinda Corp. owns nearly 10 percent of GM, has urged the world's largest automaker to consider the Renault-Nissan alliance.

Such a tie-up means that Nissan and Renault could take a stake in GM as the three companies attempt to find savings by sharing the costs of developing new products and buying components.

Wagoner also stipulated that GM did not need an alliance to be successful. "We have a good plan, we're turning the business. ... We're going to be in a position to be a successful business."

Carlos Ghosn, the chief executive of Renault and Nissan, said in newspaper interviews published on Thursday that he was interested in a broad alliance with GM in which his companies would take a stake in the Detroit automaker.

GM lost $10.6 billion last year, pressured by high labor costs, sluggish sales of sport utility vehicles and loss of U.S. market share to foreign rivals.

[sirAQUAMAN64]

Good sensible interview.

GHOSN -- The interview

Automotive News / July 14, 2006 - 6:00 am / UPDATED: 7/14/2006 8:51 A.M.  
    
Here is a transcript of the Thursday interview that CNBC's Maria Bartiromo conducted with Carlos Ghosn, CEO of Renault-Nissan.

CNBC: In terms of geopolitical events, we've been reporting about all of the violence in the Middle East. Oil prices are at a record high. As a global businessman, have these events changed the way you operate?

Ghosn: Certainly the fact that oil is becoming more and more expensive and we're seeing it at $75 a barrel, we have to take this in concentration in our product planning, technology planning. So we are making substantial and significant changes into product coming in the next three to four years. This is without any doubt a factor influencing the technology and influencing the product that car manufacturers will offer.

CNBC: Tomorrow you have a meeting with the CEO of General Motors, Rick Wagoner. How did that come about? Kirk Kerkorian called you, and invited you to dinner. Tell us how this came about?

Ghosn: This started with a meeting that I had with Jerry York. You know, I have known about Jerry for awhile, but in fact I'd never met him. So I met him the first time at his request. We talked about change… change about the industry. Then he said, ‘Would you agree to meet with Kirk Kerkorian at the first opportunity?' I said fine.

I happened to be in the United States for the inauguration of the new headquarters of Nissan in Nashville. So we met on the 15th. And then during the dinner we had some exchanges about the industry, and how the Renault-Nissan alliance is working.

Here's something very interesting: People talk about the alliance, but they don't know exactly what the alliance is. What does it mean? They compare Renault-Nissan to DaimlerChrysler and other kids of collaborations.

Renault-Nissan is completely different, because we still have two independent companies. Each one is based in a different country. Two different executives, two different boards, two different stocks.

[By contrast,] DaimlerChrysler is a merger. You have one company, one board, one stock… I'm not saying one is better than the other. I'm just saying they are just different. So I spend some time explaining what the alliance is about, and how it evolved, and why the alliance is getting results.

CNBC: In Kerkorian's letter to Rick Wagoner, he said the Renault-Nissan partnership alliance has created tremendous synergies in terms of engineering, manufacturing and marketing — resulting in great benefits. What would be the benefits of an alliance with GM?

Ghosn: Well that's one of the reasons why we are meeting. It is because the Renault-Nissan alliance has been successful.

And it wasn't successful just for one year, or two years. This thing has been going for seven years. For seven years, the two companies have grown, and the two companies have been very profitable.

So on a long-term basis, this is a concept which is working and has delivered a lot of results. So the question now is: Is this something we can expand to a third party? And what kind of benefits are we going to get?

That's one of the reasons we are meeting with Rick. We will say, ‘Can we outline all the different areas where we think there will be synergies? And second, can we quantify the synergies?

Obviously we're not going to do it one on one. We have to have some experts from each company [to meet and generate data] that we can agree on. This the first step. This is a very important [question]: What is at stake? The second step is: How do you deliver these results, which would be related to organization and structure.

CNBC: So you are going to have independent outsiders in this meeting to assess whether or not an alliance…

Ghosn: No I don't think so. I think the first meeting is going to be mainly one-on-one at the top level to see how can we quantify what is at stake. What's the price, OK? To quantify this price, I think we're going to need our own experts. You're going to need one GM expert, one Renault expert and one Nissan expert in [each] specific area. [They would] meet together, and agree that we can expect this kind of benefit if we do things together.

CNBC: Have you spoken to Rick Wagoner yet, at all?

Ghosn: Oh yeah. I had him on the phone a couple of times already.

CNBC: And what has been Wagoner's reaction to this?

Ghosn: Well you know he has had a very open reaction. Because the Renault-Nissan alliance has been extremely successful, we're a little bit optimistic. But if you were coming from an experience which was not so successful, you'd be a little bit more skeptical.

Which I understand. So I think we're going to have to sit down and meet together... There are a lot of things at stake. That's why I want to be very cautious and look at the way we want to run it.

CNBC: Let me bring on Lee Iacocca, another really icon in the automotive industry. He talked about one the biggest problems facing GM. I'd like you to hear what he had to say and then react to it. Listen to Lee Iacocca.

Lee Iacocca: The healthcare and pension costs for Toyota are just minimal compared to General Motors. I think General Motors' own numbers show they pay $1,500 a car for health care. Toyota pays about $250… So they have some built-in advantages...

CNBC: That was Lee Iacocca… What do you think about that? Is this GM's biggest problem?

Ghosn: Well, there is no doubt about the fact that health care and pension costs are a factor. So, you see, the older the workforce is, the higher the cost. If you have a younger workforce, it's an advantage. If you have an older workforce it's a disadvantage.

When you compare the United States to other countries, this is something you have to take into consideration. For example, European companies don't have to care about [pensions and health care]. It's paid by the government.

CNBC: But at some point, don't you face the same legacy issues?

Ghosn: Well, obviously, one day you are going to face it because your workforce is going to get older and you're going to have these pension costs. But today, you prepare for it. You know that if you don't do anything, you're going to get huge costs that you cannot manage. So you are trying to modify your system little by little [so you won't] face the same kind of problem.

CNBC: There is some speculation that prior to your talks with Tracinda and Wagoner, you were talking with Ford and the Ford family. And basically Kirk Kerkorian crashed that party. What has the Ford family asked you to do?

Ghosn: I have contacts with all the top executives of this industry, we know each other, we have been there for a long time. I've known Bill Ford for a very long time, we have exchanges. I don't think that saying that we had talks about the alliance is really very serious, we didn't.

CNBC: They wanted you to run the company, though.

Ghosn: Well this is a different story and a different subject. I don't think they were talking about the alliance. I've always said that I am very open, but there is no necessity to expand the alliance to a third partner. Renault-Nissan can compete together and hopefully be very successful. But if there is an opportunity to expand the alliance, we'll look at it. And that's what we are doing.

CNBC: But why GM and not Ford?

Ghosn: Well, because the request came from GM. The initiative came from them.

CNBC: Right, but Ford did ask you to get involved somehow, either run the company or take a part in the organization there.

Ghosn: No, I don't think there was any request by any other car manufacturer directly or indirectly to be part of the alliance. The first initiative that was taken was Kirk Kerkorian's [initiative] through Tracinda.

CNBC: Let me ask you about this big news today on Ford. The company cut its dividend in half. It's also cutting the fees that it pays to the board members. Many people question the viability of Ford if in fact we were to see Nissan and GM and Renault have this alliance. Is Ford in big trouble if in fact these three get together?
 
Ghosn: I don't think that [an] alliance [would fix] the fundamental problems of one specific company. The fundamental problems that a company faces has to be fixed by the management of the company itself. Nobody can do it for them.

When the alliance between Renault and Nissan was completed, Renault lent some skills and experts to Nissan, but Nissan did the job by itself. And nobody could do the job for Nissan in terms of revival and back to profits.

Certainly I think this is going to be the case for any car manufacturer. If you are in the alliance, you going to benefit from benchmarking…You are going to benefit from skills, expertise, whatever you need. But at the end of the day, you've got to do the job by yourself.

Frankly, I don't think [the auto industry] has any situation which has no solution. Every single problem has a solution. It's more or less hard, more or less obvious -- but you have a solution. And I don't think… an alliance threatens the existence of another company. Because if alliances are not managed well, they can be a liability.

CNBC: People are worried that you can't handle another job. You're already running Renault, and you're running Nissan. One company is based in Paris, one is based in Tokyo. How are you going to run a third company? Are you stretched too thin?

Ghosn: Well, I'm not going to run any other third company. That's not what is at stake here. What is at stake here is building an alliance with a third company and working with this company. If an alliance is set up,we would do anything we can… to help it be successful and, second, to develop the synergies.

CNBC: Are you saying categorically that you do not want to run GM?

Ghosn: I'm saying, categorically, it's out of the question that I would add [a third job] on top of my two present responsibilities, which is being CEO of Renault and Nissan.

[sirAQUAMAN64]

CNBC: … CNBC automotive reporter Phil LeBeau interviewed GM CEO Rick Wagoner earlier this week. He joins us now in Chicago.

CNBC: Hi Maria. Mr. Ghosn, this is Phil LeBeau. I don't know if you had a chance to see the interview we did with Mr. Wagoner. I'd like to play one of his comments, when we asked him what could be gained from an alliance. Here's what Mr. Wagoner had to say on Tuesday.

Wagoner: I've known Carlos through business relationships for a long time. [I've know him] more than a decade, and have great respect and admiration for him. Beyond that, let's see what happens as far as the future develops. But he's obviously someone who's done a fine job… and knows the business, and I'm privileged to know a lot of people in our business. I think he's a very good one.

CNBC: Can you work with Ghosn?

Wagoner: We'll worry about that when the time comes. Let's see what works for the company first and then we'll worry about the right way to run them. I don't see any problem working [with Ghosn].

Really, in my career I've not had trouble working with anybody. We worked very well with the Fiat management as long as that deal was in place. We've worked with Japanese management, and we've had alliances with others. So it's not my experience to have trouble working with any other businesses.

CNBC: That was Mr. Wagoner talking about working with you, Mr. Ghosn. From your perspective, could you work with Rick Wagoner? Could he run General Motors while you run Nissan and Renault?

Ghosn: Well, there is no doubt about it. If we find an agreement on the synergies…and if we agree… to deliver the synergies, that's what an alliance would require.

I've known Rick for a long time. I think we've always had a very open discussion about many issues. I think he's somebody who is pleasant to work with. So I have no problems with this. I understand that in order to work well with people there must be some kind of basic agreement that you need to follow. And if the basic agreement is very clear, there will be no problem.

CNBC: One more comment from Rick Wagoner. Here's what he had to say when it came to the question of looking for those areas where Nissan, Renault and General Motors could work together.

CNBC: Rick can you see this alliance producing value for General Motors' shareholders?

Wagoner: We need to look at the details because of our experience with alliances -- and we've had a lot of them over the years, as you know. What kind of products can you share? What kind of powertrains can you share? Where are there opportunities to work together in distribution?

So you really need to get into the details. How do product cycles run ? We know how to do it. We look forward to doing it. We've done it with other [automakers] So we're going to do that. It's really a pretty straightforward exercise much of the time to figure out what the value is for the shareholders.

CNBC: Mr. Ghosn?

Ghosn: Well, I agree with Rick. It's obvious that you need to know first what are the different areas [of cooperation.]

Obviously they have a lot of experience having partnerships and joint ventures with many car manufacturers. We have our own experience [with] Renault and Nissan. And that's one of the benefits of sitting together and [sharing] our own experience.

But at the end of the day you have to bring in your experts -- though not many of them. At least you have to pick one of them for every single area of opportunity that you consider.

Powertrains are one area, platforms are another area, purchasing is a third area. You can take [R&D] as a fourth area. You can take all the areas and you to agree on the different areas where we think there are synergies. Get the experts and tell them how much at a minimum you can work together, and how much is the maximum we can shoot for.

And then, we define what is at stake… And if you think that the stakes are big enough, then you're going to have to build an organization in order to deliver.

CNBC: Have you spoken to the unions and discussed a possible alliance with any union? From their perspective, there's probably going to be more plant closings and job losses if we are talking about synergies.

Ghosn: You know, I think that the job losses and the plant closings have already taken place. I don't there we're going to have [any cutbacks] on top of what exists.. When you talk about North America, these decisions have already been made by the present management.

Those [cuts] are going to continue whether there is an alliance or not. On the contrary, I think if we agree on an alliance, you may stop some of the job losses and you may probably reduce some of the plant closings for a very simple reason. Nissan needs more [production] capacity in North America. Period.

CNBC: So it's a positive for you.

Ghosn: So we have an option. We can build a new plant or we use an existing plant. There is no other option. Obviously, if there is no alliance you're going to build a new plant.

If there is an alliance, you're going to consider whether you can use existing capacity somewhere… Obviously it would be a benefit for the two parties.

One party does not have to make such a huge investment to build a new plant. And the other party does not have to spend so much money to close a plant and reduce the workforce. So, these are the kinds of synergies we're going to take a close look at.

CNBC: Some people say this is an effort on the part of both companies, Nissan and GM, to really get at, fight against a common enemy – Toyota.

Ghosn: We have a common objective. [We want to] attract as many customers as possible. That's the main objective. It's not so much to combat one or the other competitor. It's mainly to bring to this customer as much as possible… I don't think this [alliance's purpose] is to conquer any particular company.

CNBC: The proposal on the table -- as we read it in the papers so far -- is for Nissan to take a 10 percent stake and for Renault to take a 10 percent stake. That's 20 percent. Could this deal be done without a stake?

Ghosn: It depends on the synergies... If the synergies are very big, I think exchanging shareholdings – and especially taking some share holdings -- is very important. It gives the signal inside the companies that this is serious and this is long-lasting.

CNBC: So you want a stake?

Ghosn: I think so. I don't believe that anything serious will happen for the long term if there is not a stake… At the end of the day, you want the people inside your company to sense that the success of the other company is good because you benefit from it. The best way to do it is take a stake in it.

CNBC: Will you take less than 10 percent?

Ghosn: Frankly, it is too early to talk about this. First you need to know what are the synergies. Maybe after we see the possibilities, we'll say it's not worth it. So let's not even talk about organizational structures before we see what is at stake. I suspect that the stake will be big, but we have to sit down and size it up… Then you say what kind of organization and what kind of shareholding you have.

CNBC: It is no secret that the American automakers have lagged behind the Japanese automakers in terms of quality. What is wrong with the American quality in cars?

Ghosn: I think the gap has been reduced. You're going to see more and more reduction of this gap in the future.

CNBC: Why?

Ghosn: With quality, like anything else, if you work at it you're going to get it.

CNBC: Is that the main problem?

Ghosn: I think so… If you make it a priority, you're going to get good at it. Now, the [definition of quality] is going through a shift away from “things gone wrong,” which is what people are now fixing. You've got to get more things you like.

Do you like the materials, the colors, the fit, the sound? You've got to take the good cars apart. In the past, [the quality question] was: ‘Is the car reliable? Is the car durable?' Now, we're shifting…to the question: Did I get the right colors, features, material, sound, into the car?

CNBC: One year ago, I asked you how business was and you said it is turning down. People are buying fewer SUVs... Where are we right now in terms of business? What do you expect in the second half of the year?

Ghosn: In the second half of the year I'm expecting the market to be stable. What's happening in the United States is about the same as what's happening in Europe and Japan, We are seeing that the mature markets are relatively stable, with some shift in the mix of cars sold. People are buying more small cars and fewer big cars.

But the real growth of the industry is happening in the developing markets – China, Russia and India. These are booming markets with double-digit growth rates and that's where everybody is going.

CNBC: Is this an area of synergy for Nissan and GM?

Ghosn: Without any doubt.

CNBC: Is this one of the main topics tomorrow?

Ghosn: This is one of the topics. I would not say that this is the main topic but this will be certainly one of the topics.

CNBC: What is the first thing on your agenda tomorrow when you go in to speak to Wagoner?

Ghosn: I have a program of work and a schedule. Because I don't think this should go as an open-ended process. I think we should set for ourselves a timeline. We should set some milestones, and we have a lot of stakeholders for which we need to talk about what's going on.

So it should be relatively short for people most immediately impacted by this, but also [allow] enough time for our teams and the experts to really size up what's at stake.

CNBC: How long are you going to give it before you can make a decision if this is working or not?

Ghosn: Hopefully before the end of the year it would be clear.

[Trainman]

Moved to the study phase:

From Reuters (http://money.excite.com/ht/nw/bus/20060715/hle_bus-wen1109.html)

GM, Renault-Nissan start 90-day study of alliance

Saturday July 15, 12:39 AM EDT

By Kevin Krolicki

DETROIT (Reuters) - General Motors Corp., Renault SA and Nissan Motor Co. agreed on Friday to review the benefits of a potential alliance that could change the world auto industry.

The decision to devote the next 90 days to a study of the potential savings from a tie-up follows a widely awaited dinner meeting on Friday in Detroit between GM CEO Rick Wagoner and Carlos Ghosn, CEO of both Renault and Nissan.

The meeting came two weeks after GM's largest individual shareholder, billionaire investor Kirk Kerkorian, went public with his bid to broker a sweeping alliance that would see Renault and Nissan take a substantial stake in GM. Renault and Nissan already hold stakes in each other.

Ghosn and Wagoner said working-level talks were expected to focus on areas such as pooling purchasing of parts and sharing vehicle platforms would get underway now, allowing both sides to evaluate the benefits of a deal by October.

"We had a good discussion today, and are looking forward to having our teams work together to explore our ideas," Wagoner and Ghosn said in a joint statement.

"It is important to let our teams work on this review without distraction and, therefore, we will not be providing further public comments about it at this time."

Ghosn told reporters earlier a deal would only succeed if all sides would benefit.

"If not, we will shake hands and return to our battlefield," he said at a Nissan facility in Detroit.

Analysts fear a tie-up might not produce the cost-savings Kerkorian has suggested and could threaten to distract both CEOs at crucial times for their respective companies.

Wagoner has said this week that GM, the world's largest automaker by sales, was not relying on a white knight to rescue it from its deep-seated problems.

GM lost $10.6 billion in 2005 as it struggled with high labor costs, sluggish sales of profitable sport utility vehicles and loss of U.S. market share to foreign rivals.

Under Wagoner, GM has moved to sell assets and slash its hourly work force by 35,000 workers as part of a cost-cutting plan expected to capture about $5 billion in savings this year.

In response, GM shares have gained almost 46 percent since the start of the year, bringing Kerkorian closer to profitability on his 9.9 percent stake in the company.

"We have a good plan, we're turning the business at a rapid rate," Wagoner told reporters on Thursday. "So we're going to be in a position to be a very successful business."

Ghosn, highly regarded for his success in turning around Nissan, Japan's No.2 autos firm and the world No.7, has tried defuse several areas of potential tension with GM management and workers. Renault is the world's 10th largest automaker.

WHEN THE GOING GETS TOUGH?

Ghosn repeated on Friday he had no intention of taking the top job at GM, a prospect some analysts see as Kerkorian's aim in first approaching Ghosn at a mid-June dinner.

"It's not serious," he said of the suggestion. "I'm not interested in his job. I'm interested in and responsible for Nissan and Renault development and results."

In a move that could ease potential union opposition, Ghosn has also suggested Nissan could take over some of the excess production capacity GM is planning to shed in North America.

That would cushion the blow as GM looks to close 12 plants and heads into a crucial round of contract talks with the United Auto Workers union where it is expected to seek concessions on costly benefits.

Ghosn has said he wants a broad partnership with GM if there is to be any deal at all, including a deal where his companies take a "big" but unspecified stake in GM.

Wagoner said on Thursday he wanted to get a "clear understanding" of what Ghosn expected and to convey GM's priorities.

Analysts remain skeptical.

"We believe an alliance between Renault-Nissan and GM is set to fail the test of generating enough synergies quickly enough to make it worthwhile, particularly for GM," Commerzbank analyst Philip Watkins said in a research note.

Analyst Kevin Tynan of Argus Research agreed: "I think Wagoner is going into it a little more skeptical. He and his team are a little bit more confident now in the work they've done and they've said publicly they don't need a distraction right now."

©2005 Reuters Limited.

[sirAQUAMAN64]

EXCELLENT!  

http://www.autoblog.com/2006/10/04/what-went-wrong-analysis-of-gm-renault-nissan-talks/

Ford stock is at $8.50 or so. GM is at $33 or so. Didn't realize so much difference between the two. If Nissan-Renault goes after Ford, could be possible to make some money investing in Ford as the stock market is bound to respond.

[UmroAyyar]

In my uninformed opinion. Changes from within are the only way for GM to turnaround. Its a totally different behemoth to be handed over to people who don't know the legacies within GM. There are some signs towards that. All the well.

[ovr50]

No big surprise there, although I guess, for political reasons, both sides had to drag it out to make it seem like they were both really serious about a possible deal and to shut up Kerkorian. As stated, now let the real auto execs get back to making GM work and quit pandering to shareholders like K.  

[inco]

No big surprise there, although I guess, for political reasons, both sides had to drag it out to make it seem like they were both really serious about a possible deal and to shut up Kerkorian. As stated, now let the real auto execs get back to making GM work and quit pandering to shareholders like K.  

And that's really what this was all about - Special K. Put me on the side of glad it didn't happen - it would be such a shame to see the N/R guys get dragged down by the GM mindest.