Nissan and Renault seek talks with General Motors

24-08-2006

Carmakers Nissan and Renault said yesterday that they were prepared to start talks with the troubled General Motors Corporation (GM), aiming to forge a three-way alliance which would create the world's largest auto group.

Carlos Ghosn, chief executive of both French company Renault and its Japanese partner Nissan, has been authorised by the groups to begin discussions with GM if the US car giant agrees to consider such a move.

Renault, which owns a 44 per cent stake in Nissan, said in a statement yesterday: "Exploratory discussions with General Motors concerning a potential alliance could start if General Motors Corporation makes the proposal."

Nissan, which in turn owns a 15 per cent stake in Renault also said that it was prepared to proceed with "exploratory discussions concerning a potential alliance with General Motors".

The announcements followed separate meetings between Renault and Nissan board members to consider a proposal put forward by GM's largest shareholder Kirk Kerkorian in regard to the possibility of the companies taking a stake in the group.

Renault and Nissan chief Ghosn allegedly expressed an interest in purchasing a stake of up to 20 per cent in GM during a dinner last month with Kerkorian, a source said to be familiar with the situation, he told the Reuters news agency last week.

Reports suggest that billionaire investor Kerkorian, who owns a 9.9 per cent stake in GM, is keen to increase pressure on the company's management to improve the group's ailing performance.

North American-based firm GM lost $10.6bn last year, with increasing labour costs and growing competition from Asian competitors such as Toyota taking their toll on the company's profits.

The car manufacturer, which plans to close 12 of its plants by 2008 in a bid to cut costs, recently announced that 35,000 of its workers had accepted either early retirement packages or voluntary redundancies.

GM has yet to comment on Renault and Nissan's approaches.


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