rominl

iTrader: (4)

i can believe GM working ultra hard on this, but nissan willing to talk, that got me. i know nissan is in some kind of slump right now, but do they need this?

Gojirra99

July 10 (Bloomberg) -- 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 July 7 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's Target

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 2006, 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.''

source : bloomberg

rominl

iTrader: (4)

well, i can see how toyota being their common enemy, but my doubt is still, if they (GB and Nissan) join forces, is it going to help? dunno, personally i just see more harm done (at least to Nissan).

we will see i guess

LexFather

didn't I say this right out the box!! That its about Toyota and someone wants to be the BIGGEST, not about being the best.

Hell throw in Ford, Mitsubishi, Isuzu, Peugot+ GM, Nissan, Renault and I still pick Toyota.

GS3Tek

iTrader: (8)

"Ghosn, 52, could use GM's idle manufacturing capacity to increase production cheaply."

Well hopefully the joint venture is also about improving QUALITY.

LexFather

Toyota being #1= the right way
Gm+Renault+Nissan being #1= the total wrong way

If u thought I had jokes before, let this merger go through

KneeShoe00

hahahahha @ mike what is wrong with you? ahhaahah

rominl

iTrader: (4)

what's the point of being number 1 in size??? that's not gonig to buy you anything. if you dont' have good products people would still leave and you have nothing to hold them back?!

Lexmex

Size means nothing as Daimler-Chrysler proved that point when talking mergers. I figured it might be something with an economy of scale in terms of size and costs, but on the quality front Nissan ain´t what it used to be, and Renault and GM are not much of an improvement.

CHIS350

For some reason US stockholders are hell-bent on marketshare, so to them it's important to be "the biggest." In the end it doesn't mean anything because Toyota is always going to be marking a much higher margin per vehicle sold, which they pump into maintaining/increasing the quality of their products.

GM, Ford, Chrysler, Nissan, all cut corners to lower costs because they have to add so many incentives just to get their damn cars off the lots.

LexFather

Immature bragging rights. No different than the guy saying I got 28" rims.

videcormeum

Have you seen Toyota commercials lately?

They'll be just as annoying and insolent about becoming/being #1 as GM has been, if not more so.

But Toyota deserves the #1 spot more than any other auto company - they've really got it together.

M.

rominl

iTrader: (4)

if that's the case, then it's pretty pathetic imho.....

Gojirra99

GM's Wagoner Could Try a Call to Toyota: Doron Levin (Correct)
(Corrects name of Toyota chairman in eighth, 19th paragraphs.)

July 11 (Bloomberg) -- Rick Wagoner, chief executive of General Motors Corp., is a man on the spot who's running out of time and options.

An influential GM investor wants him to entertain a global partnership that could cost him his job. You'd imagine someone in such deep muck might at least consider a rescue by automaking's top dog, Toyota Motor Corp.

Officially, Wagoner has agreed to study a proposal by Kirk Kerkorian, who owns about $1.7 billion of GM's stock, to join an alliance between Renault SA of France and Nissan Motor Co. of Japan., run by high-profile turnaround specialist, Carlos Ghosn.

Wagoner and his management team are wary and probably will argue that the drawbacks outweigh any benefits. Wagoner's biggest objection might be that Nissan and Renault, after buying a 20 percent stake in GM, will call or heavily influence the shots, rendering his own turnaround plan moot.

The alliance proposed by Kerkorian isn't a bad idea on its face, especially with Ghosn, the chief executive of Renault and Nissan, at the helm. Assuming Wagoner has his own ideas on how to reverse GM's course, he can't simply blow off Ghosn. GM directors ultimately will decide, and shareholder interests are paramount.

Wagoner can't argue persuasively that his own strategy, announced last year, is certain to bear fruit if given time. He's won some union concessions, but the numbers remain dismal. Longtime GM watchers are growing more dubious, as are competitors, shareholders, suppliers and lenders.

In the Game

No, to stay in the game Wagoner must come up with a new and creative alternative to Ghosn. One possibility with merits is a strategic alliance with Toyota, the acknowledged world leader of the industry in terms of pure manufacturing skill and business acumen -- and soon to surpass GM as No. 1 in sales.

Wagoner could easily reach out to Fujio Cho, Toyota's chairman and say: ``Cho-san, I'm in trouble and need help. Would Toyota consider some kind of alliance with us that blocks Ghosn?''

Jeff Liker, an engineering professor at the University of Michigan and author of papers and books about Toyota, said the Japanese automaker would ``have to consider'' such a request.

For Toyota, buying 15 percent to 20 percent of GM on a friendly basis would be relatively cheap and probably enough to block Nissan. The stake would be small enough so Toyota wouldn't be stuck with GM's massive pension or health-care liabilities -- and perhaps might pass U.S. antitrust scrutiny.

GM could give Toyota unused U.S. plant capacity. Toyota's market capitalization is $189.3 billion, compared with GM's $16.7 billion.

Toyota, GM

Toyota, which avoids giant mergers, already has a few small projects with GM and it bought GM's small stake in Fuji Heavy Industries Ltd. GM also has considerable warts; it's beset in the U.S. with labor woes, government investigations into questionable accounting, falling market share, a junk credit rating and bloated management.

An alliance with GM, though, might help to inoculate the Japanese automaker against what it fears would be a possible backlash from American consumers and politicians if GM ever were to file for bankruptcy. From a defensive viewpoint, Toyota also has to wonder if there's value in impeding a GM alliance with Carlos Ghosn that could grow into formidable competition.

Ghosn sometimes refers to Toyota as ``the beast.'' In his view, GM and Ford Motor Co. have helped the beast grow by failing to lure customers they should be attracting with their own brands.

Catching Up

Toyota and its affiliates plan to sell 10.3 million vehicles by 2010, up from 8.85 million in fiscal 2006. Nissan and Renault together sold 6.13 million cars and trucks in 2005. GM sold 9.17 million cars and trucks in 2005.

How Wagoner conducts the study whether to ally with Ghosn will be critical. Kerkorian and his confederate, Jerry York, a GM director, think the study should be carried out by a subcommittee of the board, assisted by a consulting firm; they're worried management will nix the proposal to save itself.

Another possibility is that Kerkorian and Tracinda put the spotlight on their own study, which York has been pursuing quietly. While such an inquiry would lack any legal or official status, it could take on a life of its own in the media and among investors, forcing GM management to defend its findings.

Kerkorian and Tracinda so far aren't identifying the major institutional investors they say are sympathetic to them. As time goes on, and absent a substantial improvement in GM's performance, investors will demand proof that Wagoner's plan is succeeding.

So unless GM soon has good news to report, Wagoner better make that call to Toyota's Cho. Toyota could be an unexpected white knight, and won't do worse than to say no.

Overclocker

By DAVID GUILFORD | AUTOMOTIVE NEWS
AutoWeek | Published 07/14/06, 9:20 am et

Carlos Ghosn says he has no interest in running General Motors in the event of an alliance involving GM, Renault and Nissan.

"I'm not going to run any other third company," said Ghosn, CEO of Renault and Nissan. He made his comments Thursday in an interview with the CNBC cable network.

Ghosn is expected to meet with GM CEO Rick Wagoner on Friday to discuss a possible alliance that grew out of Ghosn's discussions with investor Kirk Kerkorian, who controls 9.9 percent of GM stock.

Ghosn also said:

A possible alliance should be studied jointly by teams made up of one expert each from GM, Nissan and Renault.

Nissan wants to produce some vehicles in GM's North American assembly plants.

An alliance could avert some GM layoffs and plant closings because "Nissan needs capacity in North America -- period," Ghosn said.

A serious alliance would require that Renault-Nissan hold a substantial equity stake in GM. "I suspect the stake would be big," Ghosn said. Initial reports said Renault and Nissan would buy 10 percent of GM stock apiece.

In interviews published Thursday with the Wall Street Journal and France's Le Monde newspaper, Ghosn said that any deal with GM needed to boost the existing alliance between Renault and Nissan.

In his interview with Le Monde, Ghosn said there was no point in entering detailed negotiations if the willingness to look seriously at a deal was not there on both sides. "Without any hunger, (talks) would be a waste of time," he was quoted as saying.

"We have to overcome the optimism of some and the skepticism of others in order to evaluate objectively the potential of an alliance," Ghosn said.

Under a tie-up, Nissan and Renault could take a stake in GM as the three companies look to capture savings by sharing the costs of developing new products and buying components.

"There is no reason it cannot work if we undertake this project in the same spirit as that we worked on with Nissan," he told Le Monde.

"The only valid question is whether an alliance with GM could accelerate, strengthen or increase the success of the plans underway at Renault and Nissan," he was quoted as saying.

Wagoner said on Tuesday, July 11, the proposed alliance was an "interesting idea" that would get full consideration from GM.

Some analysts had expected Wagoner to oppose the potential tie-up, saying it could endanger or end his tenure at the head of the world's largest automaker by sales.

GM's board last week approved exploratory talks on a three-way alliance with Nissan and Renault, increasing the pressure on GM's Wagoner at a crucial point in the automaker's turnaround.

Kerkorian objected to the board decision. Rather than GM management, Kerkorian wanted an independent board committee with access to outside advisors to investigate the possible alliance.

Reuters contributed to this report.

Interview Transcript
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.

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.

Source: http://www.autoweek.com/apps/pbcs.dl...1/TOC01ARCHIVE