Jack Yan: the Persuader Blog: GM won’t be part of Renault

The Renault–GM alliance might not be as big as people suspect. Car companies already source a great deal of their components from the same place, and a tie-up would mean lower pricing for Renault and GM. The ofﬁcial line might not be too far from the truth this time.
Sure, we hear big names like Kirk Kerkorian, and I know he has grand visions for cooperation. Somehow, I still believe GM will drag its heels because of a Johnny Foreigner syndrome, and Renault will be held back by French politicians.
Any real merger could begin here, but I don’t think it will unfold the way things did with Daimler-Benz AG and Chrysler Corp. last decade. There, we were confronted with one group willing to spend, and another group ﬂexible enough to say yes.
I don’t think the same factors exist this time, with GM preferring to look at streamlining its operations globally rather than join an alliance, at least not beyond component sourcing and some shared platforms. If anything, this will rejuvenate Bob Lutz’s efforts to bring GM units more closely together.

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Posted by Jack Yan, 06:33 permalink

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Comments:

hiya jack yan!

the queer chef and comment whore pimped me here. nice blog.

cheers!

# posted by

R*Y A N: 7/09/2006 11:49:00 AM

Thanks, R*yan! Charles’s blog is wonderful and it’s a great way to meet people.

# posted by

Jack Yan: 7/09/2006 11:55:00 AM

Hi Jack. I knew you were about to take up this issue any day around since it's made headlines. While I coincide with what you have concerned, I also get this fuss that where's the end of it really ? Is the whole global automobile industry is anyway going to be formed into one single conglomerate ? Or there'll be a four way tug directing each one to GM or Ford Or DaimlerChrysler or Toyota [reckoning a Toyota-Honda merger] ? So, there'll be a vey few platforms and a very few competition now. All in the name of say, survival or streamlining or restructuring or the other sorts of gains. I wonder, how would they take care of the imminent market cannibalization. Isn't the very thread of individuality [or for that matter, identity] and culture also lost ?

# posted by

ROHAN: 7/10/2006 02:53:00 PM

I think the only benefit to such a merger would be retain the number one position over Toyota in global sales. To manage three companies with three cultures and so many locations would be a nightmare and the increased economies of scale would be insignificant. As a former GM employee, I hope this doesn't go through.

# posted by

Atul: 7/10/2006 03:55:00 PM

Atul, I agree. The cultures will not work out, though in fairness Renault–Nissan has worked, and Renault has learned from its alliance with AMC. However, I doubt GM is easy to shift, Bob Lutz or Carlos Ghosn. Ghosn will have to ﬁght a lot of battles to get his way, and while he will, it’ll be frustrating.
Rohan, consolidation is expected in mature industries, so I would not be surprised if we see more mergers. We have seen far stranger alliances in the past, but I personally think Honda will go offshore for one. Honda–BMW does not sound too daft to me. Ford–Fiat could make some sense.
Cannibalization would be avoided through branding, as we’ll see with the nuova Fiat 500 and the next Ford Ka: if anything, Ford has been particularly good on managing its brand portfolio, even if it has red ink from Jaguar and Land Rover.

# posted by

Jack Yan: 7/11/2006 08:52:00 AM