GM, Renault-Nissan test drive alliance

Mumbai: General Motors Corp has agreed to work together with Nissan Motor Co and Renault SA in a 90-day study of potential benefits that may arise from a three-way alliance among the auto majors. The three are expected to review the benefits and vote on an alliance plan within this period.

The decision, which could impact the auto industry worldwide, followed a meeting between GM CEO Rick Wagoner and Carlos Ghosn, CEO of both Renault and Nissan bin Detroit.

GM's largest individual shareholder, billionaire Kirk Kerkorian, who proposed that Renault and Nissan acquire a substantial stake in GM, brokered the alliance plan.

Renault and Nissan already have a two-way alliance.

GM, Nissan and Renault would initially focus on sourcing parts together and sharing vehicle platforms.

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

GM, the world's largest automaker, lost $10.6 billion in 2005 as it struggled with rising production costs and sluggish sales, especially of its sport utility vehicles. The auto behemoth has been steadily losing US market share to foreign rivals. Having initiated a restructuring plan, GM, however, has indicated that it is not looking for a bail-out from its deep-seated problems.

As part of its cost-cutting exercise, GM has moved to sell assets and reduce its workforce by 35,000, a mover that is expected to bring about $5 billion in savings this year alone.

On the sidelines, though Ghosn has said that he has no plans to take on the top job in GM, an alliance amongst the majors may make it possible. Ghosn, who has successfully turned around Nissan, Japan's No 2 auto firm and the world's No7, is regarded as having the potential.

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

Nissan may also take over some of GM's excess production capacity in North America. That could win workers over where GM plans to close plants and hire workers on contract basis.