Carlos Ghosn's Renault SA and Nissan Motor Co. may start talks with Ford Motor Co. as prospects fade for a link with General Motors Corp., two people with knowledge of the discussions said.
Executives from the Renault-Nissan team and Ford have been in touch in the past month about exploring a possible link, according to the people, who asked not to be named because the proceedings are private. William Clay Ford Jr. initially called Ghosn in July to discuss a partnership if the GM-Ghosn talks led nowhere, three people familiar with the matter said last month.
After two months of discussions, Renault and Nissan probably won't take an equity stake in GM, nor have the companies been able to agree on purchasing and vehicle development, people familiar with the talks said this week. The two U.S. carmakers are considering alliances after Detroit-based GM lost $10.6 billion last year and Ford lost $1.44 billion in the first half of this year as buyers switched to models from Toyota Motor Corp.
“If that's true, it's not that Ghosn wants to quit talking to GM for Ford, but that if there are opportunities he'd be very stupid not to look at all of them, and on that he's absolutely right,'' Philippe Barrier, an analyst at Societe Generale in Paris who has a “buy'' recommendation on Renault stock.
Spokesmen for GM, Renault and Nissan yesterday said negotiations continue and no decisions have been made. Ford spokesman Oscar Suris declined to comment.
Kerkorian's Proposal
GM investor Kirk Kerkorian proposed the talks between General Motors and Nissan-Renault on June 30 after he lost confidence in GM CEO Rick Wagoner's plan to revive the world's largest automaker, a person familiar with the investor's thinking said at the time. GM's U.S. market share has dropped to an 80- year low. Wagoner and Ghosn, CEO of both Renault and Nissan, said July 14 their companies would spend 90 days, or until mid- October, exploring an alliance.
“The Renault-Nissan alliance is open to a third partner. As far as I know, that potential opening has only been discussed with GM,'' said Frederique Le Greves, a spokeswoman for Nissan's North American unit. “I have no knowledge of any talks with Ford.''
Ford, based in Dearborn, Michigan, has lost money in seven of the past eight quarters on its North American auto operations and doesn't expect the unit to turn profitable until 2009. Former Ford Chief Executive Officer Bill Ford subsequently turned over his company's CEO post to Boeing Co. executive Alan Mulally.
Reducing Production
The company is cutting North American production by 16 percent in the second half of the year, including a 21 percent reduction in the fourth quarter. Ford also said it will spend “significantly'' more than the $3.8 billion it estimated for one-time costs related to job cuts.
Kerkorian initially suggested in a June 30 letter that Renault, which has headquarters in Boulogne-Billancourt, France, and Tokyo-based Nissan were interested in a “significant minority interest'' in GM as part of an alliance.
The focus of the GM-Renault-Nissan talks has been on emerging markets such as China, Russia and Brazil, where GM has stronger sales, the people said.
Wagoner has said he remains committed to a plan to cut $9 billion from operating costs this year and GM considers that the priority as the Detroit automaker studies potential savings from an alliance.
Lining Up Bankers
Ghosn said Sept. 6 that his automakers have begun the process of hiring banks for advice on the talks. He said at the time the negotiations are “going well.'' Ghosn, who said he's not interested in running GM, also said he would back out if GM wasn't interested.
General Motors and Ford, the second-largest U.S. automaker, also briefly discussed an alliance or other type of cooperation of their own, a person familiar with those talks said last week.
GM Chief Financial Officer Fritz Henderson and Ford CFO Don Leclair talked after Kerkorian recommended the Renault-Nissan alliance, the person said. The talks led nowhere and haven't continued, the person said.
Shares of GM in Europe were up 0.1 percent at $30.96 as of 11:01 a.m. in Frankfurt. Ford stock gained 0.5 percent to $7.80. Renault shares in Paris were down as much as 1.50 euros, or 1.7 percent, at 88.60 euros. Nissan shares in Tokyo declined 8 yen, or 0.6 percent, to 1,314 yen.
