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Wednesday, October 04, 2006

GM Kisses Off Ghosn

Perhaps it was Nissan's poor showing in America in September, or its falling share in Japan, but GM decided today to end talks with Carlos Ghosn about a three-way alliance with Nissan and Renault.

Ghosn was a hero in Japan and Europe a year ago, but the screw has turned since then. Nissan's shares are down sharply since May and Renault's have dropped modestly over the same period.

Contrast that with GM, the Dow component with the largest increase this year, close to 70%. The shares now trade near their 52-week high of almost $34.

The GM brass did not want to lose their jobs to a man who spoke English as his third language. But, in true, they helped their own cause. GM's US share has been stable around 25% the last three months. The company has also taken $9 billion out of annual costs. It accomplished this several months ahead of Ford in an industry where a week is now an eternity.

GM knows from its joint ventures in places like China that knitting together car company production and distribution requires more than a roadmap and compass. The GM, Nissan, and Renault cars are not on common platforms. The issue of dealership overlap is also complex and can be vexing.

Ghosn can now approach Ford. But, its CEO may want his turn at bat before he hands the company over too a new proprietor.

Douglas A. McIntyre can be reached at He does not own shares in companies that he writes about.

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