Two Wrongs Don't Make a Right
How many times have you heard that in your life? I know i have quite often...someone needs to remind GM of this. GM-Renault-Nissan? Or would it be Nissan-Renault-GM...or Renault-GM-Nissan...doesn't matter, whatever it is its a recipe for disaster. I was rather surprised that this idea is supported by Kerkorian. I'm having a hard time seeing the benefits of such a partnership/merger and apparently allot of journalists are as well. I've yet to read an article that is very positive.
What i cant figure out is how this address's GM's problems? How does this help Nissan, or even Renault? GM has too much capacity, too many expensive employees (current and retirees) and too many boring cars and brands. There are a few winners...but not enough to support the rest of the losers. Again, i ask, how does a merger with Renault-Nissan help this situation? I can think of only two reasons to discuss such a move.
One, it changes the scope of the press on GM. By refocusing the scrutiny on GM perhaps GM thinks it can send a message to the Union and the government that the situation is serious and requires some serious actions. This is a long shot though.
Two, Carlos Ghosn. This is a more compelling reason. He did a very tough thing in turning around Nissan. If GM wants him to work his magic with GM then they shouldn't do this by adding the deadweight of Renault and Nissan to the mix. Simply hire Ghosn. The problem is he isn't keen on moving. Ford tried to lure him away and failed. Perhaps GM thinks that even with Nissan and Renault in the mix its still better to have Ghosn than not have him. Renault is fairly successful here in Europe (although mostly on the back of only 1 popular model) and theres been allot of talk about Renault reentering the US. Maybe this is also some motivation. GM can market new cars (current production Renault cars) through its existing dealership networks thereby adding new cars to the mix for relatively little cost. But does GM really need another offering? Will these new cars take sales from competitors or from current GM sales?
The partnership/merger is billed as saving money in terms of engine development and supply chain costs. Well thats just plain BS. US consumers have vastly different tastes than European or Japanese consumers. Unless GM plans on flat out replacing its small engines with those from Nissan/Renault and eliminating its V8's altogether theres no benefit. And supply chain savings. As someone who works at a tier 1 i can tell you that you can only squeeze so much money from your supply base before you drive them into the same situation as you are in. Lest we forget that it was GM, or rather J Ignacio Lopez who really put the whole supply industry on this track in the early 90's. Thanks Lopez.
Supposedly this isn't really a merger but rather a partnership. However we have only to look as far back as GM/Fiat or Daimler Benz/Chrysler to see what can happen when companies partner up. The GM/Fiat partnership was a failure, no doubt about it. No one knew why the deal was cut then or now and in the end GM wound up paying quite a bit if cash to break the deal.
The DCX deal has fared better, but not after some serious growing pains. If you look at Chrysler's recent success it has more to do with getting in a good leader (Zetsche) and pushing out some good products. Savings from a merger, which is normally why they are billed as being necessary, don't generate success.
For a partnership to be successful one has to believe that the partners will compete better than its components would have on their own. If this deal goes through this new company would create a part Japanese, part American and part French entity. 2 cultures working together is hard enough, but 3? And 3 as different as these? I'm not convinced.
What i cant figure out is how this address's GM's problems? How does this help Nissan, or even Renault? GM has too much capacity, too many expensive employees (current and retirees) and too many boring cars and brands. There are a few winners...but not enough to support the rest of the losers. Again, i ask, how does a merger with Renault-Nissan help this situation? I can think of only two reasons to discuss such a move.
One, it changes the scope of the press on GM. By refocusing the scrutiny on GM perhaps GM thinks it can send a message to the Union and the government that the situation is serious and requires some serious actions. This is a long shot though.
Two, Carlos Ghosn. This is a more compelling reason. He did a very tough thing in turning around Nissan. If GM wants him to work his magic with GM then they shouldn't do this by adding the deadweight of Renault and Nissan to the mix. Simply hire Ghosn. The problem is he isn't keen on moving. Ford tried to lure him away and failed. Perhaps GM thinks that even with Nissan and Renault in the mix its still better to have Ghosn than not have him. Renault is fairly successful here in Europe (although mostly on the back of only 1 popular model) and theres been allot of talk about Renault reentering the US. Maybe this is also some motivation. GM can market new cars (current production Renault cars) through its existing dealership networks thereby adding new cars to the mix for relatively little cost. But does GM really need another offering? Will these new cars take sales from competitors or from current GM sales?
The partnership/merger is billed as saving money in terms of engine development and supply chain costs. Well thats just plain BS. US consumers have vastly different tastes than European or Japanese consumers. Unless GM plans on flat out replacing its small engines with those from Nissan/Renault and eliminating its V8's altogether theres no benefit. And supply chain savings. As someone who works at a tier 1 i can tell you that you can only squeeze so much money from your supply base before you drive them into the same situation as you are in. Lest we forget that it was GM, or rather J Ignacio Lopez who really put the whole supply industry on this track in the early 90's. Thanks Lopez.
Supposedly this isn't really a merger but rather a partnership. However we have only to look as far back as GM/Fiat or Daimler Benz/Chrysler to see what can happen when companies partner up. The GM/Fiat partnership was a failure, no doubt about it. No one knew why the deal was cut then or now and in the end GM wound up paying quite a bit if cash to break the deal.
The DCX deal has fared better, but not after some serious growing pains. If you look at Chrysler's recent success it has more to do with getting in a good leader (Zetsche) and pushing out some good products. Savings from a merger, which is normally why they are billed as being necessary, don't generate success.
For a partnership to be successful one has to believe that the partners will compete better than its components would have on their own. If this deal goes through this new company would create a part Japanese, part American and part French entity. 2 cultures working together is hard enough, but 3? And 3 as different as these? I'm not convinced.
posted by Corrigan at 9:30 AM
1 Comments:
surprised that it is supported by kerkorian? i was under the impression that its pretty much his deal. he's pushing it through to make the stock go up so he can sell and get a profit.
its still a shitty deal, i agree. as for ghosn... nissan did turn around but they've been stagnant for the last few years.
there is no way in which this deal is anything but fodder that might make the stock price flutter. luckily the detroit local news coverage has seen the light and so against it and kerkorian.
dcx wasn't a merger... chrysler got bought.
when at gm, i worked with isuzu to develop the trailblazer ... it sucked. i spent a week learning the culture and etiquite so that i wouldn't insult them and we still couldn't communicate or work effectively together.
good points all around though.
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