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CAR Confidential: GM ponders Renault tie-up

Ninety days. That’s the time frame Rick Wagoner, boss of General Motors, has set to decide if his company’s proposed alliance with Renault-Nissan could work.

Speaking to CAR Confidential at the British motor show last week, Wagoner outlined his thinking on a deal that would rewrite the auto industry map. The green light would create the world’s mightiest automotive alliance – at least on paper – with the two parties having a combined share exceeding 20% of the global car market.

“It’s a fairly standard play,” said Wagoner – with his trademark understatement – when asked about the advantages. “We would look at the benefits of sharing costs and revenues with a partner. It’s a pretty standard checklist: the development of products and technology, powertrain and purchasing.”

Just five days after his first face-to-face with Renault-Nissan chairman Carlos Ghosn, Wagoner couldn’t elaborate on details.

The synergies would be breathtaking if the two partners managed to pool the next Clio, Micra and Corsa, for example. Unit costs would be driven down, allowing the triumvirate to undercut competitors on price while still improving quality and margins.

But Wagoner warned that synchronizing product life cycles is not easy, with big cost ramifications for any company that has to pull forward a replacement model. He also noted the pitfalls of making alliances work across international and cultural divides.

He speaks from experience. Last year, GM took a $2bn hit to buy itself out of a partnership with Fiat that went sour. “We have learned lessons. Both sides must have a clear understanding of the business opportunities and very specific strategies.”

Wagoner’s views were echoed by Chrysler Group president Tom LaSorda. “A three-way alliance would be extremely complex. But if anyone could pull it off, Carlos Ghosn and Rick Wagoner could,” LaSorda says.

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