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Attitude from Altitude

Peter Brown
Thursday, October 5, 2006

No alliance? GM already knows everything

Automotive News / October 5, 2006 - 10:58 am

Here's all you need to know about why General Motors will not be hooking up with the successful Renault-Nissan alliance.

Last week in Paris, GM CEO Rick Wagoner said this: "GM sells more than 9 million vehicles a year globally. It's not logical or responsible to say we must have a partner to recover."

In other words: We're GM.

If GM had a different culture, Wagoner could, with equal truth, have said this: "GM lost $10.5 billion last year, more than $1,100 for each of the nearly 9 million vehicles we sold. Of course we need some help. We need to do things in different ways."

But you didn't hear that from Rick Wagoner. For all of the company's failures, GM people remain arrogant. Nobody can tell anything to anybody at GM. They already know it all.

To my knowledge, no executive was whacked to take the blame for the $10.5 billion loss. So the same team that lost the money is now working to make money.

I was never in favor of the alliance. Kirk Kerkorian proposed it as a shortcut fix to make his investment in GM rise above water. The benefits of an alliance would be speculative.

And any company as arrogant as GM would be a lousy partner, which is what Carlos Ghosn's people discovered during the doomed study of the hookup. ("You want us to pay you money for the privilege of working with your money-losing team?")

Renault and Nissan succeed because they work together, learn from each other (GM learns from no man) and find areas of the business where they can either both save money or both improve revenue.

Rick Wagoner himself is not an arrogant person. He is a smart, self-deprecating man with a good heart. But still, he suffers from GM disease: We sell 9 million vehicles; therefore, ...

Wagoner's team has done a magnificent job of cutting costs. But his team has shown little ability to capture the fancy of the American car buyer. And until that happens, all the cost cuts in the world will just be part of a downward spiral.

OK, GM sells 9 million. Meanwhile, GM's market capitalization of about $18.9 billion is less than a quarter of the total market cap of Renault and Nissan, which combined last year to sell a measly 6 million vehicles and make $7.54 billion.

The three-way alliance was probably not a good idea. But for GM, neither is arrogance.

You may e-mail Peter Brown at pbrown@crain.com