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From the Detroit Insider:

How about Ford-Renault-Nissan?
by Christine Tierney

Chemistry with Ghosn, complementary lineup could make more sense than alliance with GM.

M ight Ford Motor Co. be a better fit? As investors weigh the pros and cons of an alliance among General Motors Corp., Renault SA and Nissan Motor Co., the Dearborn automaker's name keeps cropping up.

According to the local version of events, Carlos Ghosn, CEO of both Renault and Nissan, first sounded out Ford when he began his search a little over a year ago for a third partner for the Renault-Nissan alliance.

Those talks didn't lead anywhere, but the chemistry was good enough for Ford to approach Ghosn last fall about the job of running the world's No. 3 automaker. That, however, would be little more than a lateral move -- Renault and Nissan together form the world's fourth-largest auto grouping.

About the same time, Renault expressed interest in acquiring Ford's Volvo Cars -- a Swedish company that the French company had sought as a merger partner in the early 1990s.

Volvo is the most successful and profitable brand in Ford's Premier Automotive Group of upscale nameplates, including the loss-making Jaguar marque. Analysts believe the deal probably fell through because Ford would not sell Volvo by itself.

Now Ford risks being left out in the cold if Kirk Kerkorian, GM's largest individual shareholder, succeeds in pushing the struggling U.S. auto giant into a three-way alliance with Renault-Nissan.

But auto analyst Robert Hinchliffe of UBS Securities says Ford might be a more logical partner for Renault-Nissan, and not just because the top executives already know each other.

"It's interesting to think about the idea. Could Ford step in here with an alliance with Renault and Nissan?" Hinchliffe said in a teleconference with investors Monday. "I wouldn't count it out. Ford could be a better partner."

For one thing, Ford has a mixed track record with cross-border deals, whereas GM's experience is by and large poor.

While Jaguar was a multibillion-dollar mistake, Ford has forged a successful partnership with Mazda Motor Co. of Japan, which now produces most of its car platforms. Its relationship with Volvo is happier than GM's relationship with Sweden's Saab.

Secondly, there are more cost-cutting chances at Ford, which lags a few steps behind GM in its North American restructuring.

Thirdly, Ford CEO Bill Ford sounds more willing to step back and let someone else run the show than GM Chairman and CEO Rick Wagoner.

Ford officials declined to be drawn into the discussion. "We're just not commenting on this kind of speculation," said company spokesman Oscar Suris.

From Ghosn's standpoint, Ford has attractive assets. Its trucks and luxury cars would complement the Renault-Nissan lineup.

Nissan has done a respectable job with the Infiniti brand, but it is hardly known outside the United States and lacks the pedigree of a Volvo or Jaguar. Renault has failed in its recent efforts to break into Europe's fiercely competitive luxury car market, which is still dominated by the Germans.

Hinchliffe believes it would be easier to turn around Ford, with its lower legacy costs and smaller size, relative to GM. "I would say two or three big hits could turn Ford around, or at least make a material difference where GM would need more than that, just given their size."

But there are major obstacles to a three-way deal with Ford. "The Ford family would have to want to do this, and they would have to be willing to relinquish certain control," Hinchliffe said.

That's clear, say people who know Ghosn. He has already worked for one family-controlled company, tiremaker Michelin, which he left in the 1990s to make a career with Renault.

The Ford family has not indicated that it is willing to reduce its controlling interest, and insiders say such a deal is a stretch. But never say never. "The Ford family could also view this as the potential to have a major stake in one of the largest global auto companies," Hinchliffe said.

A mammoth GM-Renault-Nissan alliance controlling about 24 percent of the global vehicle market would dwarf Ford.

A final reason to keep an open mind is Kerkorian's record, including his stint as a Chrysler Corp. investor.

Kerkorian's interventions tend to bring about changes -- but not always those he has in mind. As the Chrysler Group now points out with pride, it is part of a German company.
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