Renault-Ford link could make more sense than GM

Paris, Aug 24: A possible partnership between the Renault-Nissan alliance and Ford Motor Co would make more sense and deliver more synergy benefits than a Renault-Nissan tie-up with General Motors Corp., analysts said on Thursday.

Renault and Ford have declined comment on media reports that Chairman and Chief Executive Bill Ford had phoned Carlos Ghosn, chief executive of both France's Renault and Japan's Nissan Motor Co Ltd, to propose talks in case Ghosn's discussions with GM lead nowhere by mid-October.

After an enthusiastic start and media frenzy over such a major shake-up in the global car sector, Ghosn and GM Chairman Rick Wagoner have been taking a cautious line.

Ghosn has said any decision depends on the amount of synergies that can be realised, while Wagoner is focusing on restructuring the world's biggest carmaker.

''A deal with Ford would make far more sense than one with General Motors,'' said Patrice Solaro, Kepler Equities analyst.

''Not only are the synergies between Ford and Nissan on the North American market larger, but in Europe a deal with Ford would also generate more opportunities than with GM,'' he added.

''Ford in Europe is also Jaguar, Volvo, Land Rover, Aston Martin,'' he said.

Purchasing Power

Rod Lache, an analyst at Deutsche Bank, also said a deal with Ford would create more value.

''We believe Ford's purchasing is relatively inefficient -- an area where Renault/Nissan has substantial expertise. There could also be benefits should investment-grade partners get involved in co-ownership of the Ford Credit business,'' he added.

Ford's interest in an alliance is no secret given its mounting losses and dwindling market share in North America amid slumping demand for pickup trucks and sport-utility vehicles.

Bill Ford said his group was open to an alliance deal after the announcement of talks between GM and Renault-Nissan.

Renault has a 44 percent stake in Nissan, the Japanese car maker that Ghosn turned around against difficult odds, securing himself the reputation of a star automotive manager.

At Renault, Ghosn has unveiled a Commitment 2009 plan, based on an overhaul of its models and a lower cost base, that needs to start delivering results in 2007 after a weak 2006.

Ford has acknowledged courting Ghosn for a senior post at Ford in Dearborn, but Ghosn, a Brazil-born Frenchman of Lebanese parents, declined.

One investment banker who follows the sector closely said recently a Renault-Nissan link with Ford would be simpler and more effective than one with GM because there would be less overlap of brands.

''I'm sure that if Carlos Ghosn doesn't succeed with General Motors he will look at Ford or one of the other players,'' the banker said, although the strong influence the Ford family exercises at the company could pose an obstacle.

For Solaro, that was something that could be overcome, however.

Renault was likely to want a equity stake in Ford, in line with its stake in Nissan and reports of intentions to take a stake in GM in case of an alliance deal.

In that case it would probably want the same power as the Ford family which at the moment has 40 percent of the votes with about four percent of the capital. Deutsche Bank's Lache said too that this problem was not insurmountable.

Reuters