General Motors and the Renault-Nissan partnership abandoned merger negotiations in October 2006 after failing to agree on a financial compensation demand. GM had required a substantial cash payment, reportedly around $5 billion, arguing that joining the alliance would bar it from pursuing other partnerships. Renault and Nissan rejected that principle as incompatible with a genuine alliance.
The deal had originally been championed in June 2006 by GM's largest private shareholder, Kirk Kerkorian, and was seen by markets as a potential lifeline for the struggling US automaker. GM posted a $10.6 billion loss in 2005 and a further $2.7 billion loss in the first half of 2006.
With GM out of contention, analysts shifted attention to Ford Motor Co. as a possible Renault-Nissan partner. Bank of America analyst Ronald Tadross estimated a Ford alliance could generate $2 to $3 billion in annual savings, citing purchasing and capital investment advantages. JP Morgan Chase analyst Himanshu Patel noted Ford may be more receptive, given product overlap particularly in Europe.
GM chief executive Rick Wagoner said his company's recovery did not hinge on any global alliance. Meanwhile, Toyota continued closing the gap on GM in global production, raising the stakes for any potential consolidation among Western automakers.
Historical summary. TurkishPress restated this wire report, first published in October 2006, in its own words.