Naughton: Does Detroit Need a White Knight

When Detroit's Big Three chieftains emerged from their long-awaited, oft-delayed meeting with President Bush earlier this week, there was a telling moment at the end of their press conference in the White House driveway. Their handlers told reporters that the three bosses of America's ailing auto industry would take no more questions and began leading them away. But Alan Mulally, Ford's new CEO, wasn't done yet. Before he could be whisked off, Mulally stepped up to the microphone to clear the air. "The question was asked, are we interested in a bailout?" he said. "Absolutely not!"

That's good, since President Bush, who chided American automakers earlier this year for not making "relevant products," has shown little desire to ride to Detroit's rescue. Indeed, after the White House meeting Tuesday, Bush expressed confidence that the shrinking Big Three can make the "tough choices" necessary to heal their companies on their own (read: lots of layoffs and factory closings). And the only clear commitment from the White House was to have more meetings.

But just in case Detroit's big wheels reverse course and decide they need a bailout, they were reminded Thursday that there is another option. But first, let's adjust the terminology. "Bailout" sounds so bad. How about aid? No, that's still too demeaning. Instead, let's call it an alliance. That's much better. And the auto-alliance king, Sir Carlos Ghosn (yes, he was knighted by Britain's Queen Elizabeth last month) rode triumphantly back into Detroit on Thursday to declare that he remains interested in adding a U.S. carmaker to his highly successful automotive partnership, Renault-Nissan. "Expanding the alliance to include an American partner makes sense," he told the Motor City's power elite (including GM's CFO) in a speech to the Detroit Economic Club. "But we are in no hurry. We can wait for the next opportunity to emerge, and it may take some time."

You might recall the last time Renault-Nissan's charismatic CEO rolled into Motown. It was last July when he came to dine with GM CEO Rick Wagoner and kick-start exploratory talks on forming a GM-Renault-Nissan car colossus that would have controlled one quarter of the world's auto market. But those talks were D.O.A. because Wagoner had been forced into them by billionaire financier Kirk Kerkorian, GM's largest individual shareholder and persistent critic of Wagoner's methodical turnaround strategy. To no one's surprise, the talks collapsed last month, with Wagoner saying such an alliance would benefit Renault-Nissan more than GM.

That's not how Ghosn sees it. "I still think it's a good idea," he said following his speech. "But it's not the right time." The benefits of an alliance--the billions saved by sharing the cost of developing new cars, manufacturing them in the same plants and purchasing parts jointly--can't be fully quantified up front, Ghosn argues. "With Renault and Nissan, we knew at the start there were some synergies," he said, "but at the end of the day it was much more." Ghosn was right. Since the 1999 partnership, Nissan has gone from near bankruptcy to being the second most profitable car company in the world. That helps explain why Renault's market value increased threefold in the last seven years, while other European automakers' stock stagnated. Of course, during that same period, Detroit's stock plunged along with its sales and profits as car buyers turned away from its SUVs. But Wagoner sees GM's salvation as a go-it-alone venture. Given Wagoner's reluctance, Ghosn says it was better that they part ways. "As long as we had different opinions, it was better that it stop," Ghosn said of his talks with GM: "Imagine if somebody is forced into a marriage. How long is it going to last?"

What about courting another Detroit partner? Ghosn said he has not spoken with Ford's Mulally or been approached by Germany's DaimlerChrysler to take money-losing Chrysler off its hands. (Interestingly, Ghosn wouldn't say if he's been in touch with Ford chairman Bill Ford, who called him this summer to express interest in talking if Renault-Nissan didn't align with GM.) It also turns out that this really isn't the best time to pick up a partner, Ghosn said, since Nissan and Renault are each in the midst of launching a parade of new models. "Our shareholders said, 'We're worried you're spreading yourself too thin'," he said. "And I have to take that into consideration." Still, Ghosn seems in a marrying mood. "If somebody calls," he said, "I'll pick up the phone."

One of Detroit's reluctant brides might finally have their hand forced by another significant automotive event this week. Deep in the heart of Texas, Toyota rolls its first Tundra pickup truck off the line at its new San Antonio factory on Friday. The redesigned truck is Toyota's biggest and boldest yet. And so is its bet on Texas, the biggest bastion of loyalty to Detroit's final stronghold: pickups. With this, its first Texas plant, Toyota is crossing into enemy territory to try to gain traction for its own truck. If Toyota can make inroads into the Big Three's pickup turf, today's troubles in Motown will seem like nothing. "San Antonio will make Toyota into an American company in the minds of a lot of consumers," says veteran auto analyst John Casesa. "And the Toyota brand name is strong enough to get even those loyal American truck buyers to consider it."

To recap, the week turned out to be one of symbolism and substance in the car business. It began with America's auto bosses insisting their White House visit wasn't an SOS call. And it ends with the world's richest automaker moving in for the kill in the U.S. truck market. In between, a knight rode into town offering a hand to America's ailing automakers. Whether they take it or not could ultimately determine their fate.