Naughton: A Ford-Renault-Nissan Alliance?

When I interviewed General Motors CEO Rick Wagoner two days before his first meeting with Renault-Nissan CEO Carlos Ghosn this summer, it was clear that this was an unwilling bride being forced into a shotgun marriage. "There's a lot of aspects of all of this that haven't been normal," Wagoner said, referring to how his hand was forced into negotiating with Ghosn by GM's big and restive shareholder, Las Vegas billionaire Kirk Kerkorian. "It's not the way I would have done it." In the end, though, Wagoner got his way when alliance talks collapsed this week.

But Ghosn still might find a willing partner across town in Detroit. Bill Ford struck a much more conciliatory tone when I asked him Aug. 31 if he was interested in forming an automotive alliance. "We're certainly open to that," he said. "I think a focused Ford Motor Co. with the geographic reach that we have would make a strong partner for anybody." And what did he make of Renault-Nissan's superstar CEO, whom he'd previously courted to become Ford's CEO? "In Carlos, I thought this was an exceptionally talented executive who could help the company," he said. "I talk to Carlos all the time." Indeed, Ford phoned Ghosn this summer to say: if talks don't work out with GM, call me. And Ghosn said at the Paris Auto Show last month that he'd still be interested in finding another "North American partner" (read: Ford) if talks with GM failed.

So the table has been set for Ford and Renault-Nissan to rush into each other's arms, right? Not so fast. The day after I spoke with Bill Ford, he hired Boeing executive Alan Mulally to be his new CEO. And now the word out of Ford's Dearborn, Mich., headquarters is that the new guy, who officially started this week, is in no hurry to share power with Ghosn. "I don't think the very first thing a new CEO will do is jump into bed with another automaker," says veteran auto analyst John Casesa. "He'll want to take time to take stock of the situation."

Ultimately, though, a Ford-Renault-Nissan marriage feels destined. They just seem right for each other. Ford, of course, is reeling right now and could benefit from hooking up with a healthy Renault-Nissan. It remains one of the world's most profitable automakers despite some sales slippage lately as it awaits the arrival of several new models. And the Franco-Japanese automakers, which each struggled on their own before aligning in 1999, have proven there's strength in numbers. Yet their biggest weakness remains in the United States, where Nissan has just 6 percent of the market and Renault is completely absent. Globally, the three companies would have a combined share of 21 percent, according to auto researcher CSM Worldwide. That would give them considerably more might to take on the Toyota juggernaut, which is rocketing toward controlling 15 percent of the global auto market and leaving GM in the dust.

Even though Mulally is now in the driver's seat at Ford, he's still sharing the wheel with Bill Ford and his powerful family. Bill Ford, in his new role is as "executive chairman," now focuses on long-term strategy for the auto company his great-grandfather founded. (What's more long-term than forming a global alliance?) And with the Ford family still driving the company with a super-voting stock that gives it 40 percent control, Bill Ford has the power to steer the automaker wherever he wants. Some have viewed potentially meddlesome family control as an impediment to an alliance. But Bill Ford argued just the opposite with me. "I would turn it around and say many potential partners would view having the stability of a 40 percent shareholder as a real asset," Ford said, "because of the stability of knowing where the vote is and where the control is and not having to wonder who is influencing their partner and what is going to happen next."

Rick Wagoner would love to have that kind of stability from his largest individual shareholder. The combative Kerkorian, through a spokeswoman, expressed disappointment that the Renault-Nissan talks failed and, in a swipe at Wagoner, added: "We regret that the board did not obtain its own independent evaluation of the alliance." Kerkorian recently signaled his intention to boost his stake in GM from 9.9 percent to as much as 12 percent, which would give him more power to wage a proxy battle to replace Wagoner and his board. And rumors have emerged in Detroit that Kerkorian's representative on GM's board, former Chrysler and IBM exec Jerry York, might resign so that he can push for change from the outside. York did not respond to requests for comment. "There's more pressure to come from Kerkorian," says Merrill Lynch auto analyst John Murphy. "He's in there knee deep, and he's not just going to walk away." And the Kerkorian wildcard just adds to the uncertainty surrounding GM. "I can't speak for what Mr. Kerkorian will or will not do," says GM CFO Fritz Henderson. "We'll just have to see."

The truth is, though, that Ford always made a better partner for Renault-Nissan than GM. Consider these complementary aspects of a Ford-Renault-Nissan get-together: Ford owns a stable of luxury thoroughbreds, with Jaguar, Aston Martin, Land Rover and Volvo, while Renault-Nissan is a one-trick pony with the relatively minor Infiniti luxury line. Renault-Nissan has a 40mpg small car in the Nissan Versa, which, if Ford used it as a base to build its own small car, would quickly plug a gaping hole in its guzzling lineup. Ford's biggest market is the United States, Renault's is Europe and Nissan's is Asia. An alliance would immediately give Ford a big presence in China and Japan that it would take decades to obtain on its own. And then there are all those underutilized Ford factories in America that could be filled with Nissan production rather than closed.

But the real driver of any deal is that the Ford family, and Bill Ford in particular, is a willing and even eager suitor. That's something Wagoner never was. "Clearly, GM resisted this idea from the very start," says auto analyst Casesa. "But the Ford family just might find a partnership attractive right now and go into discussions with a view to making it work." The fact is that Ford is losing the battle on its home front; it needs something to get back in the game. Why not an injection of new models, technology and global reach from Ghosn & Co.? It might take some time for Mulally to see that. But given Detroit's dire state—and Toyota's relentless rise—it seems like Bill Ford has already figured out that the 103-year-old family firm just can't make it on its own.