For troubled US auto giant General Motors, a possible alliance with Renault and Nissan could represent a vital lifeline even though the French manufacturer has a poor reputation in the US market and its Japanese partner is a major competitor.
Industry analysts have responded with enthusiasm to the alliance idea.
"If GM management were to agree to such a partnership, we would view this as a major long-term positive for GM shareholders," J. P Morgan said in a note.
But GM chairman Rick Wagoner has yet to endorse the proposed alliance pushed by Kirk Kerkorian, a principal GM shareholder who has a 9.9 percent stake in the company.
It was the billionaire investor Kerkorian who launched the proposal after approaching Carlos Ghosn, the chairman of Renault/Nissan. According to US media reports, they met two weeks ago over dinner in Nashville, Tennessee where Ghosn was opening a new plant for Nissan.
An ally of Kerkorian, Jerry York, who was named to the GM board earlier this year, has already expressed his admiration for Ghosn, the architect of a spectacular recovery at Nissan in recent years.
Having suffered losses of more than 10 billion dollars over the last year, General Motors - which includes car brands Chevrolet, Buick, Pontiac, Cadillac, GM, Hummer and Saturn in the US market and Opel, Saab, Vauxhall and Holden abroad - has launched an ambitious restructuring plan.
GM plans to cut 30,000 workers in the United States and to close several plants while revamping its line of models to boost fuel economy in the face of stiff competition from Japanese auto makers.
The company continues to rank a solid first in the United States, with a 23.5 percent market share, ahead of Ford with 17.4 percent. But GM lags behind the combined 30 percent market share of the three major Japanese auto makers - Toyota, Honda and Nissan.
GM also risks losing its place as the world's largest car maker to Toyota. While Wagoner has played down the effect of such a shift, it would be seen as a humiliation for the company based in Detroit, Michigan.
If the proposed alliance went ahead, Renault/Nissan would take a 20 percent stake in GM, according to Japanese press reports.
As GM executives consider their options, they will be mindful of a previous alliance with Fiat that ended badly for GM, with a loss of two billion dollars.
"We have no plan, we haven't talked to anyone and I suspect it will not happen," Wagoner said on June 6 when asked at a shareholders' meeting if the company would consider a possible alliance with another firm.
Speculation about forging ties with Renault came as a surprise to the US market where the French company has been absent since the disastrous campaign for "Le Car," a Renault 5 model which was promoted at the end of the 1970s when the French firm owned AMC.
But Renault's often effective efforts to compete against Nissan have not gone unnoticed.
According to analysts at J. P Morgan, a partnership between GM and Renault/Nissan offers a chance to pool resources and cut production and development costs for both sides in Europe. GM also would bring to the alliance a strong foothold in China where Nissan has a much smaller presence.
In the US market, GM could profit from expertise at Renault/Nissan in developing smaller cars and diesel engine models.
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