Can a Charismatic CEO Save GM?

July 7, 2006 — -- Detroit is considering a potential mega deal, creating an international car-making colossus by combining the forces of General Motors, Renault and Nissan. Think of it: a combined 15 million new cars annually.

But while the GM board decided Friday to explore the possibility of an alliance with the French Renault and the Japanese Nissan, skepticism abounds.

"It's hard to see how this deal has anything to do with doing a better job on any of those fundamentals" such as building better automobiles, said James P. Womack, an industry analyst at the Lean Enterprise Institute. "It's a big spin opportunity to make something happen in what otherwise appears to be a fairly desparate situation for GM."

Trying to make it happen is Kirk Kerkorian, the billionaire owner of 9.9 percent of GM stock. He's watched his precious investment lose tens of millions of dollars and is not happy -- or quiet -- about it.

"Frankly," said Dale Jewett of Automotive News, "I think the vast majority of this is Kirk Kerkorian."

Kerkorian is 89 years old, but because he is a billion-dollar investor in GM, when he speaks people must listen. And what he has been saying lately is that current GM Chairman Rick Wagoner is moving too slowly to turn the automaking behemoth around. Better to install someone with a proven track record for cost-cutting, with a more upfront personality, a can-do attitude -- like 52-year-old Carlos Ghosn, the chairman of both Renault and Nissan.

"The bench in the car industry is basically empty with regard to people who've shown they can turn around a car company," said Womack. "Ghosn's the one guy. He's the man."

Indeed Ghosn, a Brazilian of Lebanese descent, is considered a savior in Japan where he slashed Nissan's debt in half and returned the company to profitability in just two years time. Hot-selling models including the Murano, are Ghosn's work. In France, Ghosn's surgery on Renault won him the sobriquet "Le Cost Killer."

Daniel Howes, automotive writer for the Detroit News, said Ghosn has been a "very effective CEO." But, he added, "this is a whole 'nother game."