It looks like Renault is about to take control of Nissan, Japan's second-largest automobile company.
It may look like a marriage made somewhere other than heaven. But it just might make sense for both parties.
There may be a lot of synergy between those two large, well-established companies. Obviously, Nissan needs big help, both financial and operational, and Renault could be the perfect partner.
I've gotten to know Renault Chairman Louis Schweitzer a bit during the last few years. He is a brilliant executive who knows exactly what he's doing. This is no ego trip, but a calculated plan to expand the markets and the success of Renault.
They may have some overlapping products, but they don't have overlapping markets. Where Nissan is big - Asia and the United States, Renault is weak or absent. Where Renault is strong and growing - Europe and parts of South America, Nissan is not particularly strong. Nissan has a good plant in the United Kingdom, but has only a quarter of Renault's European sales. A lot will change when Nissan becomes part of Renault.
DaimlerChrysler studied Nissan, but concluded that a merger didn't make sense. The popular explanation is that DaimlerChrysler already had too much on its plate, and an attempt to swallow Nissan would have been a disaster. You can do only so much at any one time. Obviously, DaimlerChrysler didn't like Nissan's balance sheet and couldn't get a deal to make sense.
The real problem is all that Nissan debt that has piled up over the years. In an economy that has really encouraged debt, Nissan is a great example. It has $20 billion to $40 billion in debt, depending upon whom you're talking to. There is no way anyone can handle that much debt and stay in business. It is a staggering amount.
Meanwhile, Schweitzer has a specific idea of what he wants to accomplish and how he's going to get there. It's a quite different road from the road DaimlerChrysler had in mind.
Americans remember the Renault that bought American Motors. Well, it's a completely different company today, with many segment-leading products in Europe.
It will be fascinating to see what develops when those two giants get together. Soon we'll see what Renault has in mind. I'm betting that we'll all be surprised.