Does General Motors' salvation lie in the hands of Le Cost Cutter?

When Rick Wagoner, the embattled chief executive of General Motors, gave the carmaker's board a "back me or sack me" choice, back in April, they chose to back him. There was no alternative figurehead.

Maybe now there is. Carlos Ghosn, who runs both Nissan and its parent company, Renault, has been asked to sprinkle his magic dust over GM.

The idea was mooted last week by Kirk Kerkorian, the octogenarian investor who has amassed a 9.9 per cent stake in GM and wants to shake up the ailing company.

GM needs to slash costs and improve its line-up of new models in order to stem a precipitous decline in its share of the market - no disagreement there. But Mr Wagoner's turnaround plan is frustratingly slow, according to Mr Kerkorian. Mr Ghosn has done it once, at Nissan, and his influence on GM would light a fire under the seats of the executive team.

That was the theory behind suggesting, in a bombshell letter to Mr Wagoner last week, that GM should become a third partner in Nissan and Renault's global alliance, with the pair taking a stake of up to 20 per cent in GM and giving Mr Ghosn a boardroom role. In choreographed moves, Nissan and Renault said they would be open to talks.

All the signs are that, today, when GM's board meets to discuss the Kerkorian plan, Mr Wagoner will try to pour buckets of ice water over the idea. Sources at the company say it will treat it as a "hostile approach". GM is likely to set up a group led by the chief financial officer, Fritz Henderson, to examine the plan, but insiders are already pointing up the difficulties of doing a deal.

Firstly, there is little overlap between the companies, with Nissan and Renault focusing on small cars and GM stuck in larger vehicles, including gas-guzzling SUVs. Combining product development, manufacturing plants and negotiations with suppliers might not yield the savings for which Mr Kerkorian hopes.

The biggest overlap in the product ranges are in the small- to-medium car market. Renault and Nissan share some platforms and engineering resources, but even here they maintain mostly separate corporate structures and manufacturing plants, including Britain's largest car factory at Washington, Wearside, which produces the Nissan Micra. Integrating the European arm of General Motors (comprising Opel and Vauxhall) into this structure would be difficult.

GM is contemplating a rationalisation of Opel and Vauxhall in any case, recently announcing the loss of 900 jobs at its Ellesmere Port operation. Management flown in from Renault would have just the same difficulty cutting costs as GM veterans, if not more so. The North American unions have been pretty compliant so far, but this could change if GM portrays the Renault alliance as a foreign takeover.

John Murphy, an analyst at Merrill Lynch, told clients that the timing might also be premature for Mr Ghosn. "Our feeling is that there is no rush on the part of Renault-Nissan to expand the alliance. Both alliance partners are working flat out on their respective businesses, a major model launch programme for Nissan in 2006 and the restructuring plan for Renault."

Another complicating factor is GM's South Korean Daewoo arm, who now sell compact cars under the Chevrolet badge around the world. Culling and making sense of the current Renault/Nissan/Vauxhall/ Opel and Chevrolet ranges would tax even the brightest motor industry brains.

Nonetheless, it could result in a slimmer but more viable small car business for all concerned - and this is why, despite the formidable list of objections, no one is yet betting against some sort of alliance.

The eternally young Mr Kerkorian, who turned 89 last month, is trying to repeat what he did in the Nineties, when he forced Chrysler into the arms of Daimler-Benz. The combined company is $40bn-plus lighter in terms of market value since the painful merger, but the veteran raider's defenders say things may have been even worse if they had pursued separate paths.

Philippe Houchair, automotive industry analyst at JP Morgan, says that the process of rationalising GM's manufacturing base could be speeded up if an outsider such as Mr Ghosn comes in, but the real benefits of joining the Renault alliance would come later.

"Cutting costs, shutting down factories, laying off workers, these are things the industry knows how to do," he said, but having scale helps when dealing with suppliers, and having a wider mix of products helps when negotiating with distributors.

Mr Ghosn is the wunderkind of the international car industry, a Brazilian-born Lebanese man who was educated in France and made his name saving a Japanese car maker from the brink of bankruptcy. He moved from Renault to Nissan when the French company became its biggest shareholder in 1999, and was appointed chief executive of Renault, too, last year.

If Mr Ghosn could inject the sort of flair and design innovation that he put into Nissan into GM's passenger car offerings, then customers might respond. The 35 per cent year-on-year sales decline which GM just posted for June would be a banished nightmare. Renault-Nissan, meanwhile, could benefit from exploiting GM's upmarket brands, especially Saab and Cadillac. There is plenty of scope for joint ventures on cars of the future: diesel engines, hybrid technology and, looking further ahead, hydrogen fuel cell vehicles.

GM, Renault and Nissan already jointly design and manufacture medium and light vans in Europe. Both groups have been developing low-cost manufacturing bases in China, which, like Renault's interest in Dacia of Romania, could be more significant in the future.

The two sides will be acutely aware of the poor history of alliances in the car industry, and mindful of the lessons of their own past misadventures. Six years ago GM alighted upon Fiat as its principal partner in the small car business, but it cost the General $2bn to extract itself from the partnership when things went wrong. In the late 1970s, Renault bought American Motors, makers of the Jeep, but failed to make a go of that, selling out to Chrysler a few years later.

A face-saving alternative approach might be for each partner to co-operate in some fields, while feeling free to develop plans with other carmakers as well, a sort of corporate "open marriage". That would be the same business model as at Peugeot, which manufactures small cars with Toyota while working with BMW on engines and Mitsubishi on SUVs.

Mr Henderson is emerging as a key figure within GM, since arriving in Detroit from a stint heading up its European operations. By being put in charge of detailed talks on an alliance with Renault, he will be well positioned to implement it if it comes to pass. If it doesn't, he will surely also be in charge of proposing accelerated restructuring efforts as an alternative. Particularly after the jump in GM shares on Mr Kerkorian's letter last Friday, simply restating Mr Wagoner's current restructuring plan, calling for the closure of a dozen North American factories and 30,000 job losses, looks like it is no longer enough.