Could a Nissan-Ford deal be next?
Now that the GM-Nissan-Renault talks have fallen apart, Carlos Ghosn might work something out with new Ford CEO Alan Mulally. Plus: where Kerkorian and GM may be driving.
By Alex Taylor lll, Fortune senior writer

(FORTUNE) -- That the talks to create an alliance between General Motors and Nissan-Renault have collapsed is not surprising. For the past week, GM (Charts) has been publicly demanding billions of dollars in compensation from Nissan-Renault to equalize the terms of the deal. And Nissan-Renault CEO Carlos Ghosn has been just as forcefully denouncing the financial demands as absurd and unseemly.

But then the deal was tainted from the very start. Ghosn didn't privately approach GM CEO Rick Wagoner about working together to save money on purchasing, new technology, and product development. He was brought in by renegade GM board member Jerry York, who represents shareholder Kirk Kerkorian. Wagoner thinks he has a turnaround plan in place that is working and wasn't in the mood to have a celebrity CEO like Ghosn mess it up. Besides, York isn't his favorite director and the idea that he was negotiating with Ghosn behind Wagoner's back didn't make him feel any more affectionate.

The big question is what do the three parties - GM, Kerkorian/York, and Renault/Nissan - do next.

GM is the easy one. It thinks that with its employee reduction program, capacity rationalization, and new team spirit, it is ready to recapture some of its faded glory. It is demonstrating great confidence in its new models for 2007 and beyond, as if it has suddenly drunken a magic elixir that will put new life into faded brands like Pontiac and Buick. This may be a simple case of new-model euphoria that comes from touring the advanced design studio. It is easy to forget that for all the shiny new GM cars that will be coming out in 2008 and 2009, competitors will have ones that match or surpass them. It should come as an awakening to learn that while GM's U.S. sales fell 6.9% in September, Toyota's rose 20.2%. GM will do very well just to hang on to its market share in the face of the Asian onslaught. After the news was announced, shares of GM were down nearly 2 percent. (Meanwhile, Nissan (Charts) was up about 0.5 percent in New York trading, Ford Motor (Charts) was up more than 4 percent, and DaimlerChrysler (Charts) was also slightly higher.)

Kerkorian/York is the tough one. Kerkorian is clearly playing for keeps, as evidenced by his threat last week to buy even more GM shares to tighten his grip on the company. He may send York out in public to put more pressure on Wagoner to speed up the restructuring or weed out some of the executive cronies that Wagoner is so reluctant to send into retirement. Or Kerkorian may decide to wage an old-fashioned proxy fight, putting up a slate of directors to oppose GM's. If Wagoner didn't feel like he was on the hot seat before, this will really turn up the heat.

For Ghosn, this could turn out to be a win-win. His ego may be bruised by the failure of the GM talks, but he he is nothing if not astute, and must have seen which way the wind was blowing. He will look like the good guy for not making any oppressive demands on GM; York will certainly do his best to frame the debate that way.

Plus: Ghosn has lots of other opportunities. The problems that Nissan-Renault are currently experiencing are overblown. Nissan is in a temporary lull before the arrival of important new models like the Altima, Maxima, and Infiniti G35, while Renault is just starting to benefit from the Ghosn treatment. Outsiders forget what a long lead business making autos is. Once the decision is made to develop a new model for a particular market, it still takes three years or more it reaches the customer.

As before, Ghosn should find more receptive potential partners in Dearborn than he did in Detroit. Ford is about to hit rock bottom, with huge layoffs and plant closings looming and its new product program in disarray. It could use an idea man like Ghosn, and new CEO Alan Mulally may be more receptive to working together than Ford's previous executives have indicated. Ford's very limited product line could use an infusion of components and engineering from Japan, while Ghosn would happily work out a deal to take Jaguar and Land Rover off Ford's hands.

The messy divorce between GM and Nissan-Renault could lead to a happy marriage down the road.

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