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Alliance plan clouds Paris auto show

By CNN's Jim Boulden

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PARIS, France (CNN) -- Carlos Ghosn is in his element. The CEO of Renault and Nissan is the host and man-of-the-hour at the party to cap off the first day of the Paris Auto Show.

Ghosn's glittering reception comes after a day when many of the thousands of journalists attending the bi-annual Paris Auto show tried to get him or his foil, General Motor's CEO Rick Wagoner, to talk about the alliance talks which took place on Wednesday.

This auto show, like all the others, is touting the world premier of new vehicles; more than 60 were unveiled Thursday, say the organizers. And while there are new offerings, like the new Ford Mondeo, and unlikely exhibitors from Iran and New Zealand, the glitz of the motor show has been overshadowed by one question: will General Motors join forces with the world's most successful auto alliance of Renault and Nissan.

At least one big shareholder of GM thinks Ghosn, the CEO of both Renault and Nissan, can also be the savior of GM, which lost $10 billions last year and seen its market share lose out to Toyota and Honda.

Ghosn has said in the past that to stop Toyota becoming the world's number one auto maker -- projected to happen by 2010 -- the current top dog, GM needs an alliance.

Clearly some at GM are not so sure. Wagoner said Thursday most of GM's management is not focusing on the alliance talks, but on new models and speeding up the auto giant's massive cost cutting and job cuts.

"That's still going on and that isn't going to change frankly, no matter what happens," said Wagoner Thursday after GM Europe's press briefing. He said cost cutting is what is "ultimately going to determine the success of the business." He also pointed out that GM is already a turn-around story. "If anything, the pace of the turn-around in North America shocked people," he said.

What has not shocked people here is the continual pain felt by many of the car companies here. Peugeot-Citroen, for example, said Wednesday it would speed up job cuts and is losing 7 percent of its work force.

"The market is completely flat" in Western Europe, outgoing chairman Jean-Martin Folz told CNN Thursday morning as builders were making their last minute adjustments to the Citroen stand. "Competition is very harsh and our model range has been somewhat aging," he conceded.

But some car companies are crowing. Ford of Europe made $105 million in the second quarter even while Ford's parent is losing billions of dollars and shedding jobs and plants under new management.

The most smiles can be seen at the BMW stand. Whether it's the luxury sedans or the newly improved MINI, BMW is minting money. By pushing further and further upmarket, the German automaker said again Thursday it was on target to make a pre-tax profit of 4 billion euros this year. Something the bosses of the other stands could only dream of.

CNN asked new CEO Norbert Reithofer if BMW could possibly surpass that in 2007. "No comment" he beamed. "Ask me again next year."

Many car companies showing off their new muscle cars and concept vehicles here can only hope they will have a better 2007.

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