The board of US car firm General Motors has voted to embark on exploratory talks with Renault and Nissan on a possible three-way alliance.GM’s management can now “weigh the potential of such an alliance in order to assist the board in its decision making”, said the board.

GM shares rose 1.8% up after the news but closed only 0.69% higher.

Last week a major GM shareholder urged the tie-up with French Renault and its Japanese partner Nissan.

‘Open mind’

Billionaire Kirk Kerkorian - who holds 10% of GM shares - wrote to the ailing US car firm encouraging it to go ahead with the move.

The suggested deal would see the two firms take a 20% share of GM.

GM’s board stated on Friday that the firm’s executive Rick Wagoner would assess the potential tie-up with Nissan and Renault.

“General Motors has a lot of experience with different types of alliances and some have provided significant benefits to GM’s competitive position and financial strength,” said Mr Wagoner said in a statement.

“We will enter into discussions with the managements of Renault and Nissan with an open mind.”

But he added: “Given the complexity of any potential relationship, it has to be carefully considered on its merits before coming to any conclusion.”

After Friday’s news, Mr Kerkorian’s investment firm Tracinda issued a statement welcoming the development.

‘Economies of scale’

GM has embarked on wide-ranging cost-cutting initiatives after the firm saw losses of $10.6bn (£5.7bn; 8.2bn euros) last year.

High labour costs, intense competition from Asian car firms, and a move away from gas-guzzling vehicles have all dented GM’s profits.

Rating agency Fitch however highlighted that GM’s near term problems would remain unchanged even if an alliance went ahead.

“GM’s challenges in North America, on the revenue and the cost side, remain numerous, and an alliance is unlikely to have a significant effect on either in the short term,” Fitch said.

Nonetheless the potential for longer-term cost benefits remains.

“The new group could achieve unprecedented economies of scale and buying leverage in addition to being the largest automaker,” said research firm JD Power, which examines the automotive industry.

Analysts have questioned the degree to which a tie-up would benefit Renault and Nissan.

“Renault runs the risk of having its management distracted by this possible alliance at a time when it needs to concentrate its resources on its declining market share and its new strategic plan,” said Fitch.

Renault has a 44.4% share in Nissan which has a 15% stake in Renault. Both firms are headed by Carlos Ghosn.