Overseas money seen wary as Detroit sinks

By Gilles Castonguay

MILAN (Reuters) - The mounting trouble for U.S. automakers has cost them any chance of winning more than partial help from a foreign investor or overseas rival.

Bankers and analysts say Detroit-based automakers could still find partners for limited tie-ups but caution it could prove impossible to find a deep pocket overseas for the cash the U.S. industry could need to ride out the current downturn.

European and Asian automakers are investing in more promising markets and face their own challenges from the rise in prices for fuel and raw materials like steel, analysts say.

While the market value of both General Motors Corp(GM.N) and Ford Motor Co (F.N) was marked down sharply this week, uncertainty over their near prospects could keep bidders away.

"There are a lot of legacy costs that are difficult to estimate," said Klaus Pflum, an investment banker for Nomura in London.

Shares in GM ended the week down just over 17 percent, the worst weekly performance for the stock since September 2001.

With a market capitalization of $6.5 billion, GM is now worth less than a third of Renault SA (RENA.PA) ($23.7 billion), the French automaker that was spurned when it sought an alliance with GM in 2006.

The leading U.S. automaker is worth just one-fifteenth of Toyota Motor Corp (7203.T) ($99 billion), which overtook GM this year as the global sales leader by volume.

Once seen as a bellwether for the U.S. economy, GM is also in danger of being eclipsed in value by the likes of India's Tata Motors (TAMO.BO) ($4.4 billion) and Russia's Avtovaz ($4.6 billion), home of the Lada brand.

GM says it has enough liquidity to get through the year and options to raise capital if needed, but analysts have raised questions about its cash burn between now and 2010 when GM and crosstown rivals Ford and Chrysler LLC start to realize savings from a contract with their major union, the UAW.

Billionaire investor like Kirk Kerkorian has offered to help Ford with a capital infusion.

But few other angel investors are in sight. European and Japanese car makers are unlikely to make a direct investment.

"What's wrong with GM is it's too big now. GM is also deep in the red and no one would want to buy it. I can't think of ways to help it except through restructuring," said Koji Endo, a Credit Suisse analyst in Tokyo.

Capital could come from a foreign sovereign fund, but Pflum said he did not expect it to happen. "The automotive sector has been volatile. It is cyclical. The issue is that in the United States it is not a growth business," he said.

JP Morgan's Asia Chairman Gaby Abdelnour, a veteran Middle East and Asia banker, was more open to the idea but he acknowledged that the political implications loomed large.