Big Three Automakers Plan to Launch Online Purchasing Joint Venture
DETROIT — General Motors Corp., Ford Motor Co. and DaimlerChrysler announced plans to form an Internet purchasing joint venture designed to streamline business with the companies’ array of suppliers. As envisioned by the automakers, the new company would handle much of the $240 billion in purchasing of raw materials, parts and other products and supplies.
Details about the venture company and its operation, including a name, ownership structure and fees, were not announced. Officials with the automakers said the system will be open to other auto companies, who will be offered stakes in the company, and the exchange eventually could expand to include other industries. The new company could be spun off to investors within a year.
Estimates suggest that such Internet purchasing systems could significantly reduce costs related to purchase-order processing. Other functions could include auctions of materials, online purchasing by suppliers, and sharing of product and inventory plans with suppliers. Business-to-business Internet trading is forecast to expand rapidly, with estimates suggesting that business volume could double every year for the next three years. One estimate says business-to-business Internet trade totaled $109 billion in 1999.