Big 3 automakers to combine online buying through single portal

"As we continued to build our separate exchange sites, we quickly realised traditional, individual stand-alone models weren’t the winning strategy for us, our industry, our suppliers and, ultimately, our customers," GM president G Richard Wagoner Jr said in a statement.

The three automakers, who spend a combined $240 billion on supplies annually, expect to reach a definitive agreement for the venture and have it running in some form within 30 days. The auto makers’ supplier groups spend another $500 billion annually.

GM, Ford and DaimlerChrysler plan to have equal ownership in the new venture, which will operate as a business independent of the three automakers, the companies said. The supplier exchange is expected to be powered by technology spearheaded by Oracle Corp and Commerce One Inc, which will have equity in the venture. GM will give half its 20 per cent stake in Commerce to Ford in exchange for half of Ford’s undisclosed stake in Oracle.

The stock in all the companies involved rose after the news. On the New York Stock Exchange, GM was up 2-3/16 to 77-7/16, Ford rose 2-3/16 to 44-1/8 and DaimlerChrysler climbed 3 to 64-15/16. On the Nasdaq, Oracle rose 5-15/16 to 67-7/8, and Commerce One surged 24-15/16 to 203-9/16.

Brian Kelley, the Ford vice president who heads the company’s electronic commerce ventures, said they expected to spin off the venture this year. "We’ve historically been competitors," he said of the three automakers. "And we’ll still be competitors, but we’ll create an independent company that can go off and help our suppliers, our dealers, our customers and each of us."

The name of the new venture, who will run it, where it will be based and other details have not been set as the deal came together quickly, Kelley said. Officials didn’t say what savings would result.

Any other automakers that join the venture also will receive an equity stake, GM’s Kutner said. GM’s Japanese partners – Isuzu Motor Co Ltd, Subaru and Suzuki Motor Corp – as well as Ford’s Japanese affiliate, Mazda Motor Corp, are expected to join, officials said.

GM, the world’s largest automaker, announced the formation of its online supplier procurement network, TradeXchange.com, just three and a half months ago, and has already begun limited auctions on the site. On the same day, Ford, the No 2 automaker, said it would form a competing network, AutoXchnage.com.

On Friday, DaimlerChrysler said it would in the near future bring in a third technology partner, joining Commerce One and Oracle – the GM and Ford partners, respectively, in the venture. The world’s No 5 automaker had not announced an online procurement network. Automotive suppliers are excited about what the deal couldmean to them, although they want to see the details.

"Th announcement obviously brings commonisation with our three biggest customers in North America," Ray Campbell, Delphi Automotive Systems Corp’s vice president of global purchasing, said in a statement. "It also helps us as a supplier because there will be no variation in the system."

Until the venture officials begins, GM and Ford’s existing networks will continue to provide such services as catalogue purchasing, bidding and price quotes, on-line sourcing and auctions, the companies said. In addition, supply chain management functions such ascapacity planning, demand forecasting, production planning, supply chain transaction automation, financial services, payment and logistics will continue and be expanded.