DETROIT (Sept. 13, 6 p.m. EDT) — Covisint, the North American automakers´ Internet-based trade exchange, could open for business before the end of this year with the first dollars of an estimated $300 billion worth of purchases crossing the electronic wires.
The Federal Trade Commission gave its approval Sept. 11. Now only Germany´s federal cartel office in Bonn, Das Bundeskartellamt, stands in the exchange´s way. Officials with Ford Motor Co. and DaimlerChrysler AG say they expect full acceptance in the fourth quarter, with trading to begin within 30 days afterward.
FTC approval "represents a major milestone for us as we move ahead in the planning stages," Alice Miles, who leads Ford´s planning team in Covisint, said in a telephone news conference.
Dearborn, Mich.-based Ford, DaimlerChrysler of Auburn Hills, Mich., and Detroit´s General Motor Corp. announced the proposed exchange in February. The companies plan to shift all of their combined purchases into the program.
Since then, Renault SA and the Japanese carmaker it controls, Nissan Motor Co. Ltd., have joined the venture. More than a dozen suppliers also have signed on, ranging from giants such as Delphi Automotive Systems and Lear Corp. to minority suppliers including custom molders Plastech Engineered Products Inc. and Ernie Green Corp.
"We have a number of suppliers who have agreed to work with us and have become very active (in planning)," Miles said. "As we move forward and become operational, the suppliers will hook in with their internal systems and we will talk with other suppliers to get them acquainted with Covisint."
Suppliers also will have a chance to develop their own private area within Covisint to use as a Web business portal, she said. The company will start with 40 companies to work out the kinks before opening it to a wider group.
"The exchange is part of the (business-to-business) equation, but every company also needs to look within their own organization and determine how they could best use the Internet," Miles said.
Automakers want to make the system work smoothly for suppliers, said DaimlerChrysler´s Covisint leader, Peter Weiss, during Auto-Tech 2000 in Detroit, an auto industry conference featuring e-business.
The exchange´s technology will allow access from a variety of electronic connections, he said, including private networks and public Internet portals. That ease is important for Covisint to move beyond simple sales and purchases, Miles said. The key to e-commerce is using it as a conduit to access and send information.
Improved communication should help rid both purchase and design programs of inherent glitches and expense — whether from a mistyped memo or from faxed information engineers must retype into their own computer systems.
In the end, the improvements will save money for everyone in the auto industry, Miles said.
"We have been very optimistic for the potential for inefficiencies to be taken out of the entire supply chain, from (automakers) to the makers of tooling," she said.
Car buyers may not see a cash savings when they shop for their next sedan or sport utility vehicle, but should benefit through a wider variety of "added content," such as navigational systems or heated seats, she added.
Covisint still does not have a permanent home or a chief executive officer. For now, it´s operating out of temporary quarters in Southfield, Mich., while considering sites ranging from California to Ann Arbor, Mich.
Automaker representatives, including Miles, who now are serving as co-CEOs, have a "very short list" of potential Covisint leaders and expect to have one signed on shortly after receiving German government approval.
The European Union does not have to take action on Covisint, Miles said, while Weiss noted the FTC approval should help speed Germany´s anticipated acceptance.
"We are ready to move forward," Weiss said.