Ford, GM and DC have formed an alliance to launch an Internet parts and service portal.
The ‘Big Three’ automakers – Ford, General Motors and DaimlerChrysler – have combined again, this time to launch an Internet parts and service portal targeting dealers and collision repairs, initially for the US and Canada. The Internet-based OE (original equipment) component ordering systems will initially target dealers and the wholesale sector (collision and mechanical repair outlets), allowing participants to source OE parts on-line. Since dealerships make over 50% of their revenues from parts and services, the new system will drive down costs as well as inventory substantially, and improve efficiency in ordering and delivery.
After the success of mammoth trade exchange Covisint, it is becoming increasingly obvious that best way for large auto manufacturers to realize the huge potential savings and efficiency gains from the Internet is through partnerships; scalability is fast becoming the key that unlocks the soaring potential in the auto industry. GM, Ford and DC have here formed a strategic understanding – but more importantly, trust. Rather than replicating technology, the partnerships can divide the costs and share risks, whilst maximizing the potential benefits. They also recognize that it is virtually impossible for external players to invade the automotive industry with similar eVentures without their approval.
Few automotive companies are doing well at the moment. Cars are leaving the forecourt, but margins are weak and profitability on new car sales is significantly lower today than a few years ago. Further partnerships using the Internet are extremely likely, as the tough times continue. The Internet highway may lead to streets paved with gold, but the vehicle manufacturers will have to march together or risk being left on the roadside.
