GM purchases $96 billion in products through Covisint

DETROIT - General Motors has used Covisint to buy parts and systems valued at $96 billion.

The figure - from GM purchasing chief Bo Andersson - represents purchasing for this year as well as several unspecified future model years and includes more than auction business. GM, which spends about $87 billion annually in purchasing, would not give a breakdown.

Covisint handled 100 online auctions by suppliers and automakers totaling $1 billion in the first quarter. By the end of the second quarter Covisint added 320 auctions for products worth $35 billion.

The figures offer a glimpse at how the automotive industry exchange is being used and its progress under CEO Kevin English, who has been on the job since May 1.

GM, Ford Motor Co. and DaimlerChrysler founded Covisint in February 2000. Nissan, Renault and Peugeot have since joined as minority equity partners.

Automakers and suppliers use the automotive industry exchange for online procurement, collaborative product development and supply-chain management.

English said customers use Covisint for more than buying pencils.

'More than 85 percent of the procurement done through Covisint was for highly engineered parts - not commodities,' English said. That could range from disc brakes to steering systems.

GM said its $96 billion was for engineered components and systems for cars and trucks, rather than for office and factory supplies. GM used Covisint's reverse auctions, where suppliers bid online for GM work, and Quote Manager, where GM awards contracts without competitive bidding. GM has conducted more than 8,000 transactions on Covisint.

Covisint's automaker owners are its primary users, said Kevin Prouty, senior research analyst at AMR Research in Boston.

'I think $36 billion is a pretty good-sized number, and it's probably fairly accurate,' Prouty said. The automakers may drive up to 10 percent of their annual procurement through Covisint by year end, he predicted.

Ford and DaimlerChrysler would not provide use figures. A published report by the Financial Times in July said Ford saved $70 million using Covisint during 2000. But Ford spokesman Chris Vinyard said that number did not come from Ford.

'We haven't divulged, and are not going to just yet, anything about the volume of business we do or the savings that have resulted,' he said.

English has refused to provide revenue figures for the private company.

Covisint charges fees based on auctions and the percentage of the volume of transactions.

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