Originally published: Jan. 17, 2000Call it the World Wide Web of Deal Making.
Automakers, in a big hurry to link their operations and their customers to Web-based services, are striking alliances and partnerships with Internet companies at breakneck speed.
Car companies are looking a lot more like their fast-moving partners in the Internet and consumer electronics fields, said Joe Guglielmi, president of Motorola Inc.'s Integrated Electronics Systems Sector. Suppliers and partners are recruited to fit the deal or the new technology. The next deal might shift the alliances, turning former partners into competitors.
“That same model is going to happen in the automotive supplier space,” Guglielmi said.
At the Detroit auto show last week, General Motors announced an alliance with America Online Inc. to build a shopping service and to study ways of wirelessly linking AOL content to OnStar subscribers. The two companies also will look to expand their relationship outside the United States.
But teaming up with the world's largest automaker was just a warm-up exercise for AOL, of Dulles, Va. A day after the GM announcement, AOL said it would acquire Time Warner Inc. for about $183 billion.
Ford Motor Co. announced a linkup with Yahoo! Inc. to offer Web pages on which vehicle owners could store personal data and access information for vehicle sales and service. Ford said its deal with Yahoo! would create a place where car and truck owners could manage automotive services and information over the life of a vehicle. Vehicle purchases would still be handled by dealers, said Brian Kelley, president of Ford's Consumer Connect unit.
Expect more alliances between automakers and Internet companies, he said. Ford already has struck deals with a number of consumer Web companies, including Bolt, iVillage and the Digital Entertainment Network.
“I think the Internet is a natural place for co-branding to develop,’’ Kelley said. “You have not only the product itself, but the method of getting the information. It's product, information and channel distribution all in one.’’
Ford also plans a “build-to-order” Web site for car buyers with Microsoft Corp.'s CarPoint. Kelley said that within a couple of months, shoppers would be able to track the production of vehicles in the Ford assembly system through the Web site. The next phase of development will allow shoppers on CarPoint to track the assembly and delivery of special-order Ford vehicles.
So where is DaimlerChrysler? The company has been conspicuously absent from all of the automotive-Internet hoopla in recent months.
Although the automaker has not made a big public splash, it is very much a part of the Internet revolution, insists DaimlerChrysler Chairman Robert Eaton.
“We're not out there with the big headlines, but I think we're further along than everyone,” he said.
He and his management team talk regularly with big Internet companies about tying up.
“I'm totally convinced that we will do every transaction, inside and outside the company, on the Internet within this two- to three-year time frame,” he said. “With our suppliers, with our dealers, with our customers, with our employees.’’
The use of the Internet will change the way the auto industry buys parts, builds vehicles and sells cars. Both Ford and GM, for example, have struck deals with computer firms to put their entire procurement operation online. On the marketing side, even the product clinics that automakers hold for future vehicles will change dramatically, said Mark Hogan, president of e-GM, the automaker's e-commerce business unit.
Car designers now can use the Web to test a design in front of thousands of consumers and then come back in a day or so with a revised concept. “That's having a big impact on what we do,” Hogan said.
GM also is getting ready to launch a build-to-order experiment this year, Hogan said. He declined to provide details.
SOME THINGS WON'T CHANGE
Still, some things about the industry won't change much. And if they do, it might not be in expected ways, said Maryann Keller, a former auto analyst who now is president of the Priceline.com automotive unit.
Dealers will continue to be a key link in the sales and distribution network, despite predictions of their obsolescence by Web entrepreneurs, she said. And one-price selling simply won't work in fast-changing local vehicle markets, Keller added.
Buying a vehicle is more like buying a home, and not at all like buying a book or CD on the Internet, she said. The vast majority of consumers still need some amount of hand-holding through vehicle selection and financing.
“Are you going to spend $35,000 with a click of the mouse?” Keller asked. “I don't think so.”
Still, she warned dealers not to be complacent. Retailers need to understand how to use the Internet to reduce costs and improve service.
Warned Keller: “Those who simply want it to go away will go away themselves.”
Staff Reporter Michael Woodyard contributed to this report.