General Motors has enthusiastically embraced the Internet by acquiring stakes in innovators such as Commerce One Inc., NetZero Inc. and General Magic Inc., and through partnerships with technology heavyweights Sony Corp. and America Online Inc.
But those deals are a mere toe in the water compared to what's yet to come, GM Chairman Jack Smith told delegates to the Automotive News World Congress.
'The relationships announced with Sony, (America Online) and NetZero this month are only the first wave,' Smith said. 'More are soon to come.'
Indeed, the morning after Smith's speech, GM announced that it had picked Bell Atlantic Mobile and GTE Wireless to create a nationwide wireless network to support GM's OnStar in-vehicle communications system.
GM said the deal will give OnStar customers personal calling and Internet access.
The reason for the rush of activity is that GM believes the Web is the way to lower costs and higher sales. Smith said the GM BuyPower Web site, on which customers can locate and buy vehicles, will generate 50,000 to 100,000 additional new-vehicle sales in 2000.
Additionally, Smith said subscriptions to GM's OnStar system will increase to 4 million by 2003, from 100,000 in 1999. OnStar will begin offering Internet access during the second half of 2000.
More importantly, GM hopes to cut production and distribution costs by using the Internet to connect customers, dealers, assembly plants and suppliers. The goal is to reduce the time between a customer ordering a vehicle and delivery to about 10 days, he said in response to a question.
'The auto industry in America goes to market with all dealers carrying about an 80-day supply of vehicles. There's a lot of waste there,' Smith said.
In December, GM launched a new Web site, GM TradeXchange, to handle all of its business-to-business transactions, as well as those of its suppliers and affiliates Saab, Isuzu and Suzuki.
Smith said about $50 billion worth of transactions will be conducted on GM TradeXchange in 2000.
When asked after his speech what GM's Internet budget would be in 2000, Smith was vague.
'In a broad sense, much of the (Internet) spending is really a shifting from advertising or consumer-influence dollars. It's a new world, and we won't be spending as much in other areas of the media. We'll be spending more on the Internet,' Smith said.