DETROIT - Ford Motor Co., General Motors and DaimlerChrysler have joined to create the world's largest online purchasing company.
The three automakers will use the new company, which has yet to be named, to handle their purchasing activities and those of their suppliers on the Internet.
Combined, that is more than $1.7 trillion in annual purchasing, officials for the automakers said. The companies eventually want to take the venture public, which could boost the shareholder value of the three automakers because dot-com companies are flying high on Wall Street.
The joint venture will replace two existing online purchasing Web sites unveiled last November: Ford's auto-xchange and GM's Trade-Xchange.
Ford, GM and DaimlerChrysler will be equal partners in the new company. Other automakers who join the project also will be offered equity positions in the company, said Harold Kutner, GM group vice president of worldwide purchasing.
Just hours after the announcement last Friday, Feb. 25, Renault SA said it and its Japanese partner, Nissan Motor Co., intended to join the new company.
Working out details
The joint venture came together quickly over the past three weeks during meetings among the three automakers; GM's e-commerce partner, Commerce One Inc.; and Ford's partner, Oracle Corp.
Even in the hour before last Friday's press conference announcing the venture, it was unclear whether DaimlerChrysler would be part of the announcement. But DaimlerChrysler received last-minute approval from its headquarters in Stuttgart, Germany.
The three partners want to use the exchange for global purchasing.
Commerce One and Oracle will be the architects of the Internet-based purchasing system. Yet to be decided are who will run the company and when there will be an initial public offering of stock in the company.
Kutner and his counterparts, Brian Kelley, Ford vice president of e-commerce, and Peter Weiss, executive director of e-procurement strategies for DaimlerChrysler, had few other details on the new company.
'We'll IPO it when we have operating results that make it worthwhile. We don't believe it will be a long, long time, but we need results,' Kelley said.
When spun off, the new company 'should have a much more generous valuation than any automaker,' said John Casesa, an automotive analyst with Merrill Lynch in New York.
GM's outstanding common stock was worth $47.4 billion last Friday.
The announcement ends a four-month competition between GM and Ford to get other automakers and suppliers to join their individual Web purchasing sites. The sites offer similar services such as catalog purchasing, bidding and price quotes but use different systems.
Supporters of the online purchasing sites say they bring speed and efficiency to contract bidding. The owners of the sites typically earn fees, much like an auction house.
'Suppliers were all telling us the same thing,' Kelley said. 'In fact, we're doing this because the supply base has said we don't want a separate exchange for Ford, a separate one for GM and a separate one for DaimlerChrysler.'
Although the automakers will be using the same system, Kelley said they will not combine their parts purchasing.