GENEVA - Volkswagen AG will not join Ford Motor Co., General Motors and DaimlerChrysler in the world's largest online purchasing company.
'We would like to develop our own marketplace, which we are doing,' said Jens Neumann, a Volkswagen AG board member in charge of North American strategy.
Volkswagen has an electronic link with 3,000 of its 10,000 suppliers worldwide, but so far the automaker has not engaged in online auctions for production parts.
On Feb. 25, Ford, GM and DaimlerChrysler announced they would jointly use a new company to handle their purchasing activities and those of their suppliers on the Internet.
The three automakers said they eventually want to take the venture public. The venture will replace two online purchasing Web sites unveiled last November - Ford's auto-xchange and GM's TradeXchange.
Ford has held two online auctions to buy tires for future platforms.
Volkswagen began developing an Internet link with suppliers in 1998, Neumann said.
'We think it's the right development,' he said. 'It can save a tremendous amount of cost because it streamlines the process, eliminates redundancies in the purchasing process, and that's where the big savings are. It better be operated by your own people rather than by an outsource company, otherwise, you lose control of your core process.'
Volkswagen is technically able to do online auctions, which Neumann said favors the automaker.
'Since the pricing and the bidding becomes transparent, if you really want to succeed in your bidding, you go lower as a supplier,' Neumann said. 'It is really challenging for the suppliers. It is good for the manufacturers to have that kind of transparency.'
Neumann said he will let the purchasing department decide whether to use online auctions with suppliers.
'You get the lower price because of the transparency, and you save on the process because you get a leaner, quicker, paperless process,' Neumann said. 'And sometimes with our bureaucracies, in the big companies, the savings on the process is higher than the savings on the purchase price.'