Two automakers are using Covisint auctions to buy every part, module and system for two future models.
The vehicles are 2005 or 2006 models, Covisint CEO Kevin English said. He would not provide details or reveal the automakers.
The development signals growing acceptance in the auto industry for the online automotive exchange. English acknowledged the publicity surrounding the creation of Covisint in February 2000, lengthy government approval and a lack of leadership slowed Covisint's startup. But he said the momentum has shifted as the industry looks to cut costs.
Suppliers and automakers have made auctions Covisint's most widely used software tool. English said about 85 percent of the auctions in 2001 were for direct materials - parts, modules and systems used to assemble a vehicle.
The value of the goods purchased through auctions last year was more than $50 billion (E57.2 billion), English said.
Automakers purchased another $100 billion in parts using Covisint's quote management tool, a nonauction service that links buyers and potential suppliers.
Covisint expects as much as 70 percent of revenues this year to come from its auction, online catalogs and other e-procurement tools.
English said the company's No. 1 priority is to become profitable this year, prompting a restructuring at the beginning of this month.
Covisint created two business units - the Strategic Sourcing group and the Industry Portal and Connectivity Applications group. Each is accountable for meeting profit goals.
The Strategic Sourcing unit oversees auctions, catalogs and sourcing services.
The Industry Portal unit focuses on portal development and collaboration tools.
Covisint also laid off 25 staff members and 25 contract workers and will add 14 employees to its sales staff. It now has 330 employees at its headquarters in Southfield, Michigan, USA, plus another 25 to 30 contract workers. Covisint also has offices in Amsterdam and Tokyo, where employee numbers will likely be unaffected.
English would not disclose Covisint's revenues. But he did acknowledge the business spends more money than it takes in.
Still, English stuck by his prediction from earlier this year that Covisint will be profitable in the fourth quarter.
He said revenues would be 'nine digits' by year end, which would be a minimum of $100 million.
'We've got plenty of money in the bank to drive to profitability, but we've got to get there this year,' English said. 'That's critical.'