Big Three reach pact on dealer networks

DaimlerChrysler AG, Ford Motor Co. and General Motors Corp. yesterday said they've reached an agreement to establish a common networking infrastructure for their dealer networks.

The Big Three automakers anticipate that most of their applications, such as those used to manage services and track vehicle inventories, will migrate to the Web within the next three years. Setting a network infrastructure standard will also aid communication for multifranchise dealers, who sell vehicles from several manufacturers, officials said.

"It's what they had to do," said Jonathan Gaw, an analyst with International Data Corp. in Framingham, Mass. "Most dealers work with multiple manufacturers and nobody wanted to support more than one system. The Big Three coming together will go a long way to developing an instrument for the dealers and manufacturers to communicate more efficiently."

Jim Yost, chief information officer at Dearborn, Mich.-based Ford, said the technical guidelines would benefit dealers by providing a road map for building Internet-ready dealerships.

"We are using technology to drive the business," said Yost. "The business is looking for every opportunity to improve performance and to be more responsive to customers."

The push for a common dealer network infrastructure is part of an overall thrust to enable build-to-order systems, which allow customers to select vehicles directly from the automaker's inventory or to specifically configure a vehicle directly from the manufacturer.

But thus far, consumer experiments with Web-based build-to-order systems have been less than stellar.

Detroit-based GM launched a pilot test of a Web-based ordering system earlier this week. The online system allows customers in the Minneapolis-St. Paul area to configure and order an Oldsmobile Alero. Ordering direct from GM cuts the order processing time down from about 60 days to 15 to 20 days.

Customers can explore GM's main inventory through its Web site and are guaranteed a price online that falls below the manufacturer's suggested retail price (MSRP). GM officials said less than 10 customers have bought a vehicle through the pilot program, which launched in September.

Ford launched a similar pilot in Ottawa last August (see story), called BuyerConnection, that allows consumers to configure vehicles online and buy from one of the two dozen local dealers participating in the program. That program used what Ford calls an "e-price" -- a price that Ford negotiated with the 24 dealers in the program and is also less than the MSRP price.

For example, the MSRP on a base model Ford Taurus is listed as $27,276 (Canadian), while the e-price is given as $26,039. Consumers are then provided with the contact information for local dealers participating in the e-price program.

The pilot program includes only 24 of the 565 dealers in Canada and offers pricing on just three vehicle lines. Online sales have been minimal, Ford officials said.

Ensuring that dealers have a Web-based and common network infrastructure moves automakers closer - though perhaps only a few inches, analysts said - to those build-to-order goals.

"This is barely a step in tackling the marathon of difficulties of creating a build-to-order system," said Gaw. Build-to-order is a long way off, because it involves redesigning factory systems and supplier fulfillment processes, he said, but Web-communications from the dealers are important.

The automakers are suggesting a network infrastructure guideline, which will be up to dealers to implement, said officials from DaimlerChrysler in Stuttgart, Germany.

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