Automobiles online: biggest thing since Henry Ford's production line

By: Kathy Foley

Date: Thursday, 25. January 2007

Reproduced courtesy of Nua Internet Surveys

In one of those notably quotable moments, a senior Ernst and Young analyst commented that the Internet was the biggest thing to happen to the car industry since Henry Ford dreamed up the production line.

The global automotive industry has certainly embraced the Internet with gusto, and executives from other sectors would do well to keep a sharp eye on goings-on in this arena. The car industry is one of the most powerful industries in the world and automotive companies are incorporating cutting-edge Internet technologies into every possible area of their businesses.

The most visible use of the Internet is as a vast online network of car dealerships. A study released last week by the National Automobile Dealers Association in the U.S. shows that over 80% of new vehicle dealers now have web sites, and almost all of those are interactive, allowing customers to order online.

Kenneth Hollander Associates also released a study last week showing that 41% of consumers researched their last vehicle purchase online and 56% plan to use the Internet when they next purchase a vehicle. Research carried out last year by JD Power & Associates indicated that about 5% of all those buying cars complete the entire purchase online.

As in other industries, however, business-to-business (b2b) commerce is where it's really at. As old Henry would no doubt be delighted to see, Ford is leading the way forward. It spearheaded the establishment of a huge industry hub site and persuaded GM and Daimler Chrysler to join the venture, making the site the world's biggest online marketplace for car parts, worth some US$240 billion a year.

Purchasing for each of the companies will be kept separate but the "Big Three" hope that combining their supply chain operations will cut costs by as much as 10% annually.

Major players in the chemical, steel, and telecommunications industries have already seen success with similar ventures and last week Sears Roebuck announced a partnership with European retail giant Carrefour along the same lines. None of these b2b marketplaces even come close to the size of that proposed by the car manufacturers. According to the Ford CEO, the new initiative will achieve "nothing short of reinventing the automotive industry."

Of course, the coming together of such enormous companies is not necessarily a Good Thing. Critics fear that the car industry, already an oligopoly, will morph into a monopoly if these co-operative trends continue.

This is unlikely, as there are too many antitrust regulations in place, but there is always the chance of a little insidious price-fixing, so some sort of monitoring system does need to be established. This applies to all b2b marketplaces, not just to the car industry.

When manufacturers can procure car parts over the Internet and cars can be sold to consumers over the Internet, what is the next logical step? Making the Internet available in cars, obviously.

Nokia announced in February that all cars would have an Internet address of their own by 2005. This was only the latest in a series of Internet-in-your-car type pronouncements from car manufacturers and technology companies.

Since 1999, Toyota has been giving demos of My Car Universe,   software developed with Intel, Hewlett Packard, and Compaq. My Car Universe   will tell drivers if the car needs more fuel and will helpfully provide directions to the nearest petrol station.

Last November, General Motors announced that it was planning to sell one million Internet- enabled cars in 2000. Their gadgets would enable drivers or passengers to access personalized data including news, sports, stock prices and email.

Lastly, a new company called WirelessCar has been launched by car manufacturer Volvo, telecom technology group Ericsson, and state telephone company Telia. This all-Swedish company will offer mobile Internet services including remote diagnostics and roadside and emergency assistance.

While the emergency response facilities are clearly commendable, one can't help wondering if they will have to be deployed on a frequent basis as distracted drivers send email and check their share prices while speeding along the motorway.

Henry Ford would undoubtedly be rather bemused by the entire affair.

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derica,

Admin,

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khairy el gamal,

ED - Drivers.com,

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