VW for B-to-B in tie-up with IBM, i2 & Ariba

Volkswagen AG in Frankfurt yesterday announced that it's teaming up with IBM, i2Technologies and Ariba to create a global business-to-business digital marketplace to order parts, tools and office equipment online.

"With this partnership we accelerate our current activities to optimize our business process," James Neumann, a Volkswagen board member, said in a statement.

According to the statement, this new Internet marketplace will allow Volkswagen to "increase the efficiency in its global supply chain and improve process flow."

In making its announcement, Volkswagen said it wouldn't take part in the Internet automotive trade exchange being set up by Ford Motor, General Motors and Daimler-Chrysler. That marketplace, announced in February, will offer procurement transactions for the Big Three automakers, other automotive manufacturers and their supply-chain partners.

In Volkswagen's statement, Neumann said the company sees the chance to create a broad European standard through the new virtual marketplace. "Our e-market is open to everyone," he said.

Analysts differ on the reasons Volkswagen chose not to participate in the Big Three auto exchange.

Laurie Orlov, an analyst at Forrester Research, said she thinks Volkswagen's decision is related to the fact that the US Federal Trade Commission (FTC) has started to investigate automakers - and their collaboration on online marketplaces - for antitrust collusion (see story). For example, she said, when competitors share information, the end result could be possible collusion to keep prices to suppliers artificially low.

Orlov said maybe Volkswagen realised "the bizarre aspect of partnering with one's competitors and decided to sit this one out" and wait to see what the FTC says about the partnering of Ford, GM and Daimler-Chrysler.

However, she added, nothing in Volkswagen's statement precluded it from partnering with other automakers in the future.

The FTC didn't return a telephone call seeking comment. Earlier this month, though, it issued its first set of guidelines in conjunction with the US Department of Justice's Antitrust division. The Antitrust Guidelines for Collaboration Among Competitors was created for companies seeking to collaborate with their competitors on electronic marketplaces and other types of projects.

At that time the agencies said, "The increasing varieties and use of collaborations by rivals has yielded requests for improved clarity regarding their treatment under the antitrust laws."

Kevin Prouty, an analyst at AMR Research, had a different opinion about the reason for Volkswagen's decision to not participate in the Big Three automaker electronic marketplace.

Prouty said there's a perception among Europeans that European automakers are going to be bought out by their American counterparts. He said Volkswagen is concerned about this perception, and wants to make it clear that it won't be acquired by a US company.

"Volkswagen fired a shot by saying that it could be independent and implement (its own electronic marketplace)," Prouty said.

In addition, Prouty said, Volkswagen looks at its supply chain as a valuable asset. He said the German automaker doesn't want to be lumped together with other companies, which could cause people to think its products are the same as the products of all the other manufacturers.

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More about AMR ResearchAribaDepartment of JusticeFederal Trade CommissionFord MotorForrester ResearchFTCHolden- General Motorsi2IBM AustraliaUS Department of JusticeUS Federal Trade CommissionVolkswagen Australia

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