In a move typical of its well-established independent corporate philosophy, Volkswagen announced Tuesday that it will forgo joining an online auto parts marketplace with the Big Three U.S. automakers in favor of a similar strategic partnership with IBM.
The Wolfsburg, Germany-based Volkswagen, which is also working with i2 Technologies and Ariba to create the online marketplace, claims it will cut procurement costs for certain items by as much as 50 percent. The marketplace will deal in sales of components, tools and office supplies.
In announcing the venture, Jens Neumann, Volkswagen’s director of treasury and organization, said the company wants its marketplace to become a European standard for business-to-business electronic commerce, and encourages other participants to join the process.
“Our marketplace is open to everyone,” Neumann said.
VW Financially Sound
The move to establish an online marketplace independently from the other automakers does not come as a surprise to many industry observers, who note that VW has a history of marching to the beat of a different industry drummer.
The company has embarked upon a series of wise business moves over the years, which have bolstered its financial position in the world auto marketplace. With a number of strategic partnerships in place, the company can afford its independent stance.
In addition to its moderately priced consumer car line, VW also owns the rights to manufacture both Rolls-Royce and Bentley through 2003. Last month, the company acquired a 34 percent stake in Swedish truck and bus maker Scania, a move that many industry analysts predict will increase the company’s profitability over time.
New Deal Strategically Timed
VW has benefited from the fact that European consumers have been quicker to adopt the Internet for car buying.
While U.S. car makers are focusing on saving money by using the Internet to cut down on supply costs, the market for Web car sales in Europe — where online households are expected to double to some 50 million in three years — is growing rapidly.
Meanwhile, Volkswagen has staged a monumental comeback in the U.S. over the last several years, driven largely by the reintroduction of the long-discontinued Beetle model.
In March, the company sold 31,675 new cars in the U.S., representing a 19.6 percent increase over last year’s mark of 26,488. It was also the most successful March since 1979.
The company’s first quarter results in the U.S. indicate that 82,621 new cars were sold, up a full 30.1 percent from the same period in 1999.
After yesterday’s announcement, VW’s stock rose about one percent.