Mark Hogan, president of e-GM, controls the online fortunes of General Motors. His immediate task is to establish the new global online parts purchasing company being developed with Ford and DaimlerChrysler.
Automotive News Europe staff reporter Diana T. Kurylko interviewed Hogan about the Internet challenges facing the auto industry.
Online auctions are going to be a big part of the web operation. How will your auction capability compare with other web auctions such as E-bay?
Ours will be more sophisticated - it's a huge magnitude. We would like to have it up and running by the end of the year. We recognize that it's a major challenge.
How many auctions have you completed through your own web purchasing operation, Trade-Xchange?
Since we started TradeXchange, we have done at least 10 auctions.
The European Network Ex-change (a new communications pipeline for online purchasing) plans to link with its ANX equivalent in the USA. To make your new exchange work, do you need more than just the USA and Europe forming a pipeline?
We may need a global exchange. The Internet has no boundaries, there are no time zones and our suppliers are global. To have a regional exchange may not make sense.
How important is it to have other European car manufacturers participating?
It is important. It's a win-win situation because when you talk about GM, Ford and DaimlerChrysler, you are talking about a lot of volume. I suspect manufacturers like VW, BMW and Peugeot are starting to think about it as well. The number of OEMs is shrinking, and we are all looking at the same thing.
Are any other automakers interested in joining?
We know the Japanese overtures are serious. I have been personally involved in talks with Toyota. Nissan also understands that it has huge costs. It would make sense for Nissan to join along with Renault. Many manufacturers will realize the capabilities of the exchange.
Then why are some companies hesitant to give up their current ways of parts purchasing?
The hesitancy revolves around the product security issue and the suppliers are hesitant because they did not want to join two or three different exchanges, they wanted to join one. You can understand that.
Can the exchange guarantee product or design security?
Yes. We have to build product security into the exchange. We have to build firewalls and encryption capabilities into it.
How soon before you add dealers?
We will make this available to our dealers (for parts delivery) soon. We are working on what we call rapid order to delivery, and we will have some pilots up and running this year here in Europe as well as in North America.
Is Europe behind in e-commerce?
The US in general is more connected. The telecom costs are high here.
I was online in the UK recently and it cost me 25 (A40). I was shocked.
That cost must come down before more people use it. In our business-to-consumer side we promote the concept of stickiness - it means you stick on our site. The more you stick to our site, the more information we can send you on goods and services.
I used to be measured on hours-per-vehicle, now I am measured on stickiness and eyeballs (numbers of visitors).
The only place you sell cars on-line in Europe is through (GM's UK unit) Vauxhall and they say they have only sold several hundred cars.
That number is pretty good. Most consumers are worried about buying compact discs online, never mind a vehicle. It is security in the transaction they are concerned with.
If several hundred people were confident enough in our online security, that is a good way for us to learn and for consumers to gain confidence in the effort.
Will other GM subsidiaries in Europe introduce on-line car sales?
Yes, they will. Look at France and the Netherlands for our next effort. They seem to be the places where we are getting the strongest signals. We will start these quickly.
How about Opel in Germany?
They won't be there for a while, although I'd like to see online shopping there before the end of the year.