The European and American governments are busy scrutinizing Covisint - the biggest and most powerful of the auto industry's new business-to-business e-marketplaces.
But like everyone else they may have trouble grasping the enormity and complexity of what is happening to the purchasing process as it goes online.
Ford Motor Co., General Motors and DaimlerChrysler announced in February that they would develop the online trade exchange to buy parts from suppliers and improve communications with the entire supply chain. Other carmakers have since joined in.
But what exactly is Covisint? And is it a violation of anti-trust laws?
The three automakers developing the Covisint trade exchange recently submitted a business plan to the US Federal Trade Commission, but they do not know how much longer the government agency will scrutinize their landmark partnership.
So far, the three partners have revealed few operational details about the exchange.
'Frankly, we're educating the US government and the auto industry, and the European Union, about what an exchange is,' said Greg Mekjian, director GM's TradeXchange who is involved in the planning of Covisint.
As the automakers prepare for Covisint, GM and Ford are getting some practice with buying parts and supplies via an online exchange. GM has been using its TradeXchange and Ford its AutoXchange. The two private exchanges will cease to exist once Covisint is up and running, Mekjian said. 'We will roll them seamlessly into Covisint,' Mekjian addedd. He will be in charge of Covisint sales and marketing once the exchange is operating.
Nissan Motor Corp. and Renault in April agreed to join Covisint as equity partners. Toyota recently said it would participate in Covisint, but it is not known whether that includes an equity stake in the new venture.
A new, independent company will run Covisint, and ultimately, the automakers want the company to raise some cash through an initial public offering (IPO).
'We need to wait for the FTC process to be concluded,' said Alice Miles, Ford's representative on the Covisint planning team. 'We're still continuing to talk about an IPO this year, but our No. 1 goal is to get the new company through the FTC and EU approval processes and introduce all the functionality we have planned. Then we'll come back and talk about the IPO.'
From the outset, suppliers have expressed their desire for an equity stake in Covisint. But it appears that will not happen. Instead, representatives from Ford, GM and DaimlerChrysler have been meeting with Tier 1 suppliers in recent weeks to gauge their interest in a revenue-sharing plan.
'The revenue sharing is a different scheme we've come up with,' Mekjian said. 'We want the members to be a success and Covisint to be a success.'
The automakers have invited a select group of suppliers to sit on a Covisint advisory committee, he said. The advisory committee ultimately will become the Covisint board of directors, Mekjian said. The board will be made up of suppliers, dealers, educators, technology providers and the automakers, he said.
The size of the board of directors has not yet been determined, but the automakers will have a minority presence on the board, Mekjian said.
The automakers say they can have Covisint operating within days of US and European government approval. 'We're planning for that day,' Mekjian said. Ford, GM and DaimlerChrysler expected and planned for a review by the FTC and EU, he said.
'Until we have those clearances, we cannot conduct transactions,' Miles said. 'We can plan very
rapidly so we have the ability to be operational the minute the approvals are received.'
Initially, the automakers were looking at June or July for launch of Covisint. While that is now unlikely, they do envision start up yet this year.
'We'll answer every question that it takes,' Miles said. 'Our counsel says it's moving forward in a very positive manner. It's not an obstacle. We're continuing along the path we laid. We're anxious to be up and running, but I wouldn't say it's been an obstacle. The investigation and our work are moving along quite smoothly.'
Now almost four months since their initial announcement, the three automakers still have not chosen a CEO for the new company and exchange. The search is well underway, but this can take six to eight months, Mekjian said.
Covisint initially will be used by the automakers to buy certain parts, commodities and office supplies from their suppliers.
'We'll go for the low-hanging fruit first - procurement,' Mekjian said.
But ultimately, they want to use the exchange to collaborate in real time with all tiers for product development and engineering changes. The technology is in place for purchasing, but getting to real-time collaboration will take longer, probably about a year, Mekjian said.
The automakers have not put a price-tag on Covisint, but Mekjian said 'it is not cheap.' Covisint is being developed with technology partners Commerce One Inc. and Oracle Corp. 'They are our technology partners in this because we are building a technology company,' he said. Both Commerce One and Oracle are equity partners in Covisint.
Covisint will attract still more automakers, Mekjian predicted. The Covisint planning team has temporary headquarters in Southfield, Mich. The automakers have not yet revealed where the new company's permanent home will be. By the end of this year, Covisint will have 200 to 250 employees. Ford, GM and DaimlerChrysler spend about $240 billion collectively each year in global purchasing. With Renault and Nissan, it is $300 billion.