Automotive Exchange Gets Backing from Key Supplier

BOSTON (06/08/2000) - Delphi Automotive Systems, formerly owned by General Motors Corp., today announced that it has signed a letter of intent to join Covisint, the automotive-industry online exchange being developed by GM, Ford Motor Co. and DaimlerChrysler AG.

Troy, Michigan-based Delphi is the world's largest automotive supplier and had more than $29 billion in revenue last year. It becomes the fourth auto-parts supplier to sign up to participate in the Covisint exchange in the past month, joining Meritor Automotive Inc., Johnson Controls Inc. and Federal-Mogul Corp.

Other automakers, such as Renault, Nissan Motor Corp. and Toyota Motor Corp., also have said they'll join the Big Three in using the exchange to automate purchasing and other supply-chain activities via the Internet.

But Covisint still faces some uncertainties, including an investigation by the U.S. Federal Trade Commission (FTC) into possible antitrust issues concerning the planned exchange. In fact, Delphi originally was expected to wait until the FTC completed its inquiry before deciding whether it would commit to using the exchange.

A spokesman for Auburn Hills, Michigan-based GM today said a go-live date for Covisint, which eventually expects to process up to $750 billion in annual purchases, is still contingent on the completion of the FTC investigation. But, he added, the exchange hopes to open for business by fall.

Richard Radecki, corporate director of Delphi's e-business program office, said in a statement that the company plans to use Covisint as its primary exchange for electronic transactions with customers and suppliers. But, he added, Delphi also "will continue to respond to the requirements of all of our customers, irrespective of their choice (of) Internet exchange services."

The addition of Delphi and the other suppliers that recently signed up "is a huge step in the right direction, but it doesn't clinch the exchange," said Tom Harwick, an analyst at Giga Information Group Inc. in Cambridge, Massachusetts.

"There are significant tier-one (automotive-parts) suppliers that have not signed up at the rapid rate the Big Three thought they would, and that told us privately they would not sign up."

And the Big Three automakers still "have a serious problem trying to get agreement on their technology architecture," Harwick added. The Covisint exchange is supposed to blend online marketplace software from Oracle Corp. and Commerce One Inc., which were working respectively with Ford and GM when those two companies initially were developing competing exchanges.

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