Volkswagen To Take Online Auctions In-House

Autoparts Report, August 1, 2001

Volkswagen said it is taking control of its auction process for privacy reasons. The company said it doesn't want to risk exposing its parts contracts and prices on a third party's system.

Volkswagen has already become one of the world's biggest corporate users of auction services. In the last eight months, the company said it bought $5.2 billion worth of goods in 270 different events. The company plans to initiate a total of 700 auctions this year, it said.

Volkswagen said it plans to take those auctions in-house, licensing the technology from eBreviate, the Electronic Data Systems subsidiary that currently hosts Volkswagen's auctions.

The automaker will adopt a 24-hour help desk, auction scheduling and other support operations that eBreviate currently provides, it said.

Managing auctions over computer networks is an inherently difficult task, but Volkswagen is aggressive despite inexperience. After conducting some pilot auctions in spring 2000, Volkswagen jumped into auctions in a big way in December.

The company has been soliciting bids for the parts used by its factories and brands worldwide, including Audi and Skoda Auto. The software lets suppliers see how their bids fare against rivals on up to 19 different parameters. "It gives them a good benchmark." said Meike-Uta Hansen, head of Volkswagen's auctions. Volkswagen already saves an average 15 percent per transaction on the total cost of the goods it buys, through lower bids, said Sarah Pfaff, executive vice president of eBreviate.