Euro car firms gear up for Net success

CommunicationsWeek International, May 10, 1999 by Peggy Salz-Trautman

"Internet users in Belgium are not used to using the Internet for purchasing," notes Dirk Pissens, president of Volvo cars in Belgium and Luxembourg. Volvo hopes feedback from its site will allow it to develop an ecommerce scheme that will simplify car buying and target a larger community of customers. "In the end, the customer doesn't need to go to the dealer except to pick up the car," Pissens said. "But that is the point: the customer goes to the dealer and that way we keep the customer in the Volvo family." The scheme will launch in other countries beginning this summer.

Volvo is also one of the European car makers quietly lining up to tackle the difficult business-to-business e-commerce market. Companies including DaimlerChrysler, BMW, Audi, Ford, Opel, Siemens, Volkswagen and Robert Bosch are among those piloting business ecommerce applications using a new network that is intended eventually to link suppliers, business customers and dealers across Europe (CWI, 18 January, p.1).

This so-called ENX Project (European Network Exchange), launched at the CeBIT trade show in March, is an IP-based virtual private network (VPN) and communications platform designed to link Europe's entire automotive industry and eventually connect to the Automotive Network Exchange (ANX), its counterpart extranet in the United States that connects General Motors, Ford and Chrysler.

The ultimate aim of ENX is to automate supply chain management from order to invoice using the Web.

Europe's on-line car market set to take pole position

The good news is that there is money to be made from online car sales, according to growth estimates (see main story). The better news for European car makers is that they have an edge over their counterparts in the United States--even if they don't yet realize it.

A number of factors are contributing to this development. One is the growth of the Internet outside the United States: While English is the language of e-commerce and cyberspace, there are strong signs that non-English speakers online are catching up fast. Reports from research organizations such as NUA Ltd. in Dublin measure a marked increase in the on-line use of languages including Scandinavian languages, German, Italian, Portuguese and Spanish.

"Europe lags between 18 and 24 months behind the U.S.," said James McQuivey, a senior analyst at Forrester Research Inc., Cambridge, Massachusetts. "The increased use of the Internet [as seen in Europe] is a prerequisite to making e-commerce work... Consumer interest accelerates consumer adoption and drives the market."

More importantly, Europe also has a completely different legal approach to car sales--one that is less bureaucratic than in the United States, where the manufacturer-dealer relationship is burdened by state laws which stipulate that the car maker cannot take an active role in selling vehicles. In contrast. European car companies, particularly in Germany, have a long tradition of selling cars directly from the assembly line. BMW AG, in Munich, for example, estimates over 50% of cars are made to order for consumers and picked up from the plant.