Auto Mega-Site Set for Debut

Having cleared its final regulatory hurdle, automotive e-marketplace Covisint will begin pilot operations Friday, the company has announced.

The online automotive exchange, founded by Ford, DaimlerChrysler and General Motors, received approval from the German Bundeskartellamt, or Federal Cartel Office. The U.S. Federal Trade Commission (FTC) gave Covisint the green light two weeks ago after a similar comprehensive review.

“Covisint is now cleared to transform itself from a planning initiative to a company,” said Peter Weiss, DaimlerChrysler’s lead representative on the Covisint executive planning team. “It will establish a corporate identity, begin hiring permanent employees and of course, open trade on the exchange between customers.”

The five automakers involved in the venture — the three founding partners, Renault SA and Nissan Motor Co. Ltd. — plan to push $300 billion (US$) worth of supply and material purchases through the site annually.

Pacing Itself

Because of quality control issues, Weiss said, Covisint will not be “opening massive floodgates” with its initial rollout, but rather limit it to just a few of the company’s trading partners.

Weiss said that Covisint will move forward with the planning team that is already in place, adding that the company expects to hire a chief executive officer within 30 days. Covisint has held back on hiring a permanent CEO and other employees because it could not incorporate or begin operations until receiving regulatory clearance.

Covisint’s CEO will most likely come from outside the automotive industry. Weiss said the company will choose someone who was “unbiased from the founding partners.”

Antitrust Issues

When Covisint was originally formed in February, it drew the immediate attention of both European and U.S. regulatory agencies who were concerned that the auto mega-site would deter competition by controlling prices and eventually become a monopoly.

Instead the FTC determined that the joint venture will provide both buyers and sellers with an efficient means to do business that could result in substantial cost savings. The FTC has reserved the right to review the company again after it has commenced operations.

Although Covisint has received the go-ahead from both German and American authorities, the company is still being reviewed by regulators from the European Union. However, Weiss said that this investigation will not preclude the company from beginning operations.

The fledgling company is temporarily headquartered in Southfield, Michigan, and expects to establish offices in both Europe and Asia.