Toyota Wooed by B2B E-Commerce Networks

Toyota Motor Corp., Japan's largest automaker, is reportedly being wooed by both General Motors and Ford to become part of their online auto business-to-business (B2B) e-commerce sites.

Toyota said it is in active discussions with General Motors to become part of GM's TradeXchange, but added that it has just received an offer from Ford to join its competing AutoXchange site.

Both sites plan to operate business-to-business supply chain management services for auto companies. The networks are designed to generate additional revenues for both automakers in much the same way that United Airlines and American Airlines operate competing travel reservation networks.

"We have had an invitation from Ford, but it just came in and we have not yet got to the stage of considering it yet," said a Toyota spokesman. "We only just began considering GM's offer."

Ford Motor Co. has teamed with database management supplier Oracle Corp. (Nasdaq: ORCL) to build its AutoXchange site. Ford has approached Nissan Motor, Japan's second-largest automaker, Renault SA, the largest French automaker, and other European manufacturers about joining its system.

GM is working with B2B e-commerce provider Commerce One to develop its TradeXchange system. GM has also asked Honda Motor Co., Japan's third-largest automaker, to participate in its site.

Yesterday, e-GM president Mark Hogan was asked if his company is willing to sacrifice part ownership of TradeXchange if it means getting Toyota to agree to coming on board.

"We're open from a business model standpoint to consider that," he said. TradeXchange is due to go live this quarter, and GM has made no secret of its wish to include Toyota and Honda Motor Co. in the new endeavor.

Toyota Considers Options

Last week, Tadaaki Jagawa, Toyota's executive vice-president for information technology, told reporters that Toyota is considering GM's offer, but the company is not convinced of the wisdom of standardizing parts with other automakers.

"GM and Ford have the big ideas, but they have yet to put a lot of this into practice," Jagawa said. "We've been working on a Toyota-only system."

In an industry that is as competitive as it is innovative, Jagawa also admitted concerns about compromising corporate secrets and becoming vulnerable to hackers if his company joins another automaker in an online venture.

Toyota already asserted its fierce independence by declining an offer to sign agreements with Internet middlemen Autobytel and MSN's CarPoint, even though all of the other Japan big five automakers have done so.

Instead, the company plans to debut its own Web site showroom in its virtual online mall, Gazoo, sometime this year.

GM and Ford Forging Ahead

Meanwhile GM and Ford are neck and neck in the race to be the first and biggest in the online automotive supply business. Ford is said to be aiming to go live on January 30th, while GM is hoping for a February debut.

Industry analysts indicate that ventures like TradeXchange and Ford's AutoXchange could ultimately process most of the approximately $90 billion in parts and supplies used annually by the two automotive giants. Each of the companies claims that Web purchasing may reduce their spending by 10 percent.

Additionally, each company has indicated intentions to take their online ventures public. Ford says its IPO could happen as early as the third quarter of this year.

So, which company will Toyota choose? Do not expect any sudden moves on Toyota's part, despite the rapid approach of its American competitors. Toyota moves at its own pace, adhering to the "slow and steady wins the race" philosophy.

"We are a slow, conservative company, said Jim Olsen, senior vice-president for Toyota's U.S. holding company. "But when we get there, it will be right."