DaimlerChrysler Forms E-Business Subsidiary

Automaker DaimlerChrysler (NYSE: DCX) announced Monday that it is consolidating all of its e-business activities into a new subsidiary called DCX NET Holding.

The company said that DCX NET Holding, which was launched with start-up capital of $500 million (US$), will form the nucleus of an initiative to make the company "faster, more efficient, and therefore more competitive."

"DCX NET Holding is a product of the company's overall e-business strategy," said DaimlerChrysler IT manager Eckhard Cordes. "The new holding will forge alliances, enter into joint ventures and invest to promote the company's e-business activities."

The new company, which draws its name from DaimlerChrysler's stock symbol, will have offices in New York City; Detroit, Michigan; Palo Alto, California; Tokyo, Japan; and Stuttgart, Germany. The company said the wide range of locations is intended to "facilitate collaboration with e-business development partners."

DaimlerChrysler's E-Activities

DaimlerChrysler, like the rest of the automotive community, has embraced the Internet as a way to sell cars and save money. The company's initiatives range from investing over $290 million in Internet companies to collaborating with rivals GM and Ford on a business-to-business e-marketplace.

In May, the automaker took a $25 million equity stake in Powerway, Inc., an Indianapolis, Indiana-based software company specializing in Web-enabled quality planning software technology. DaimlerChrysler said at the time that it planned to use PowerWay's technology to improve its business-to-business (B2B) supply chain management activities.

Also in May, DaimlerChrysler announced a deal with the Cobalt Group, a provider of Internet-based B2B services for the automotive industry. The Cobalt Group agreed to build Web sites for more than 2,000 DaimlerChrysler dealers and integrate the dealer sites into the DaimlerChrysler Web site. The automaker also made an unspecified equity investment in the Seattle, Washington-based company.

Productivity Initiatives

DaimlerChrysler is also involved in creating its own Internet applications. One of those applications is "FastCar," an Internet-based development and production system that enables development and production departments -- including design, development, production, finance, procurement and logistics -- to collaborate in real-time.

In a bid to save money and improve supply-chain efficiencies, DaimlerChrysler has partnered with rivals Ford, GM, Renault, and Nissan to launch Covisint, a B2B e-marketplace for the automotive industry. The new venture opened for business last month.

The automakers say they plan to funnel $300 billion worth of supply and material purchases through Covisint annually, once the site is fully operational.

The giant automaker also says it intends to harness the Internet as a sales channel. The company recently began online sales of new Mercedes-Benz vehicles in Europe and in the United States.

GM's New Venture

In related news, on Friday automaker General Motors announced that it is forming a joint venture with its U.S. dealers to sell cars and trucks online. The new venture will be a legally separate entity from GM and, according to the company, will allow customers access to all makes and models of cars.

Customers who visit the Web site and want to buy competitor's cars or trucks will be referred to the appropriate dealer or automaker.