Electronic Commerce Revolutionizes the Automobile Industry

Strategic Insights -

The partnership between the Microsoft Corporation and the Ford Motor Company, a joint venture offering built-to-order automobiles via the World Wide Web, signifies the profound impact of electronic commerce on the auto industry. At a news conference, Microsoft and Ford executives emphasized that the online service would not displace the traditional role of car dealers. However, some dealers expressed skepticism about the partnership's potential consequences, fearing that Ford might bypass them and establish a direct relationship with customers. Others saw opportunities for growth, citing the potential benefits of offering customers a better online experience.

Key Takeaways:

  • The Microsoft-Ford partnership allows customers to configure their own cars and access detailed information on product availability through the World Wide Web.
  • Some car dealers are concerned that the new partnership will bypass their role in the sales process, while others see opportunities for growth.
  • The partnership aims to provide customers with a better online experience, which will ultimately increase customer satisfaction.
  • Ford and Microsoft executives emphasized that the online service will not displace the traditional role of car dealers.
  • The partnership involves a minority investment by Ford in Carpoint, a car-shopping service offered by Microsoft's on-line service MSN.
  • Dealerpoint technology, a lead-management system, will be licensed to American Honda Motor Company by Microsoft.
  • The Ford-Microsoft venture will link customers directly to Ford's manufacturing-system data base, transforming the automobile business.
  • The partnership plans to make information on product availability easily accessible to customers, putting them in charge of the transaction.
  • Ford and Microsoft executives cited consumer preference information as a significant factor in their plans, which can reduce manufacturing costs and inform design decisions.
  • Microsoft has committed to maintaining consumer privacy, but its commitment was challenged by Autobytel's president, Mark Lorimer.

Statistics:

  • 140,000 referrals per month on Carpoint
  • $600 million in sales per month on Carpoint, according to Microsoft
  • 200,000 referrals per month on Autobytel
  • $1.7 billion in auto sales per month on Autobytel

Sources:

  • "News Conference: Microsoft and Ford Partnership on Carpoint"
  • Quote from Steven Ballmer, Microsoft's president (no date)
  • Quote from Edwin J. Mullane, president of the Ford Dealers Alliance (no date)
  • Quote from Peter Greiner, owner of Greiner Ford (no date)
  • Autobytel's sales and referrals figure (no date)