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GM, Ford and DaimlerChrysler Form Virtual Venture
By Justin Hyde   Associated Press
WARREN, Mich. — General Motors Corp. and Ford Motor Co. will merge their Internet-based supply exchanges and DaimlerChrysler will join the new venture, a source said today. The exchanges are aimed at helping automakers cut costs.

The venture will be open to all auto manufacturers and suppliers, creating one of the world's largest virtual marketplaces, according a source within one of the three automakers. An announcement was expected later today.

GM, Ford and DaimlerChrysler will have equal ownership in the venture, which will operate as a separate independent business. It could eventually be expanded to include other industries.

DaimlerChrysler doesn't have an Internet supply exchange, but GM and Ford announced new ventures in November to require all of their suppliers to handle purchasing online. GM buys $87 billion a year from its suppliers, while Ford buys about $80 billion.

The ventures — GM's TradeXchange and Ford's AutoXchange — planned to link some 30,000 suppliers to save money by cutting the paperwork and time needed for hundreds of thousands of transactions. GM officials had said TradeXchange could trim $90 from the $100 cost of filling a purchase order.

The automakers also used the sites to hold auctions for equipment and supplies, and envisioned suppliers using the sites to broker better deals on their own purchases.

The two were some of the largest ventures aimed at the trendy idea of linking businesses over the Internet. Forecasters predict that business-to-business transactions over the web could grow to $1.3 trillion over the next four years, up from $43 billion in 1998.

GM and Ford had also seen the exchanges as a way to lure some of Wall Street's fascination with Internet businesses toward themselves. TradeXchange and AutoXchange charge suppliers small fees for handling their transactions, and each had forecast billions in revenues within a few years.

GM had said TradeXchange would handle $50 billion in transactions this year. Ford had not given a similar estimate for AutoXchange, but had set a goal of $350 million in transactions in February.

The definitive agreement is expected to be reached in the first quarter, subject to government and other approval. The systems would be integrated soon after that, according to the source.

GM owns all of TradeXchange, and partnered with California software company Commerce One to build and run the system. Ford's AutoXchange was a joint venture with Oracle Corp. and Cisco Systems.

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