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Toyota, Honda Seen Dabbling in Net Exchange
By Edwina Gibbs   Reuters
TOKYO — Toyota Motor Corp and Honda Motor Co may enter a new Internet parts exchange involving major U.S. automakers, but analysts expect their role to be limited to purchasing raw materials and simple parts.

On Friday, Detroit's Big Three abandoned plans to create rival online parts procurement networks and said they would instead build a single Internet marketplace.

The result will be the world's largest Net market. The Big Three alone plan to spend a combined $240 billion on supplies a year, cutting costs and generating billions of dollars in transaction fees.

In addition to General Motors Corp, Ford Motor Co and DaimlerChrysler AG, it would be open to other automakers and their respective suppliers and dealers.

GM's Japanese partners Isuzu Motor Co, Subaru maker Fuji Heavy Industries, Suzuki Motor Corp and Ford unit Mazda Motor Corp are expected to participate.

Renault SA and its Japanese partner Nissan Motor Co have said they will join. Mitsubishi Motors Corp is also considering participating.

But spokeswomen for Toyota and Honda, both of which have been looking at a General Motors proposed exchange but had been sceptical about the merits of a common market, said Friday's announcement had not precipitated any change in company policy.

A Wall Street Journal report on Monday, however, quoted an unidentified Toyota official as saying the automaker would likely join and invest in the venture as long it guarantees freedom in how Toyota uses the system and erects credible fire walls to protect corporate secrets.

Analysts say Japan's two largest automakers, with far leaner inventory and production systems than U.S. makers, are likely to be very choosy about what they order on the site.

"There could be merits in raw materials procurement," said Noriyuki Matsushima, auto analyst at Nikko Salomon Smith Barney.

"But Toyota and Honda develop many parts together with their suppliers and it's hard to imagine they will go through the site to get these when information might be exposed," he added.

And both would have little reason to make themselves dependant on the exchange when they had their own systems.

Toyota — which developed the just-in-time parts supply system that revolutionised automaking in the 1980s, has its own Intranet system that links it with 1,250 parts companies.

U.S. and Japanese automakers also have very different parts philosophies. Officials at Toyota and Honda have often questioned the trend towards universally available common parts — a trend they see as taking the competition out of carmaking.

Many Japan-based analysts also say they are not yet convinced that the exchange would work in practice.

Suppliers could reduce costs during the first year of the exchange's operation, tempting assemblers to bulk-buy from only one supplier but the assembler could easily be at the mercy of price hikes by that supplier the next year, they said.

Toyota however is aiming to put the auto replacement parts market online. Its U.S. sales arm announced last week it would work with software maker i2 Technologies to put the $100 billion U.S. market on the Internet.

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