Volkswagen Steering Online Auctions In-House

Volkswagen may become the first old Economy company to bring electronic auctions within its own operations on a large scale. The German automaker said it is taking control of its auction process for privacy reasons.

The company said it doesnt want to risk exposing its parts contracts and prices on a third partys system.

Volkswagen has already become one of the worlds biggest corporate users of auction services. In the last eight months, it bought $5.2 billion worth of goods in 270 different events. The company plans to initiate a total of 700 auctions this year.

"Ive been covering auctions for two years. VW is the only one Ive heard of that has run that many," said Gartner analyst Emily Andren. "Theyre busy."

Now, Volkswagen plans to take those auctions in-house, licensing the technology from eBreviate, the Electronic Data Systems subsidiary that currently hosts Volkswagens auctions. The automaker will adopt a 24-hour helpdesk, auction scheduling and other support operations that eBreviate currently provides.

Managing auctions over computer networks is an inherently difficult task, but Volkswagen is aggressive despite inexperience. "A lot of things can go wrong if youre inexperienced," Andren said.

After conducting some pilot auctions in spring 2000, Volkswagen jumped into auctions in a big way in December. The company has been soliciting bids for the parts used by its factories and brands worldwide, including Audi and Skoda Auto. The software lets suppliers see how their bids fare against rivals on up to 19 different parameters.

"It gives them a good benchmark." said Meike-Uta Hansen, head of Volkswagens auctions.

Volkswagen already saves an average 15 percent per transaction on the total cost of the goods it buys, through lower bids, said Sarah Pfaff, executive vice president of eBreviate.