Toyota gets set to start the e-business parts revolution

Toyota Motor Sales is predicting that its new e-business initiative with i2 Technologies Inc. - iStarXchange - will revolutionize the automotive replacement parts market. The revolution is set to start within the next three months.

The new southern California-based company, in which Toyota holds a majority stake, is designed to provide installers, dealers and retailers with an on-line marketplace to find, price, order and facilitate automotive parts purchases.

The participants claim that iStarXchange is the first online parts and service marketplace backed by a major automaker and a leading e-business firm.

Headquartered in Dallas and founded in 1982, i2 is a global provider of intelligent e-business solutions.

Dealers, installers and independent auto parts shops and service centers currently spend too much time searching for parts by going through catalogs, making calls and sending faxes, according to Toyota Senior Vice President J. Davis Illingworth.

He says, "That process is expensive, time-consuming and often frustrating for both the aftermarket business and the vehicle's owner who has to wait for the right part to come in.

"(iStarXchange) will benefit buyers by helping them locate, price, order and fulfill parts needs faster than ever before and at a lower cost.

"That, in turn, will help dealers, installers and jobbers better satisfy their customers and encourage repeat business. We believe we can organize this space very rapidly and add value right away."

Toyota is encouraging all parts manufacturers and all 160,000 parts buyers and 66,000 parts sellers in the country to participate in iStarXchange, which will support Toyota Genuine Parts sold by Toyota and Lexus dealers as well as aftermarket parts and supplies for the entire auto industry.

"This will be an open and secure system," says Mr. Illingworth.

"By taking advantage of the efficiency and visibility of the Internet, iStarXchange will automate the parts buying process and match replacement parts supply and demand," says Greg Brady, president of I2 Technologies, whose TradeMatrix product is the technological platform for the new service.

"This is the first system that will link together automotive replacement parts and services providers in a single on-line marketplace," says Mr. Brady. Initial services will include catalog hosting, technical content, demand planning, parts replenishment and purchasing, online transactions and invoicing, supplier collaboration, auctions and reverse auctions and procurement planning.

The marketplace later will add components to help optimize parts delivery, customer service, order commitments and shipment tracking.

Buyers can expect to get one-stop access to all aftermarket needs - from parts to indirect goods and value add supply chain services. Buyers also can expect greater parts availability and can potentially realize cost reductions, due to combined buying power and more competitive pricing.

Toyota and i2 say sellers, including OEMs, suppliers, wholesalers and logistics partners will benefit from expanded market reach, reduced inquiry processing costs, real-time demand information and reduced inventory-carrying costs.

"All participants in the chain will realize value," says Mr. Brady.

Although pricing has yet to be established, buyers and seller both will be charged a transaction fee for using the system.

Should Toyota and Lexus dealers feel that their parts business will be threatened by this new enterprise? Not according to Mr. Illingworth.

"While we expect Toyota and Lexus Genuine Parts to be offered over iStarXchange, it will be done only through our authorized dealers," stresses Mr. Illingworth, who adds that one of the reasons behind Toyota's involvement in this company is to help dealers increase their aftermarket business.

"This is a tremendous opportunity to get involved in the e-marketplace and improve our own systems," says Mr. Illingworth. "We get a significant jump on the efficiencies this offers and the knowledge you get participating in e-commerce and the aftermarket."

A service such as this could help wean the marketplace off of the temptation to use so-called "gray market" lower-quality parts.

"If you have quality parts available at a competitive price, then the gray-market player has less of a chance," says Mr. Illingworth.

A dealership customer wants to dress up a vehicle he or she bought or is thinking of buying, but isn't sure exactly how those accessories will look on that particular product.

What's a dealer to do to resolve those buyers' uncertainties?

MACRO Systems Inc. has come up with one solution.

It's called the Virtual Dealership system. Using a MACRO database that includes thousands of options, a showroom customer can click on accessories to see a computer image of how they'll look on the exact make, model and color of the purchased vehicle.

It's an alternative to dealers relying on paper catalogues or showing customers an accessorized vehicle that only is like the ones they're interested in.

Want to see that Mustang convertible in, say, laser red, with a tan soft top, fog lights and the GT trim package? A few clicks of the computer will show what that looks like on the monitor screen.

Same goes if a customer wants to see the image of a new Explorer with ski racks, Eddie Bauer trim, running boards, and in spruce green. Or black. Or whatever.

The system also updates the vehicle invoice throughout the accessory configuration process, provides the option to purchase the accessories and ultimately links that order to the dealerships' parts and service departments.

"We expect to dramatically increase the sale of the automotive accessories we offer to customers," says Larry Prior, president and COO of High Technology Solutions Inc., MACRO's parent firm.

The accessory market is a $20 billion a year business in the U.S. But dealerships get only a portion of it.

For instance, research indicates that truck buyers spend an average of $300 accessorizing their vehicles at time of purchase - and another $500 afterwards. That additional $500 is usually spent somewhere other than the dealership.

Mr. Prior contends the dealership cut of that action would increase if customers can see a virtual image of their accessorized vehicle.

MACRO is teaming with Ford Motor Company to provide its Virtual Dealership System software to Ford and Lincoln Mercury dealerships throughout the U.S.

In addition, the Internet Accessorizor, another MACRO solution, enables potential customers to access Virtual Dealership System via the Internet.

"The car-buying public is no longer limited by its imagination," says Allan Camaisa, High Technology Solution's founder, chairman and CEO.