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GM to Let Buyers See Production on Net

Program involves only custom-ordered cars. Company also aims to cut delivery time, inventories.

May 24, 2000|From Bloomberg News

DETROIT — General Motors Corp. plans to become the first auto maker to let customers watch over the Internet as it builds their cars to order.

The pilot program will cover a handful of plants where General Motors seeks to deliver custom-ordered cars within 10 days instead of the current 60 to 70 days, said Mark Hogan, president of the company's online unit.

General Motors, the world's largest auto maker, plans to start the program by year's end, expanding nationwide in three to four years, he said.

Customers demand a firm delivery deadline from General Motors for custom-ordered cars, and some buyers expressed interest in watching their cars being built, Hogan said. The move comes as the auto maker works to respond faster to customer orders to reduce the value of parts and unsold cars in factories.

"We carry $40 billion of inventory on any given day," Hogan said. "Presuming we're mildly successful, we'll be able to cut that in half. That's $20 billion in freed-up working capital."

The company's Oldsmobile Alero and Pontiac Grand Am factory in Lansing, Mich., may be the first assembly line wired with cameras in some areas to let customers watch production, Hogan said. The company will e-mail customers when their cars move through the wired parts of the plant.

GM would be the world's first auto maker to let customers use the Internet to watch cars being built, said Ron Harbour, president of Harbour & Associates, a manufacturing consulting company in Troy, Mich. The move could backfire if GM fails to deliver cars on time, he said.

"You better clean up your house before you open the drapes," Harbour said.

GM shares, which fell $3.06 to close at $74.94 on the New York Stock Exchange on Tuesday, have climbed more than 8% in the last 12 months.

To reduce inventories, shifts in consumer preferences will be communicated quickly to suppliers through Covisint, an online purchasing exchange General Motors is setting up with Ford Motor Co. and DaimlerChrysler, Hogan said. The rail and trucking networks General Motors uses to deliver finished vehicles need to be upgraded significantly, he said.

GM wants to build half of its vehicles to order in coming years, up from 20% now. The company sold 4.95 million vehicles in the U.S. last year. It's working with Oracle Corp. on a system to let customers order specific combinations of models, engines, colors, trim packages and options, Hogan said.

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