For sale on line

Billed as the automotive industry’s global online marketplace, Covisint looked until recently to be the last bastion of the floundering dotcom revolution.

With the backing of its three founders GM, Ford and DaimlerChrysler, and the support of other big car makers such as PSA, Renault and Nissan, world domination was surely guaranteed.

Apparently not. This month it announced that it will sell its online auction business to FreeMarkets, a US specialist in supply management software.

Covisint made reassuring statements about the move being ‘logical and evolutionary.’ It is difficult, however, to see it as anything other than a major retreat. From the word go, Covisint was described by its founders as a ‘trading exchange’ – a term now noticeably absent.

Last year it announced that its online catalogue service would gradually be wound down.

Now what is left of Covisint will focus on developing data exchange systems that allow automotive firms to communicate more efficiently with each other.

There is, no doubt, useful and profitable progress to be made in this area. But it seems unlikely that it was what Covisint’s various owners had in mind after ploughing the thick end of $500m (£270m) into its development.

Reports even suggest that several automotive giants want to cut and run, and would sell their stake given the right opportunity.

So why has Covisint turned out so differently than expected?

The ‘Co’ in Covisint is supposed to stand for co-operation in an e-business collective. But its backers are bitter competitors.

What, sceptics asked from the beginning, has Ford got to gain from co-operating with GM when it wants us to buy more Focuses and fewer Astras? The answer lay in the supply chain. The automotive OEMs argued that by trading more efficiently with their suppliers via new e-technologies, the whole industry could benefit.

Some suppliers, however, worried that ‘more efficiently’ was a convenient term for ‘cheaper’ and remained lukewarm.

Competition regulators warned they would watch Covisint like a hawk for signs of it turning into a cartel.

It is also instructive that several of its owners pressed on with development of what looked like mini-Covisints of their own, even as they paid lip-service to the co-operative venture.

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