VW to Increase Purchases Made Online

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HAMBURG, Germany -- Volkswagen plans to buy more over the Internet in the next few years and will use its own platform to do so. It is currently spending 1 billion Deutsche marks, or about $500 million, on the Web.


Speaking here last month, VW CEO Ferdinand Piech said the auto maker would be buying DM 3 billion to DM 5 billion, or $1.5 billion to $2.5 billion, worth of products on the Internet. Since VW buys around DM 40 billion a year, Web purchases would account for only about 10 percent.


Asked why he had declined joining a common buying platform with other car marketers, Piech said he would run afoul of U.S. and European law if he did so since both could accuse him of being part of a buying cartel.


The VW boss said the first test of selling the new beetle directly to consumers through the Web in the United States had been very successful, with 1,000 cars sold in 10 days.


But the company has long-term contracts with car dealers, and purchases of expensive autos contain a strong emotional component "which makes car sales over the Internet appear less likely."


Nevertheless, VW is ready to shift sales to the Web should the trend tack in that direction. "We can react quickly to new developments," Piech said.


There is question about whether Internet buying platforms among major manufacturing companies will violate EU anti-competitive rules.


A spokeswoman for Mario Monti, the EU commissioner in charge of competition affairs, said the European Commission had not yet formulated an opinion about the growing number of such purchasing alliances.


But she added that the commissioners would have to look at the fine print on such contracts to see if the multibillion dollar purchasing organizations achieved a dominant market position. If they do, she said, the European Commission would act.


European travel agencies have lodged massive complaints in Brussels against the marketing power of airlines who have formed a kind of ticket booking combination.


For the European Union, however, such combinations are new territory legally and will require lengthy examination before any action is taken. What could prompt the European Union to move is the size of these Internet marketplaces.


As a rule, ventures large enough to impact the single market are sent before the European Union for approval. These have not been sent as yet and EU sources said the commission would follow developments closely.
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