The auto industry used to be a textbook example of American industry at its worst. But as it changes its old business model to face the critical challenges being stirred up by e-commerce, the auto industry is just as surely becoming a textbook example of American industry at its best.

Because the industry makes up 25 percent of all revenue generated in the U.S. economy, it's worth watching as it transforms from a traditional brick-and-mortar operation to a New Economy player.

At the heart of the auto industry's efforts is the newfound realization that every division of an auto company, from design concept to sales, can now access information in real time. This is a key point for any company watching the carmakers make their Internet transition. When all e-business systems are ready to go, any company in any industry will be able to share information instantaneously. The benefits for market players include compressing the time to market, remaining closer to the demand cycle, and causing less duplication and fewer wasted efforts on projects that may have been changed by another division.

An overnight transformation

The Internet turned the spotlight on the worst of the auto industry's old model: wasted customer insights.

"No other industry that I can think of has had the names, addresses, and financial information on its customers for 100 years and has done less with it than the auto makers," says J. Ferron, an industry analyst at PricewaterhouseCoopers, in Detroit, characterizing automakers' weak marketing efforts over many decades.

But in the past three years, the industry has done a 180-degree about-face. Although it's difficult to pinpoint what initiated the industry's almost overnight transformation, change it did, showing the rest of the world that automakers understand the Internet.

"Time to market is everything. When you see trends in

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