Fear mounts among second hand motor traders as word spreads of Tesco’s plans to enter the used car industry. It is thought that the supermarket giant Tesco has plans to launch a used car website later this year.
According to trade insiders, Tesco has been working on this project for a year now and has secured the website domain name www.tescocars.com. April is the month being bandied around as the launch and when we could expect to see them entering the market. Editor of Car Dealer Magazine James Baggott, said: “This could be brilliant news for buyers as it’s likely the supermarket will price its stock aggressively and undercut many dealerships.”
While this might be good news for buyers, it will really hit small businesses and dealerships, many of which worry about competing with the giant that is Tesco. Chris Green, founder and director of website Motoring.co.uk, said: “This worries me. In a year when many businesses are struggling to survive and looking to the secondhand market to keep them going, a big player like Tesco entering the market could send them under.”
This isn’t Tesco’s first foray into the world of motors – the supermarket has been selling motor insurance and car loans for some time now. Some feel the cars will literally just be a vehicle for Tesco to sell their financial products. One trader said: “It’s likely Tesco will make very little on each sale but instead use itto make revenue from its financial arm.”
Sources have revealed that the chain has been in secret talks with Motability, the country’s largest ex-fleet car provider. It is this news that is perhaps the most worrying for motor traders and likely to cause ructions in the industry. Motability Operations, the groups not-for-profit division, work with car makers to help disabled drivers to purchase their own vehicles at a discounted rate. The used cars that come back through Motability are then sold on through their extensive links with 5,000 car dealerships with some going to independent garages or auctions. Used car dealers are concerned that Tesco’s plans will result in a shortage of used motors. It is thought that Tesco would need at least 100,000 used cars for the business to be a success.
Motability has privately admitted that they have been in talks with Tesco, but have officially stated they would not comment on new partners. They go on to say, “Over recent years, Motability Operations has considered potential partners who could offer an additional outlet and we will continue to do so, although we are unable to comment on ongoing discussions with any specific organisation.” “Motability Operations reviews any such proposal with the same scrutiny as it would select any supplier, looking to ensure that its suitability is matched to the best interests of the business and our customers.”
It is believed that the planned venture will sell ex-fleet cars from one to five years old, using the established website Autoquake.com as a model. Autoquake offers loans, warranties, insurance and breakdown cover, as well as part exchange on vehicles. Selling secondhand vehicles would certainly be a first for a supermarket and would add to Tesco’s ever expanding list of businesses, which currently include tyres, cash for gold, beauty salons, banking, garden centres, film making, clothes and mobile phones. And lets not forget… groceries!
Tesco refused to comment about any plans to sell used cars and a spokesman said the reports were only “speculation”.
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