A one-year trial in 60 stores convinced the Sainsbury's board that Bank Drive should be extended to all 432 branches. The Peugeot 206 was the most popular choice in the trial.
A Sainsbury's spokesman said the company had no plans to get "further involved in car retailing at the moment". But the company's retail power makes it potentially a major new force in car sales.
Tesco has been considering a move into car retailing for two years and an NOP study for AT Kearney suggested more than half of UK consumers would consider buying a car from a leading supermarket chain.
Using Sainsbury's Bank Drive, customers can phone a national call centre and be given finance quotes on more than 3,500 derivatives. Cars can be ordered over the phone, or through selected supplying dealers, and will be delivered to the customer's door.
Customers are only able to order cars through a Freeway personal contract purchase (PCP) scheme and are not able to buy for cash or through hire purchase.
“The Bank Drive scheme is a finance deal - we are selling cars through a PCP scheme,” the spokesman said. “The boundary between buying a car and a car purchase scheme is blurred in customer eyes.”
He said Sainsbury's Bank Drive gave customers an easy way to drive a car they “would not otherwise be able to afford”. The bank is quoting a typical interest rate of 10.9% APR.
Sainsbury's Bank Drive offers no facilities for part-exchange and no aftersales service, except through local franchised dealers. It only applies to new cars.
The scheme is operated by Freeway, the Bank of Scotland subsidiary which has developed a number of major affinities, including the AA and the British Medical Association. It also has a website to finance cars direct to individual customers.
Bank of Scotland has a joint venture with J. Sainsbury to operate Sainsbury's Bank and also owns Capital Bank Motor, Forthright Finance and contract hire companies, Godfrey Davis, BoS Vehicle Management and First Mutual Contracts.
Sainsbury's spokesman said Bank Drive cars would be sourced from UK dealers using existing supply relationships with Bank of Scotland Vehicle Management.
The supermarket is quoting a £145 monthly payment on a three-year deal for a Peugeot 206 1.1, after a 20% deposit and with a £3,789 final payment. A similar car from a Peugeot dealer would cost £198 a month, with a £500 deposit and £3,617 final payment.