Derek Cook, the former chairman of the failed DC Cook motor group, is set to take over the loss-making Virgin Cars operation for an undisclosed sum. Cook, who is running Virgin-rivalling Motor Solutions, is expected to take a 25% stake in the business, which will still trade under the Virgin brand.

The news is part of major plans to expand Motor Solutions, the online discount motoring service, that will include deals to supply cars to retail supermarkets. “We have agreed in principal with Virgin Cars to take over the business and are at an advanced stage of the negotiations. We expect to make an announcement within a few weeks,” says Cook. “But it is not just Virgin Cars. We are in talks with one of the biggest supermarkets in the UK who want to start selling cars.” He would not comment further, but likely candidates include Tesco and Sainsbury's, both of which already sells car finance.

Cook will retain Virgin's multi-franchised Manchester showroom, which opened in May 2003, and merge the Hemel Hempstead call centre with his own operation. It is not clear whether current Virgin Cars chief executive Ian Lancaster will remain with the business. Cook is currently working on a strategy to take the business forward and is evaluating whether to continue with Virgin's plans to open another showroom in the UK. Sir Richard Branson will have a 25% stake in the business with an option to raise this to 50% depending on how the company trades. Virgin Cars' 2001 accounts revealed losses of more than £13m and it has failed to achieve sales targets. Motor Solutions provides heavily discounted new cars in volumes and was forecast to sell 20,000 cars this year.

A Virgin Cars spokeswoman says: “Virgin Cars is in discussions with potential investors to help accelerate development. Virgin Cars launched its first car department store in Manchester last year when plans were announced to develop similar sites across the country. While discussions are in progress we are unable comment further.”