Losses totalling almost £1m have led PCFG to finally pull the plug on the 75,000sq ft used car operation in Otterspool Way. It launched the business in October 2004 with an investment of around £500,000.
AM revealed in April that the AIM-listed finance house had begun scaling down the supermarket and was likely to pull out. Now it has begun a clearance sale, and PCFG is seeking a buyer for the remainder of the site’s eight-year lease.
The company set up Karma to boost its finance penetration, in particular in the sub-prime market, and was expecting the operation to boost finance income by 10%. PCFG had ambitious plans to add two more Karma Cars outlets this year with a long-term aim of having six sites.
But a source close to the company says the operation hasn’t followed the original business model. He believes many potential customers who visited were not approved for the finance because of over-stringent criteria set by Karma Cars’ chosen wholesale funder, Capital Bank.
“It’s a shame that the business was never born to be what it was designed to be. It’s been a difficult and costly experience for PCFG. I can’t see them trying it again even if the market picks up,” he says.
In a statement, PCFG chief executive Tony Nelson says: “The management of Karma Cars and I have worked hard to redirect its advertising and promotions and increase customer footfall.
However, we have not achieved the necessary level of sales, so we have made the difficult decision to cease operations.
“I believe the concept was right but the timing, coinciding with a general downturn in customer demand, made the achievement of our goals difficult.”