AM Online

The Big Picture: Points mean cars at Tesco

Let’s make one thing clear: Tesco is not entering car retailing. Its deal with Motorpoint is purely an affinity scheme via its Clubcard programme.

That’s not to say it hasn’t considered selling cars. It came close to launching an online sales venture in 2000 and also held preliminary talks with Inchcape in 2002. It even went so far as to dip its toe into motorcycle retailing in 1999.

But the numbers didn’t add up. Instead, Tesco favours selling higher-margin motor-related products like finance and insurance.

That’s why the latest venture makes sense – although Tesco executives are publicly downplaying any cross-sell opportunities.

They would have us believe that the deal is totally altruistic – they have set it up with the sole purpose of helping their customers get a discount on a delivery mileage car (imported new or UK pre-registered – which Motorpoint insists it does not source before the three-month period is up) or used car.

So, a company which last year made more than £4,800 every minute, which has a market share of more than 30% and which takes £1 of every £3 spent by consumers on groceries has not considered cross-selling with its finance and insurance products, and perhaps linking with a warranty firm.

It seems obvious to me that if you are going to set up a scheme that encourages customers to go to one organisation on the promise of discounted products, you use the relationship to sell other products they will need anyway. If it’s obvious to me, you can bet it is obvious to Tesco’s bosses.

Motorpoint, which gets fantastic PR out of all this, including a mention on Top Gear, is singing from the same hymn sheet and says it will sell its own finance products and won’t be an intermediary for Tesco.

It’s new to this game. Nationwide Autocentres signed up to Tesco Clubcard scheme five years ago for discounted service and repairs. It knows there is a cross-sell opportunity with Motorpoint’s Clubcard customers and intends to take full advantage.

Expect Motorpoint and Tesco to wake up to a similar opportunity.

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Login to comment


No comments have been made yet.