Tesco has launched a used car retailing service that will sell ex-fleet stock direct to consumers.
The supermarket giant's plans for used car retailing has been the subject of speculation for months and its business builds on the established Carsite.co.uk infrastructure.
AM sister title Fleet News can reveal Tesco had been in discussion with Carsite for 18 months before the official launch in April.
Tesco will continue to source cars from ex-fleet and short-cycle rental stock, although with access to 16 million Tesco Clubcard holders, there is potential for significant growth over sales achieved to date by Carsite (less than 10,000 since its launch in 2006).
Tesco Cars will advertise up to 3,000 cars every week with fresh stock added to the website daily, offering a range of models between six months and three years old.
Vehicles are sold as ‘buy it now’ – available immediately – or ‘pre-order’ – about to be returned to the vendor by the current user and typically available a month after the point of reservation.
Customers reserve their chosen car with a £99 handling fee, fully refundable if they choose not to proceed with the purchase.
Buyers will then be allotted their own, named adviser, who can help answer questions and make sure the buyer is happy with their new purchase. Tesco Cars can deliver the vehicle direct to the new owner’s home for a fixed transport charge of £149 to anywhere in mainland UK.
Cars will be sold with a no-quibble seven-day money-back guarantee, and for additional peace of mind, HPI checked and a month's warranty.
A range of Tesco financial services including vehicle insurance will be offered at the point of sale and as buyers will receive 2,000 Clubcard points for each car purchase.
Tesco customers will be able to choose after-sales servicing support from a nationwide network of about 1,000 independent garages operating through an arrangement with National Service Network (NSN) and providing servicing and general vehicle repairs up to 30% cheaper than franchise dealers.
Daksh Gupta, Marshall Motor Group chief executive, does not believe Tesco entering into the used car market poses a serious threat to franchised dealers.
He told AM: “I have a lot of respect for Tesco as one of the best, if not the best retailer out there, but we have to remember that there are six million used cars sold every year in the UK. Clearly Tesco will take some market share but there is enough room for both to operate.”
Gupta said Tesco Cars’ balance of manufacturer or one month warranty, a single collection site in Birmingham, no test drives and no part-exchanges could be a concern for some customers, but there would always be some buyers where those issues would not be a problem.
He said: “Tesco is offering a totally different proposition to what a franchised dealer can offer and there will be some customers who will be happy with it.
“The Tesco brand will give customers a lot of comfort and ultimately it will be the customer that decides where they want to spend their money as well as what level of service they want. We should also remember that we have seen other new entrants into the market such as Virgin who for me are another equally powerful and respected brand but where is VirginCars today ?, look at what has happened to Autoquake recently too.
" I sincerely wish Tesco Cars all the very best with their new business venture and I hope they make a success of it, there is enough room for all good retailers who put the customer first."
Sir Trevor Chinn, chairman of Tesco Cars, said: "When buying a used car, consumers want to know they can trust the information supplied, that they are getting value for money and a good product, all supported by good customer service. Importantly they also want to be able to take their time to make the right purchase for them.
"By marrying these principles, the success of the Tesco brand, and the transparent and unpressured online sales environment, we believe we will be delivering a positive new experience for today’s car buyer."
Andrew Higginson, CEO of retailing services at Tesco, said: "Trust, value and service are at the heart of the Tesco Cars experience.
"The range of models – from electric cars designed for the city to family-sized MPVs – is immense.
"By supplying directly to customers, they can be sure they are getting the best value out there.
"And we will say ‘thank you’ with 2,000 Clubcard points which can be redeemed for goods, services and rewards in the usual way."
- Discuss Tesco's entry into the used car market on the AM Forum.