Tesco Cars has decided to close the business and is no longer accepting orders from customers after a year in business.
A statement from Tesco Cars said: “We started Tesco Cars in good faith and we always aim to do a good job for customers.
“However, following a review of the business model we and Carsite, our partner, have decided that we cannot offer customers a satisfactory range of vehicles and as a result, have decided it is right to close the business.”
A spokesman for Tesco told AM: “The core response from customers was positive, but we had difficulties early on with the supply of stock.
“Given time that problem could have been overcome but Tesco has decided to concentrate on its core business at this time.”
Tesco would not comment on whether the business was making a profit or whether the website could relaunch without the Tesco brand association.
The Tesco Cars model was based on selling ex-fleet stock directly to customers over the internet and was built on Carsite.co.uk’s website infrastructure.
Customers can claim refunds on cars they have pre-ordered and warranties on cars that have already been sold are still valid through The Warranty Group.
Tesco Cars launched in April last year to much fanfare, claiming its access to 16 million Tesco Clubcard holders would allow it access to a significant growth in sales.
When the website first launched, Tesco Cars was advertising up to 3,000 cars each week with models between six months and three years old.
Back in April 2011, 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."