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The inside story on why Tesco Cars closed

Time 9 years ago

ONE of the team behind the Tesco Cars launch has spoken out exclusively to Car Dealer as to why he thinks the venture failed.

A ‘lack of supply’ was an obvious problem, explained our mole, but more seriously than that was the fact consumers simply weren’t buying the cars.

‘There clearly was not enough customers,’ said our source. ‘At the back end of last year Tesco were selling just 150 cars a month. Well, when it was Carsite it was 125 cars a month so the Tesco branding was hardly helping to sell more cars was it.’

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Tesco bought into existing car supermarket Carsite when it launched in April 2010 and rebranded the site. It offered used car sales to the public online with customers offered test drives at a special ‘fulfilment centre’.

Our source added: ‘The original goal was a five year plan and within three years they wanted to be as big as Car Craft selling 40,000 cars a year. Well, look at the numbers they were doing and it was clear they weren’t going to get anywhere near that.’

STOCK ISSUES

Tesco Cars blamed supply issues as its main reason for shutting up shop. A statement on its website read: ‘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.’

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Our source said supply was a problem before the Tesco branding was even put in place. Stock was supposed to come from lease companies and from charity Motability, but both avenues presented problems.

‘It’s clear supply of cars was a problem,’ said our source. ‘Leaseplan were giving them a few cars here and there – but they were boring Ford and Vauxhalls, not the sort of cars you’d want to be selling in any great numbers, or could sell in any great numbers.

‘Then there’s Motability – they were annoyed with Carsite before they even became Tesco Cars. Motability is a charity and they have to get the best pries for their cars, but they deal in hundreds of thousands of cars and have great relationships with dealers via MFL Direct – maybe they got fed up with the hassle?’

WRITING ON THE WALL

Our source said the writing was on the wall for Tesco Cars at the end of last year when it made staff redundant – on Christmas Eve! And when they couldn’t get any leads from Tesco’s holy grail – its Club Card members – then it was only a matter of time before the site closed.

‘I know they got access to the Club Card data, but even that didn’t help them sell more cars,’ explained our man on the inside. ‘Perhaps when they realised that, Tesco pulled the plug.

‘I also know there were a lot of changes at board level. The guys driving the Tesco Cars brand along were moved to other parts of the business, which weren’t doing well and that says a lot. Tesco is really struggling at the moment – they can’t seem to sell food in the UK, so why bother with cars?’

So does this mean the door has been closed on other supermarkets venturing into selling cars? Well, our man said that although it makes a lot of sense selling cars to their customers when supermarkets also offer finance and insurance, the fact they’re complicated sales makes it very tough.

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Our man added: ‘Supermarkets really should stick to selling food. I can’t see any of the others doing it now either – there really will be no interest there.

‘The investment Tesco made into cars was small fry compared to what they spend on other things. It was a toe in the water for them and one that didn’t work. With other parts of the business struggling perhaps they thought it was time to cut their losses…’

What do you think? Let us know by posting your comments below or tweeting the editor and we may use your comments in the next issue of Car Dealer

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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