Global supermarket brand Tesco has closed
its ex-fleet car sales site after just one year trading.

Tesco cited a ‘lack of supply’ as the key
reason for having to terminate the online venture. Contradicting
this, a member of the team behind Tesco Cars told Car Dealer
Magazine that the issue was actually “the fact that consumers
simply weren’t buying the cars.”

Tesco entered a joint online venture with
online retailer Carsite when it launched in April 2011. Customers
could buy vehicles online to be collected or delivered straight to
their homes.

Tesco Cars aimed to sell RAC-inspected cars
at prices up to 20% less than those offered by traditional car
dealerships. It also planned to advertise up to 3,000 cars a week,
but at the end of last year it was reputedly only managing around
150 vehicles a month.

Speaking at the start of the venture,
Tesco’s chief executive of retailing services Andy Higginson said:
“By supplying directly to customers, there is no middle man, no
expensive showroom and no salespeople on commission. Buyers can be
sure they are getting the best value out there.”

Addressing customers on the closure, a
statement on the Tesco Cars website reads: “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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By GlobalData

The two main vehicle suppliers for Tesco
Cars were fleet management provider Leaseplan, and charity
Motability. .

Andy Gruber,director of point of sale
finance provider Alphera Financial Services said: “For most people,
buying a car is an emotional process. Research by Alphera
shows that only 4% of consumers would buy a car online, while 74%
would prefer to deal with a ‘real’ person when making their

“Without a dealer network it’s difficult
for any brand to offer ongoing aftersale care and
support, especially in a competitive market where dealers have
the advantage in being experts not only in cars but in direct,
face-to-face customer interaction.”