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Saturday, 26 November 2011

Tesco Cars' impact on used car market

Tesco Cars has been in operation for six months, and a report from Bryan Consulting (reported here in Automotive Management Online) concludes that it is able to offer used car prices 9 per cent lower than franchised dealers. The report also says that Tesco can source 2,000 cars a week - less than Tesco's original estimate of 3,000, but equivelant to a stock turn of at least once a week, which encourages customers to grab teh car they like when they see it.
The report is based on observations of the Tesco Cars website, and the author points out that it is impossible to say how many of the cars disappearing from the site are sales and how many are being remarketed due to lack of interest. But he concludes that Tesco Cars will succeed where Virgin Cars and Autoquake failed, party because of Tesco's 15 million loyalty card holders.
Tesco's success has major implications for the trade. Dealers will have increasing difficulty getting their hands on quality ex-fleet cars under five years old, and if Tesco get closer to their target volume it will become a great deal harder. On the other hand, Tesco do not offer part exchange and consumers are still relucatant to buy online, so the effect might be limited. Even so, with the changes being wrought by the changes to the block exemption, dealers are going to have to give serious thought to the shape of their business plans.

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