Is it all about the add-ons for Tesco Cars?

We wish Tesco all the luck in their new venture Tesco Cars and surely with their resources they can succeed where certainly Autoquake failed. However there is a feeling in the trade that they better be prepared to burn through some cash.

When it comes to retailing Tesco are without equal but car retailing, as many have discovered, is a completely different ball game. The bold claim that they can sell cars at 20% less than the competition due to lower overheads will be read with some interest by many in the car industry, especially the supermarkets that have teams of professional buyers constantly sourcing stock which, currently, is generally cheaper than anyone else.

Tesco Cars

The fact that Tesco Cars are not actually buying their own stock but effectively re-marketing cars for rental and fleet companies will mean they will feel the pressure to return better prices than the car auctions are currently doing.

It will be intriguing to see how they compete and whether this is just a toe dipping exercise but in a hardening market, with more buyers looking at cheaper economical models as an alternative, Tesco will no doubt have their work cut out convincing customers to buy the same sort of cars which are readily available all over the country from them rather than the “professionals”. They do have a bit of a head start by simply rebranding the old operation and we were wondering if they ever looked at Autoquake and whether they simply didn’t want to sell (cue sound of ex-Autoquake executives kicking themselves quite hard).

Of course it should be considered that for Tesco the marketing of cars could actually be secondary to the selling of their other more profitable offerings such as car insurance, breakdown cover and finance. Certainly there is nothing new there as the mantra “there’s no money in the metal” is the haunting refrain of the modern automotive retailer and a quick look at the new Tesco cars website sees their own add-ons prominently displayed.

Tesco Cars – the brand

One major factor which is sure to assist massively is the Tesco brand. Many car buyers and existing Tesco customers (which probably accounts for the vast majority of the population) will feel confident buying from them. For Tesco Cars it should be relatively straightforward, their customers already know what Tesco stands for and they trust them, but it’s one thing trusting them to sell you a trolley full of groceries for £100 quite another to sell you a car for £10,000.

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3 Responses to Is it all about the add-ons for Tesco Cars?

  1. tom bennett April 5, 2011 at 7:55 am #

    I’m no Mystic Meg but I predict that in less than a year Tesco will exit stage left and give it up as a bad job, the return on investment just wont add up for them.

  2. Mark Robbins April 5, 2011 at 10:34 pm #

    It’s all very well having RAC warranty’s on your cars (many of us in the independent used sector already offer this) but just wait until those phones in the claims office start ringing (which they will) for all the electrical and warning “lights on dash” that cost an arm and leg to turn rectify and are more often than not, NOT covered!

    Tesco may well find indeed that the returns on car retailing can be very shaky indeed, especially when you are offering 80,000+ mileage cars which judging by their website they clearly are, still in business in 5 years, maybe, but profitable? highly unlikely……………

  3. Kalra October 11, 2011 at 11:59 pm #

    The follow up warranty for approx £550 covers most problems for 36months. So with a saving of Approx 15-20% there is still a saving and peace of mind for 36months. Not bad!

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