Tesco and Motability in the perfect storm

It didn’t take long for the rumours to start flying around about where and how Tesco’s were sourcing their used car stock and it seems that the charity motability are caught up in the crossfire (Is TescoCars.com and Motability’s relationship on the rocks?).

For starters this will be a very sensitive issue as there are currently over 580,000 Motability customers on the road today and the charity relies on their relationship with car manufacturers to supply cars for the maximum discounts whilst the dealer network receive a handling fee and other incentives to take care of the customers when they collect their new cars.

As one dealer, who is a very active in both supplying new cars and buying used cars for stock, told us “If Tesco’s think they are going to come in and cherry pick all the best cars whilst we give away our entire margin on the new cars they have got another think coming.”

According to Motability they have only sold cars to Tesco’s after they have been offered to the dealer network either direct or through the auction route first. If this is the case it does not say an awful lot for the cars Tesco are buying. The dealers in the first instance get the chance to buy back the cars which they originally supplied and then they will get access to other suitable cars through the mfldirect portal which allows dealers a “buy now” provision. If those options are not taken up after a period of time the cars are put through auction as are the ones which fall below the quality standards which franchised dealers will measure their stock by. Then the unwanted ones are sold elsewhere, presumably to the likes of Tesco cars. If dealers do not want them because they are not of sufficient quality to sell to their customers then why would Tesco want these substandard cars to sell to their own customers?

The puzzling thing for us is that main dealers have the facilities to repair and prepare cars to the required standard and have been doing so for years so why does Tesco suddenly think that they are capable of preparing these cars to an acceptable standard for their customers? It is likely that this has not been thought through and that dealers will not be happy if they believe for 1 second that Tesco are going to get preferential treatment when they are not supporting the charity in the first place.

Any car dealer will tell you that ex-motab cars have had a bad press over the years and have been viewed with extreme caution, however Motability have made great strides in improving their own procedures to the extent where many car dealers now rely on them to supply 3 year old low mileage cars to stock their forecourts.

Tesco was always going to find this a hard battle. They are taking on professional car dealers with many years experience and as any of them will tell you it’s not the selling of the cars that’s the key it is buying the right cars for the right money and the right quality to ensure that customers get value for money and that there is a profit at the end of it.

Having a great name, a big database and a fantastic website with big investment in marketing doesn’t mean you will have a profitable business if the stock is not what buyers want to buy in sufficient numbers.

Just ask Autoquake!

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2 Responses to Tesco and Motability in the perfect storm

  1. steve boucher April 22, 2011 at 11:58 am #

    Intresting Tesco can usually bully their usual supliers and get exactly what they want at rock bottom prices, whilst their suppliers get squeezed till they burst! I wonder how much of that multi bllion pound profit they make annually will be made up of money made from their car sales divison?

  2. Victor Svekolkin May 3, 2011 at 9:44 pm #

    There is a point at which Tesco will tread on too many toes and upset not only the trade but their customers too. Why would they risk selling sub standard cars or dealer rejects and damage their core business? In my business we have avoided Tesco for 6 years simply because it is almost impossible to do business with them. I know others who were screwed into the ground on price by them and ultimately lost everything. If the motor industry closes ranks on this giant, they will catch one hell of a cold.

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