Sunday, 5 June 2011

Tesco Second Hand Car Sales - by @Bangernomics

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The UK’s biggest supermarket starts selling cars. It was the worst kept secret of 2011, but now we know that Tesco are now stocking up on used cars. Yes, used cars. You’d have thought that getting into bed with a decent new car broker would have been the easiest way into a notoriously difficult business.

Just how difficult this industry is was demonstrated by the recent demise of Autoquake. Perhaps it proved that the British public weren’t quite ready to buy cars virtually. Well, with a great big blue Tesco sign over the business, formerly known as Carsite, maybe buyers will change their mind?

As much as the thought of a great big nasty corporate entity dominating a market troubles some of us, is it really any different from those great big friendly dealer groups? Of course not, but perhaps a supermarket could teach a bunch of car dealers something, and that could be screwing suppliers.

My theory always was that for bread and butter hatch backed shoppers, why not just stack them in aisle 2? Buyers really don’t love or care about dealers or where the vehicle comes from. So long as the price is right, the car is clean and warranted. Oh yes and the customer service has to be spot on.

Tesco are offering RAC inspected vehicles and nationwide delivery, surely they can’t fail. Well, I logged on and found a Vauxhall Astra Estate 1.6i Design with 24,000 miles at £6300, plus £99 handling fee and delivery to my door at £149. So the cars aren’t that cheap and there really isn’t much in the way of choice, two principles that have served the supermarket well.

Even if supermarkets sell you a shopper, it is unlikely that they will be interested in flogging you a Caterham. Or the sort of depreciated luxury rubbish that I buy. So there will always be room for specialists, people who really know about cars. Then again, there is more than enough room for people who know about customer service.

Selling cars, especially used ones are not like selling cornflakes or even second hand cornflakes. The deals are complicated by a part exchange and customer expectations can be unrealistically high. With Tesco, the cars are not in the aisle, so can’t be test-driven and there’s only a one month warranty. In its present form, I give it a couple of years, tops. 

James Ruppert - james@bangernomics.com
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