After the recent news that Tesco have ceased their toe dipping exercise in the world of used car sales (quelle surprise) an insider takes a closer look at what went wrong.
If Tesco wanted to make a success out of selling used cars, and let’s face it this was only ever going to be about selling their finance and insurance products, then they should have had the courage of their convictions and perhaps invested in a traditional car retail group that was already successfully retailing used cars to the general public (they’re not short of resources after all).
Here you have a highly successful, hugely profitable business that has had massive and continued success through food retailing and as a result the power of the brand has often been enough to see equal success in other ventures. The difference being that previously these were initiatives that were wholly accessible to customers in Tesco stores.
The fact they were trying to sell used cars (second hand, previously enjoyed, call them what you will) was probably another factor that may have counted against them. Add to this that there was hardly any marketing (anyone see a TV add? If WeBuyAnyCar can do it why didn’t Tesco?)
Of course an important ingredient that added to this volatile mix was that, like the rest of the trade, acquiring quality retail worthy stock with profit opportunities maybe easy to say but in practice it is a very skilled and tough job and Tesco Cars did not appear “up to it”.
Their stated aim at the start of the venture was to advertise 3,000 cars a month and in fact they never came close and were only selling 150 a month, which is disastrous by anyone’s reckoning.
According to the disgruntled ex-employee who spilled his guts to Car Dealer Magazine: “‘The original goal was a five year plan and within three years they wanted to be as big as Car Craft selling 40,000 cars a year. Well, look at the numbers they were doing and it was clear they weren’t going to get anywhere near that.’
If they’d been genuinely serious about the whole thing Tesco would probably have been better off buying a WeBuyAnyCar type venture, then a car supermarket chain and backed these ventures through their financing arms and perhaps in time formed an alliance with an up and coming OEM then they would have covered off the supply, dealt with the outlets to reach customers and if they had rebranded everything as Tesco and spent the required amount promoting the venture perhaps the trade would have had something to be genuinely concerned about.
Maybe the hasty demise of Tesco Cars was down to current internal strife at Tesco and the appetite to make a success of the venture just wasn’t there. In January, £5billion was wiped of Tesco’s share value after a profit warning and they had their worst Christmas sales for 20 years. In addition they seem to be going through directors at the same rate as Chelsea go through managers – UK boss Richard Basher has been let go and is the 4th board director to depart since Philip Clarke took the top job in 2011.
However when it comes to Tesco Cars in the end it just seemed as if their heart wasn’t really in it, and though I don’t want to keep repeating it; “we told you so”.