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Petroleum

Tesco Plans to Sell Cars at Supermarket Prices, Offering Massive Discounts to British Motorists

Strategic Insights

— 2 min read

Tesco, Britain's largest supermarket chain, is set to enter the car sales market, offering discounted prices to motorists. Critics have long complained about price-fixing in the industry, with prices reportedly up to 60% higher in Britain than in Europe. Tesco's massive buying power and prime retail sites across the country make it an ideal candidate to disrupt the car sales market.

Key Takeaways:

  • Tesco plans to sell cars at supermarket prices, potentially offering discounts of up to 30% compared to dealerships.
  • The supermarket chain has been talking to manufacturers, with the aim of launching its car sales business within two years.
  • Tesco's huge buying power and prime retail sites could make it a national car dealer, with its own salesmen and mechanics.
  • The company has already shown a willingness to disrupt traditional industries, having moved into businesses such as dry cleaning, personal computers, and mobile phones.
  • Tesco's move is seen as a logical step to maintain its rate of growth in profits.
  • The Office of Fair Trading has said an inquiry into the motor industry by the Monopolies and Mergers Commission is on the cards, with a cut in prices demanded by MPs.
  • A trade and industry committee report is expected to recommend heavy fines and jail for directors of firms guilty of keeping prices high.
  • The Society of Motor Manufacturers and Traders has expressed concern that buying a car is not like buying a television, and that service backing and support are necessary.

Statistics:

  • Tesco has seen profits more than quadruple to $2.25 billion a year in the past decade.
  • The new Volkswagen Beetle will cost about $41,700 in the UK, compared to $31,300 in Europe and $26,000 in the US.
  • A Nissan model made in the UK costs £23,500 in Holland but £39,000 in a showroom near the factory.
  • Prices in Britain are reportedly up to 60% higher than in Europe.

Sources:

  • "Tesco which has branched out into computers and petrol now plans to sell cars...at supermarket prices" (no date listed)
  • "Last month MPs were told prices were up to 60 per cent higher in Britain than in the rest of Europe" (no date listed)
  • "Tesco, the UK's biggest supermarket chain, is talking to manufacturers...The bargain deals are possible because of the huge buying power of Tesco, which has seen profits more than quadruple to $2.25 billion a year in the past decade." (no date listed)
  • "The Society of Motor Manufacturers and Traders spokesman Al Clarke said of the Tesco plan: 'Buying a car is not like buying a television. You need service backing and support to go with it.'" (no date listed)

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