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Automotive review: Car retailing faces forecourt revolution.

It is a time of unprecedented change for the motor industry - especially on the forecourt.

The face of British car retailing is being revolutionised in the face of consumer demands for lower prices and a Government which is determined to give car buyers a wider choice.

In the past six months the number of Internet retailers has mushroomed, with Virgin,, Autobytel, OneSwoop and - a non-profit service launched by the Consumers Association - all joining the action.

In fact, hardly a month seems to go by without an internet start-up company promising cheaper and more efficient car deals on the web.

Traditional car dealerships are now facing competition from supermarkets as well as the rash of online suppliers.

Sainsbury's is to offer new cars as well as groceries at its 430 British stores following a successful pilot scheme in Scotland and the north of England.

Customers will be able to choose from more than 3,500 models by simply picking up a leaflet and placing an order by phone.

Sainsbury's says that the scheme will work rather like existing hire purchase or lease purchase agreements, with the customer putting down a deposit and making monthly payments over two or three years.

At the end of the term, the customer has the choice of either handing back the car, trade up to a new one or buy the car outright at an agreed price.

So in that sense Sainsbury's initiative is merely a car financing scheme - but one that is claimed to offer significantly cheaper financing than is likely to be available through dealers.

And where Sainsbury's leads, others will follow - Tesco is also known to be seriously considering selling cars.

If the Sainsbury's scheme proves the success the company hopes it will be, it is only a matter of time before other supermarkets add their purchasing firepower to the retail battle. Traditional dealerships are not taking all this activity lying down.

Reg Vardy - the country's third biggest car dealer with outlets in Wolverhampton, Walsall and Birmingham - is planning to launch its own website in a few weeks time.

But unlike other online retailers, customers will not be able to place an order on Vardy's site.

It will take the form of a database - albeit a highly sophisticated one - of both new and used cars where customers keen on a particular model will be able to register their interest electronically. They will then be pointed towards a traditional dealership where the actual deal will be done.

Reg Vardy, which sells more than 155,000 cars a year, sees its new site as more of a marketing tool rather than a sales mechanism.

In fact, Peter Vardy, the group's chairman, is somewhat sceptical about the sales power of the net.

Despite projections that online sales could account for up to a fifth of the market by 2005, Mr Vardy doubts that no more than 10 per cent of cars will ever be sold directly through the net.

He says that it is his group's buying power that is the key to success - not the net.

'We are already knocking off more in our showrooms than some of these internet-based retailers,' he adds.

'And from this month, when we will be allowed to buy cars for the same price as the big fleets, nobody will need to bother going over to Europe either.'

Nevertheless, the big manufacturers themselves are eying the web with interest. Vauxhall - part of General Motors - is the first UK car company to launch its own online sales operation, giving customers savings of up to pounds 1,000 depending on the car purchased.
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Author:Pain, Steve
Publication:The Birmingham Post (England)
Date:Sep 29, 2000
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