A new website from Tesco
selling second-hand cars could provide leasing companies with a
cheaper alternative to auctions when selling old models, an expert
has claimed.

Vehicle leasing companies
have been hit hard by the recession after a slump in residual
values dented on companies’ profitability.

The new site, tescocars.com,
offers thousands of used vehicles that can be collected or
delivered to customers’ homes. Sellers can choose three different
charges for using the site – commission, profit share or sell and
return.

Each vehicle sold on the site
must pass an RAC inspection.

Andy Higginson, Tesco’s chief
executive of retailing services, said the site had been designed as
an alternative to second-hand car forecourts.

“By supplying directly to
customers, there is no middle-man, no expensive showroom and no
salespeople on commission,” he said. “Buyers can be sure they are
getting the best value out there.”

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Graham Hill, CEO of GHA
Finance, a broker for vehicle leasing, who was an adviser to the
Tesco car site, said second-hand car sites can provide a better
return than auctions because sales are direct to
consumers.

“Traders and dealers are
removed from the equation leaving buyers with cheaper than
forecourt prices while still returning more to the lessor,” he
said.

One early customer for the
Tesco services is Motability Operations, the not-for-profit company
which provides contract hire lease vehicles to over 570,000
disabled people through the Motability Scheme.

However, despite the ubiquity
of online retailing, used-car websites have so far failed to get
out of first gear.

Last month, Autoquake, the
UK’s best-known online used car retailer, went into
administration.

One challenge faced by online
car retailers is having the capacity to store thousands of used
cars. Each year, around onem used vehicles from the fleet leasing
sector come into the UK market, according to fleet and vehicle
registration data.

Tony Gannon, communications director of British Car
Auctions, said: “The current business models of consumers buying
[cars] through dealerships, and leasing and fleet operators
remarketing through auctions and other channels is tried and tested
and successful.”