Big Boxes Tinker with Auto Sales and Rentals
Back in 2003 when the Asbury Automotive Group decided to
pull the plug on a test selling used cars in lots set up in four Walmart parking
lots, we were surprised. We figured the locations had the traffic and proper
demographics for the venture to succeed. It would certainly prove a winner
for Walmart, which only leased out the space in the lot and was not responsible
for the inventory and other costs.
Over the years, non-auto retailers have flirted
with car and truck sales. The warehouse clubs, for example, are all involved
with car buying services for their members.
This week, two news items caught
First, Tesco announced it was launching TescoCars.com in the
U.K. The site offers shoppers the opportunity to buy used cars online. Consumers
reserve their car on the website with a £99 deposit. They are then sent
a full RAC (Royal Automobile Club) report on the car along with links to a
video and photo gallery of the vehicle. If the shopper is happy with the auto,
they can pick it up themselves or have it delivered to their door for £149.
Cars, which come with a free RAC platinum warranty, can be financed through
According to the website, cars are sold directly to consumers by
banks, leasing firms and fleet operators. By selling the cars online, the physical
costs associated with running a dealership are largely eliminated, allowing
for greater savings to consumers. TescoCars intends to offer up to 5,000 cars
on a weekly basis with updates happening daily.
TescoCars.com has partnered
with the National Service Network garage group which will operate Tesco Autocenters.
The centers will offer vehicle repairs at "up
to 30 percent less than main dealer garages." TescoCars.com
purchases and repair work done at Tesco Autocenters will all come with Clubcard
There were mixed reviews
to Tesco’s new venture in the U.K.
Car Dealer Magazine columnist James Litton, who is also a used car
dealer, tweeted, "Just been reading RAC reports on Tesco Cars. Tires on
the legal limit, poor wiper blades, stuff not working. Game changer? Not with
Steve Fowler, editor-in-chief of What Car?, said cars
on the site were "well
priced" and the selection was a "decent offering."
auto venture closer to home, Home Depot and Penske Truck Rental were sufficiently
happy with a test of truck rentals at 100 of the home improvement retailer’s
stores to expand the offering to 400 locations across the U.S.
Ron Defeo, a
spokesperson for Home Depot, told Dow Jones Newswires
that consumer interest led to the expansion and that future results would determine
if truck rentals eventually became standard at the chain’s roughly 2,000 stores.
also has about 2,000 locations across the U.S. and trucks rented from Home
Depot locations can be returned to either companies’ lots.
Home Depot’s primary
rival Lowe’s does not offer a similar service.
- Welcome – Tesco Cars
- TescoCars.com launched – as we predicted! – Car Dealer Magazine
- Home Depot To Expand Penske Truck Rentals To 400 Stores – Dow Jones Newswires/NASDAQ
Discussion Questions: What is the attraction for big box retailers that are testing partnership programs for the auto sales and/or rental markets? What is your assessment of the Tesco and Home Depot programs?