Wal-Mart Leases Space to Sell Used Cars

Discussion
Apr 23, 2002
George Anderson

Wal-Mart Stores Inc. plans to lease space at five of its Houston-area super-center stores to a used-car endeavor planned by Asbury Automotive Inc., a Stamford, Conn.-based, publicly traded chain of new-car stores. Used cars will be sold out of modular buildings on land adjacent to the stores for less than the Kelley
Blue Book
value, reports the Wall Street Journal.

If the six-month Houston pilot test does well, the two companies will consider expanding the concept to stores nationwide, according to Kenneth Gilman, Asbury’s chief executive.

Mr. Gilman says that by ridding itself of the high overhead associated with a dealership, including real estate, showrooms, sales commissions, and advertising aside from posters in the super centers, the company will be able to sell vehicles for low prices. The lots will include between 70 and 100 vehicles, mostly between one and four years old with fewer than 75,000 miles. In the test, the stores, to be called Price 1 Auto Stores, will carry a lot of pickup trucks and sport-utility vehicles, which are big sellers in Houston. The average retail price should be about $15,000.

Moderator Comment: What is your reaction to Wal-Mart
test leasing space for used-car stores at supercenter locations?

Once people wondered if shoppers would buy food from
the same place they bought tires. Then they wondered if people would gas up
at big box stores. Now consumers can buy the car, gas it up, get their tires
changed and serviced in one place. Sounds logical to us.

How will a used car lot identified with Wal-Mart affect
the retailer’s image with consumers? Jay Allen, Wal-Mart spokesperson is not
concerned. “Used cars fit Wal-Mart’s stated goal of offering value and convenience
of one-stop shopping. The cars will be high quality and low cost, with no haggling
over price.” [George Anderson – Moderator]

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