Tesco has confirmed it is
considering partnering with an independent car finance company to
sell finance alongside its new online used car venture. The retail
giant is also weighing up the potential to launch its own HP and
PCP products.

A spokesperson for the
supermarket said the team behind its new Tesco Cars venture was
having “continual meetings”, both internally and with other
companies, in order to decide on “alternative offers” to its
current offering of personal loans from Tesco Bank.

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However, the spokesperson
added there was “no timescale yet for when a decision will be in
place”.

At present, the ‘Finance’ tab
on the Tesco Cars website leads to a page promoting personal loans
quoted at “7.4% APR Representative on loans from £7,500 to
£14,999”.

If Tesco was to link up with
a third-party finance provider to provide purchase finance for
Tesco Cars, it is uncertain how much revenue the funder could see
from the deal.

Tesco Cars will only reveal
its aspirations in terms of sales volumes for 2011 when Tesco
publishes its annual report at the end of April.

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However, Tesco is likely to
be seeking a high level of finance penetration within its online
car sales: the fact that fleet companies are choosing to sell cars
through Tesco rather than through auction houses suggests limits to
the margins the supermarket will be making on each vehicle
sale.

Many have speculated that it will seek to top up profits
through revenue from finance and servicing – a point of view
supported by this month’s launch of Tescoautocentres.com, a
service, repair and MOT network under the Tesco brand.