Tesco and Sainsbury’s hotly
tipped to be preparing suite of products.
Go deeper with GlobalData
Following its reputed upcoming
entry into the UK used car market, Tesco is understood to be
planning a suite of car finance offerings to complement personal
loans from Tesco Bank – with rival Sainsbury’s possibly not far
behind.
The news emerged at an asset
finance seminar held by the National Association of Commercial
Finance Brokers on 1 March, where business leaders from two major
UK lenders stated that they knew of the supermarket giant’s
intentions to move into the car finance market.
In April, Tesco is
expected to begin retailing used cars acquired through a tie-up
with ex-fleet provider Motability. According to information leaked
to Car Dealer magazine, it will sell cars through a
partnership with online retailer carsite.co.uk.
At launch, Tesco is
expected to provide personal loans to customers looking to buy used
cars through the site.
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By GlobalDataHowever, there is widespread
speculation that Tesco is talking to at least one hire purchase
provider with a view to providing the product, and that it may
later look to provide HP and PCP from its own balance sheet.
A source claiming knowledge of the
negotiations told Motor Finance to expect Tesco to make
the public aware of any finance offering “within 12 to 18
months”.
Tesco told Motor Finance
its used car venture – including any finance component – was “still
speculation at this point”.
A spokesperson later added: “If at
any point we do decide to start selling cars, we will make a formal
announcement.”
Meanwhile, supermarket rival
Sainsbury’s is known to be keeping a close eye on Tesco’s
exploration of the car finance market.
A spokesperson said that, while no
car finance offering was due to launch, the retailer was “looking
at new products and services” in light of the discussion
surrounding Tesco.
The company already acknowledges
car purchases as the biggest reason for personal loans taken out by
customers of Sainsbury’s Bank, and offered a PCP product called
‘Drive’ until March 2009, backed by Lex Vehicle Management.
The spokesperson added that Drive was “a good product” and that
its reintroduction was “not ruled out for the future”.
