Why did Tesco's use car arm fail?

It turns out selling used cars is very different to selling eggs

In a week where supermarket giant Tesco is battling to keep some of its biggest shareholders amid concerns about the group’s future strategy, it was an interesting time to pull the plug on its fledgling car retailing venture, almost exactly a year to the day after it launched.

Using the infrastructure of a used car operation called Carsite, Tesco Cars saw itself reforming the used car landscape, offering sellers of cars up to three years old – mainly fleet operators, car leasing companies and rental firms – a sales channel that it claimed would offer faster sales at higher prices than other routes such as auctions.

The reality has proved very different, and it turns out selling used cars is very different to selling eggs. When Tesco came in, the used car market was in a fairly depressed state, with plenty of stock around. But in the last six months in particular, volume has dried up considerably as the depression in new car sales of 2008 and 2009 now hits supply of three-year-old vehicles. Good used cars can currently command top dollar from buyers, as there simply aren’t enough around to satisfy demand.

Anecdotally, my contacts tell me Tesco came in and tried to act as it does with farmers and its other supermarket suppliers, using its size to try and dictate terms by wanting customers to keep cars on their books and wait for a sale, rather than taking them to the nearest auction where the cash would come through much faster. Ultimately, Tesco struggled to get hold of enough decent quality used cars as the company learned, slightly too late, that the used car market didn’t need Tesco as much as it thought it would.

Don’t mistake this as a weakness in the car market though. Private sales are struggling because of general fears about the economy leading to people not making luxury purchases like a new car when their current one serves a purpose for now, but Tesco isn’t pulling out of selling cars because it’s a struggling sector of the UK economy. The general view of people I’ve spoken to in what is a mature and established car industry is that Tesco came in and though it could easily become a big player overnight, and that people would buy cars from the brand the recognise as the place they get their groceries. Approached in a softer way and with a perceived greater understanding of how and why the new and used markets work, Tesco Cars may have survived beyond its first birthday, but the famous supermarket brand has found used cars too tough a nut to crack.

Paul Barker is group automotive editor at BusinessCar.co.uk.

Tesco's used car venture failed, Getty images.

Paul Barker is group automotive editor at BusinessCar.co.uk.

Photo: Getty
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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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