Poor uptake forces Inchcape to scale back internet car sales venture

Inchcape, the motor dealership group, is scaling back its internet-based car retailing venture with the Automobile Association because of a disappointing uptake from the car-buying public.

The venture was launched just over a year ago and was seen as having the potential to add significantly to sales at Inchcape, the UK's biggest car retailer. But Peter Johnson, Inchcape's chief executive, said it had failed to live up to expectations with fewer than 2,000 cars sold.

"There is no doubt that when it comes to pressing the button to buy a car on the web, customers in the UK are noticeably more cautious, especially compared with the US," he said.

The two partners have decided to refocus the business to concentrate only on AA customers. Costs have also been cut by combining back office functions with Inchcape's existing web-based retail operation Autobytel.

The setback for the AA joint venture was one of the few black marks last year in what was otherwise a period of improved performance for Inchcape, which represents brands such as Toyota/Lexus, Ferrari and Maserati, BMW, Jaguar and Subaru. Operating profits from continuing businesses were up 17 per cent to £117m while the final dividend was increased by 15 per cent to 21p, making 31p for the year.

Mr Johnson said Inchcape was considering going back into China, which is expected to becoming the biggest single growth market in Asia, representing either Jaguar and Mazda or Toyota, although he said it would probably be two years before Western dealerships were able to sell cars directly in China.

In the meantime, the focus will be on expansion in the UK, where Mr Johnson said the dismantling of the European Block Exemption agreement stood to benefit large, well-financed car retail groups. He said Inchcape was in talks to increase the number of dealerships operated on behalf of BMW, Toyota and Ford's Premier Automotive Group, which includes Jaguar, Volvo and Aston Martin.