Bank to sell cars over the web

Lloyds TSB, the bank which markets itself as a thoroughbred, has become second-hand car dealer, in a bid to harness the power of the internet.

In the kind of strategic departure more characteristic of the dot.com gold rush of the late 1990s, Lloyds has become the first bank to sell cars over the web.

The bank, better known for its adverts featuring a black stallion, is hoping to sell 3,500 new and used cars this year through pilot operations, Mark Stokes, a director at the bank's asset finance division, told BBC News Online.

Next year the internet unit, branded to customers as Motordirect, hopes to sell "significantly more", making it a serious challenger to longer established dot.com dealers.

Jamjar.com, joint venture between insurance firm Direct Line and car dealer Dixon Motor, is reported to have sold 1,000 cars in August, the site's best monthly performance since its launch last year.

Profit areas

Lloyds, which owns 92,000 cars through a contract hire business, hopes to pass onto new car buyers benefits of bulk buying agreements set up with dealers of marques including Alfa Romeo and Volkswagen.

Customers wanting to buy second-hand will be able to purchase cars already used by the hire business, Autolease, which runs vehicles for between one and four years, Mr Stokes said.

While the scheme will spare Autolease the fees it has previously incurred selling used cars at auction, Motordirect's primary aim is to encourage take-up of Lloyds TSB financial products.

"A big part of our customer finance work is to do with helping customers buy cars," Mr Stokes told BBC News Online.

"Motordirect will build on that."

"If you look at the site, you will see it is very much finance led, with advertising offering schemes for monthly payment. That is the main profit opportunity for us."

Expansion plans

Lloyds TSB is hoping to use its experience of Motordirect pilots to offer further services online, Mr Stokes said.

"There are plenty of other products related to motoring you could offer."

The Motordirect pilots come three months after Lloyds boosted its online insurance operations by buying the Screentrade internet insurance brand from software services firm Misys.

But, unlike firms involved in the original dot.com gold rush, Lloyds is not falling into the traps of expanding too fast, or spending millions on advertising.

"We have learned the lessons of other online car companies which have since gone by the wayside," Mr Stokes said.

Motordirect, accessible only through the bank's website, will only be marketed to Lloyds customers, with an employee site, named Carsforstaff, also launched.