Virgin Cars

» see virgincars.com as it lived, on the wayback machine

~ the eulogy ~

Virgin Cars launched in May 2000, on a Monday, with an argument rather than a product. British buyers were paying more for the same new car than buyers a few hundred miles away, so the company bought right-hand-drive stock from franchised dealers in mainland Europe and sold it into the UK at a claimed average of seventeen percent below the usual transaction price. Fourteen manufacturers, and no showroom anywhere.

The supporting cast was arranged the way Virgin always arranged these things. PHH Europe handled servicing at a discount and Alliance and Leicester supplied the finance. Branson supplied the quote: Virgin would take a significant share of the two to three hundred thousand imported cars he expected the UK to absorb that year and the next. Ian Lancaster ran it. The target was 24,000 cars and 250 million pounds of sales in eighteen months.

I was sixteen the year it opened, in Ankara, about as far from the target customer as it is possible to stand. What makes it worth writing down is the shape of the business. The whole company lived inside the gap between two prices, and that gap was a regulator's to close.

~ the dossier ~

~ the price gap ~

The Competition Commission had been looking at new-car pricing while Virgin was building the site. Its report landed on 10 April 2000, and Stephen Byers told the Commons that UK prices had been running ten to twelve percent above similar European countries. The remedies came with it. Dealers buying outright were to get terms equivalent to fleet buyers, and suppliers lost the right to punish a dealer for advertising its own prices.

The Supply of New Cars Order followed on 31 July 2000 and took effect that September, with clauses written specifically to protect dealers who sourced from other European dealers. Two years later Brussels replaced the motor-vehicle block exemption that had held the old distribution system together. Branson had lobbied for exactly this, publicly, in February 2001, saying the barriers meant British buyers paid too much. He got what he asked for and it cost him the business.

~ the order book ~

The numbers were respectable and never close to the target. By February 2001 it had sold 3,200 new cars worth over 50 million pounds. By that July it had passed five thousand customers and 115 million pounds of orders, claiming more than ten million pounds saved for buyers. The 2001 accounts showed a loss of more than thirteen million.

Then the service problems arrived, as they do when the stock sits in another country. The BBC's Watchdog collected around eighty complaints about delayed deliveries in 2004. Early that same year Virgin had sold the business to Derek Cook's Motor Solutions, and that November, nine months after selling it, Branson paid several million pounds for 53 percent of the buyer. Cook died in May 2005.

~ just before christmas ~

The notice went up just before Christmas and the site stopped taking orders on 22 December 2005. About 700 orders were still in the system, and the page promised they would be processed as normal, by Virgin Cars. The trade press caught up on 4 and 5 January 2006 with the headline that it had ceased trading.

John Jackson, who ran Virgin Retail, gave the plainest reason a founder's lieutenant ever gives: it was not a priority, it was not adding value to the brand, and the return was not worth the effort. The Salford showroom stayed open long enough to clear the stock. Someone at AM wrote that the price difference had been the only reason for Virgin Cars to exist, and when the difference went, so did the reason.

The archived homepage is a good tombstone. On 21 December 2005 it was a full site of 7.7 kilobytes. Two days later it was 1.7 kilobytes of farewell, and it stayed that way, still apologizing, into the following August.

@}-->--

              )
             (_)
            .-'-.
            |   |
            |   |
            |   |
            |   |
          __|   |__   .-.
       .-'  |   |  `-:   :
      :     `---'     :-'
       `-._       _.-'
           '""""""

« previous  ·  random  ·  next »