Welcome to Wal-Mart: Do You Need a Car?

Wal-Mart (Bentonville, Ark.) has announced it will be making an entry into the automobile business with Houston as its test market. The used-car venture will be called Price 1 Auto Stores.

The property, adjacent to five of its Supercenters in the area, will be leased to Asbury Automotive (Stamford, Conn.), one of the nation's largest automobile retailers. (It was the largest privately owned dealership group in the U.S. until it went public last month.)

The test market will begin in early June and go on for six months. After the six-month trial, Wal-Mart and Asbury will make a decision based on “what the customers tell us,” according to Wal-Mart spokesman Tom Williams. Williams said the company will especially gauge how well Price 1 fits in to Wal-Mart Supercenters'one-stop shopping concept.

Price 1 Auto Stores will be on property next to a store rather than on the retailer's own parking lots “because we don't want to infringe on Wal-Mart parking,” said Williams. Each location will offer between 60 and 100 cars and trucks. Price 1's prefab offices will be about 900 square feet. The exact locations of the Supercenters were not announced.

Howard Davidowitz, chairman of Davidowitz & Associates (New York), a national retail consulting firm, said he is not surprised that Wal-Mart would have an interest in the car business. “Wal-Mart is already in the gas station business,” Davidowitz said, “not to mention drugstores, appliances, groceries, etc.

“The biggest cost of a used-car dealership is buying the land,” Davidowitz said, “and Wal-Mart is the nation's largest private landowner. Wal-Mart might be thinking that used-car operations are one way to make use of its vacant land.”

Wal-Mart has similar leasing arrangements with hair salons, banks and other businesses at their stores.