Sir Richard Branson has thrown the gauntlet in front of UK franchised dealers by vowing that Virgin Cars will become the No1 motor retailer and 'the biggest car dealership in the country'.

At the launch of Virgin Cars in London this week, Sir Richard expects five years of rapid growth. Retail buyers will have a choice of going online or phoning a call centre to buy cars imported from franchised dealers in mainland Europe claimed to be on average 17% below transaction price.

Sir Richard said: “We will take a significant share of the 200,000 to 300,000 imports to be sold in the UK this year and next.

“Having used the price differential to get established, we will be strongly placed to compete with other new entrants like Tesco.”

Market analyst Datamonitor has forecast that the European online car market is on the verge of a “growth explosion”, with four in five consumers browsing online.

Sir Richard Branson believes his strong Virgin brand will persuade manufacturers to deal directly with him and Ian Lancaster, Virgin Cars chief executive, is already in talks with a number of carmakers.

Mark Lucas, Virgin Cars supply director, said: “Manufacturers all recognise the need to move from the current distribution model to a more efficient supply system, but cannot decide on how to make the move.

“It is a matter of time before two or three begin to supply us direct and then the others will join in a rush.”

Virgin Cars claims pre-launch sales of 120 new cars worth £1.4m before its £4m launch campaign. The target is 24,000 new car sales worth £250m in the first18 months, with sales growing “two or three-fold” in the following year.

PHH Europe will take exclusive responsibility for servicing all vehicles supplied by Virgin at rates “15% less than normal”. Alliance & Leicester will offer vehicle finance with online applications and decisions within 24 hours.