Tesco, Britain's biggest supermarket chain, has well advanced plans in place to begin selling new cars but is unlikely to enter the sector before next year's Block Exemption changes.

A spokeswoman said: “We have been looking at new car retailing for some time and are speaking to various consultants about the possibility.

“We have no plans to begin selling cars right now but there has been a lot of speculation around Block Exemption. We certainly wouldn't rule it out for the future.”

Tesco, which already offers car loans and insurance through its supermarket branches and phone operation, would be able to target potential customers via its massive loyalty card database. It is likely to enter into partnership with an existing dealer group and sell over the internet and by mail order rather than open showrooms at stores.

“We have moved into other areas not typically associated with supermarkets, like banking and finance. Cars remain a possibility,” said the spokeswoman.

RMI chief executive David Evans said supermarkets had experimented with new car sales in the past, but had given up. Asda, for example, found that profit margins did not match up to its core business.

“The RMI will look closely at any alternative distribution through a supermarket from the point of view of discrimination or inequitable treatment when compared to the dealer network under the current Block Exemption regulation,” said Mr Evans.