Coles strikes new deal to lower petrol prices and win back motorists

Supermarket giant Coles is shaking up its petrol offering in an effort to lure back motorists who have deserted them over high pump prices.

Coles has struck a new deal to lower petrol prices at its Coles Express stations in an effort to win back motorists.

Coles is moving to lower its petrol prices in order to win back motorists who have abandoned the supermarket giant’s network of service stations over high pump prices.

Coles has signed a new deal with fuel supplier Viva Energy where the pair have pledged to give up some of the profit made on fuel sales in order to provide a more competitive offer at the bowser.

Coles chief Steven Cain said having some of the nation’s highest fuel prices had hurt the Coles Express business.

“Over time we expect to be more competitive than where we are today,” Mr Cain said on Wednesday.

Fuel sales at Coles Express outlets have slumped by about 40 million litres a week since Viva became its supplier in 2014.

Under the new deal Viva will set the pump price and collect profits on fuel, while Coles will operate the convenience business at petrol stations and receive a commission on fuel sales based on volumes sold.

Under the existing deal Coles sets the pump price, pocketing a profit margin on each litre sold.

But Viva has been charging Coles more for its fuel — an increase Coles has passed on to motorists who have increasingly looked elsewhere to fill up.

Viva chief executive Scott Wyatt said a “significant part” of the retail profit margin it will inherit from Coles will be handed back to motorists.

“The one element clearly that we have not delivered as well as we would have liked to in recent years has been price and a big part of the announcement today is restoring that,” Mr Wyatt said.

The Australian Competition and Consumer Commission last year said Coles Express was, on average, up to 9.5c a litre more expensive than its rivals across the nation’s capital cities.