Direct Line admitted yesterday it is selling only 500 cars a month through its jamjar.com website, despite spending £10m on television advertising.

On that basis the commercials cost £1,666 for every car sold, but jamjar.com says it expects sales to double by mid-year. Direct Line, owned by Royal Bank of Scotland, is investing £50m in jamjar and expects to break even this year.

Jamjar said it was selling as many cars in a day as a small forecourt dealer would in a month. However, even if it achieves 1,000 sales a month its share of new car sales will remain below 0.1%.

About 2m new cars are sold annually in Britain, and the biggest dealer, Dixons Motors of Doncaster, account for 75,000 of them.

Jamjar spokesman Justin Skinner said: "What we are building is the UK's leading online car retailer. We are not saying that it will replace traditional dealerships. The advertising campaign has resulted in very high name awareness; the cost per customer at the moment is misleading because what we are doing is building a brand."

Jamjar claims to have saved its customers a total of £2m since launch nine months ago by undercutting manufacturers' list prices. It said its best-selling car is the Ford Focus, where it offers savings of more than £2,000 on Ford's list price.