Auto Trader’s annual results reveal that the online car classifieds website profit was up six per cent to £258.9m last year.
Figures were up across the board for the financial year to the end of March 2020, with revenues increasing four per cent to £368.9m and the operating profit margin also up from 69 per cent to 70.
The increases were largely driven by increased spending by car dealerships throughout the 12-month period, where revenues grew by seven per cent from £293m to £312.1m compared to home traders where revenues fell by 19 per cent to £8.3m.
Auto Trader credited this to 95 new retailer forecourts, growing by one per cent, advertising on the platform, with average revenue per retailer up by £105 a month (six per cent) to £1,949.
Despite the growth in the year up to the Covid-19 lockdown coming into effect, Auto Trader reported that it was loss making in April and May this year due to car dealerships closing and the business providing free advertising in those month’s plus a 25 per cent discount in June.
The pandemic has also seen a three per cent drop in the number of car dealers using the platform, with figures falling from 13,298 in March to 12,920 by June 21.
Nathan Coe, CEO of Auto Trader, said: ‘We are pleased with our achievements in the past financial year, however we recognise these have been well and truly surpassed by the events of the past few months.
‘Through this time, we have been absolutely committed to supporting our people and customers in the face of the most challenging conditions ever experienced by our company or industry.
‘Since the early stages of the pandemic we have endeavoured to act decisively and responsibly to ensure we and our customers could emerge in as strong a position as possible when the crisis passes.
‘We’ve been encouraged by the strong initial bounce back in used car demand, and whilst the short-term outlook remains uncertain, we believe the case for moving more of the car buying process online is stronger than ever. We are looking forward to making this a reality with our customers in the years ahead.
‘We would like to take this opportunity to thank our people for their unwavering commitment and support, and our customers for their trust in us through these most trying of times.’
Nigel Frith, a senior market analyst at www.asktraders.com, said: ‘Given that these figures only included a week of lockdown, investors are more interested in the outlook.
‘Auto Trader’s policies through the pandemic such as providing free advertising during April and May and reduced rates in June were a clever move, and the firm has seen a record audience in the first three weeks of June.
‘It almost goes without saying that the firm was loss-making in April and May, it also made use of the government’s job retention scheme for a short period and has cancelled its dividend to shore up the balance sheet.
‘The strong initial rebound in used car demand is encouraging. However, there is a good chance that this is pent-up demand. The reality is the outlook remains highly uncertain. Cars are expensive items and with the UK in the midst of its deepest recession for 300 years, demand for cars will likely take a hit. The road to recovery will be a long slow one. Investors are nervous and the stock is trading -2.6 per cent, underperforming the broader market.’
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