Auto Trader offers free advertising to customers for December as half year results show profit cut in half

Time 11 months ago

Auto Trader will offer its car dealer customers free advertising for December and extend payment terms on November bills.

In an announcement to the Stock Market it revealed that revenue was down for the first half of the year by 37 per cent to £118.2m and profit fell 48 per cent to £68.5m.

Its operating profit margin also fell to 58 per cent from 70 per cent in the same period last year.

The company has decided not to offer an interim dividend.

The drops follow the company’s decision to offer free advertising to car dealers in April and May, followed by a 25 per cent discount in June. 

For each month the company offered free ads it clocked up a loss of between £5-7m.

The offer to make December advertising free follows the government’s decision to shut non-essential retail for a month, starting today and lasting until December 2.

It’s likely many of Auto Trader’s rivals will now follow suit.

Auto Trader CEO Nathan Coe said: ‘We remain committed to supporting our customers when it matters the most.

‘What our customers really need at the moment is simplicity and clarity about the future.

‘By going free in December and extending payment terms in November, we feel we have delivered this. We are also doing everything we can to sustain demand by driving consumer awareness that retailers are open.’

Commenting on the impact the support the company gave car dealers had on its financial numbers, Coe said he was proud of the way the company helped at a time its customer needed it.

He added: ‘The unprecedented level of support we provided to retailers has had a material impact on our financial performance. 

‘However, as an organisation we feel both proud of the decisions we have made and the performance we have achieved. 

‘What has made me most proud has been the determination and passion I have seen from our people to support our retailer partners and to continue to improve the products on which they depend. 

‘We have and will continue to work tirelessly to support our partners and to deliver the things they and the wider industry need to continue to emerge even stronger.’

Auto Trader returned to full charging from July onwards and says that this was at ‘higher rates’ following an ‘annual pricing event’ on April 1.

The company told the Stock Market: ‘We re-instated payment terms from June 1 and removed the additional stock allowances, successfully converting a good proportion of that stock to paid units. Customer numbers have grown since June.’

But despite the higher bills, traffic has continued to grow on the site too – average monthly visits across the six-month period increased by 12 per cent to 57.3m per month.

The firm said: ‘We have seen consistently high levels of site traffic and audience, which has provided the best possible marketing exposure for our retailer customers to capitalise on a period of strong car sales.

Auto Trader has also launched a new Buy Online hub that is designed to help car buyers find their next car during lockdown.

The hub highlights those cars that can be bought by either click and collect or home delivery. 

The new hub will be heavily promoted on the website and via an impactful marketing campaign on Sky TV and online advertising.

Get more from Car Dealer

  • Premium stories
  • Used car data
  • Magazine early access

Auto Trader product director Karolina Edwards-Smajda said: ‘While forecourts are forced to close in England and Wales, we wanted to do all we can to help our retailer partners to continue selling cars by promoting click and collect and home delivery options. 

‘We’re investing to make sure consumers know they can still buy from retailers during various lockdown restrictions and are doing all we can to drive them to our customers’ stock.’

The home delivery search function will be live today, whilst the click and collect search function will be live from next week.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

More stories...

Server 51