Auto Trader is to put out a call for cash from investors to strengthen its finances – at the same time as it furloughs staff and slashes executive pay because of coronavirus.
The online car seller and trading platform – which last November announced a six-month profit of £131m on a margin of 70 per cent – is to make available up to 46.5 million new shares, which is about five per cent of its issued shares capital.
It is also furloughing staff via the government scheme, which will pay them 80 per cent of their salary, but it plans to ‘fully top up salaries for the large majority of those who are impacted’.
Its board directors have also agreed to waive at least half of their salaries or board fees for the ‘foreseeable future’, while executive bonuses will also be dropped this year.
But while the car industry has ground to a halt amid the outbreak, Auto Trader said it saw a record number of vehicles advertised on its site after announcing just before the UK lockdown that customers could list cars free throughout April.
It said around 540,000 vehicles were displayed on its site at the end of March – up from 480,000 a year earlier.
The group expects results for the year to the end of March to be ‘broadly’ in line with forecasts, but stressed that it cannot accurately provide guidance for 2020-21 due to the Covid-19 disruption.
Auto Trader chief executive Nathan Coe said: ‘We believe our actions to support our employees and customers, to reduce our costs and to strengthen our balance sheet will provide greater flexibility to act in the long-term interests of shareholders, employees, customers and other stakeholders.’
The firm has already axed most of its non-essential spending in areas such as marketing.
Meanwhile, the firm has launched a powerful new tool for dealers early in response to the challenging market. AT Market Insight is designed to help retailers identify and adapt to market trends as they happen.
The product was due to be launched in the spring, but has been bought forward and is included in retailers advertising packages.