Auto Trader Group chief executive Nathan Coe expects the automotive sector to “prove its resilience” once again after the online car retail marketplace reported a 2% decline in operating profit from H1 trading.
The business’s operating profit declined to £149.1 (H1 2022: £151.7m) in the six-month period to September 30 despite a 16% growth in revenues to £249.8m (H1 2022: £215.4m).
Auto Trader’s average revenue per car retail site rose by 9.3% to £2,404 during the period as it rolled out new systems including Auto Trader Connect platform, the Market Extension online retail tool and developments to its end-to-end Deal Builder sales channel for retail partners.
The average number of retailer forecourts represented by Auto Trader in the period was up 2% to 14,161 (H1 2022: 13,892) as physical car stock rose 1% to 440,000 cars (H1 2022: 436,000) on average.
A further £11.6m in revenues was also added through the March acquisition of the Autorama leasing business, although Auto Trader’s financial statement revealed that the operation had delivered a £4m operating loss during the period.
Commenting on the results, Coe said that the H1 performance had put the business in a strong position to continue investment into further enhancing its platform, “driving greater consumer engagement with retailers, surfacing more of our data and insights, and developing more tools and services to improve the profitability of our partners”.
In the most recent episode of the AM News Show, Auto Trader commercial drector Ian Plummer gave an insight into the business’ strategy and ts response the market forces currently at play.
Auto Trader reported that more than 75% of all cross-platform minutes spent by car buyers on marketplace sites during the six-month trading period had been spent on its platform.
Its investment in marketing amounted to £11m in the period.
Cross platform visits were down 10% to 67.7 million per month year-on-year (H1 2022: 74.9 million) but remained significantly versus pre-pandemic levels (57.5 million and 447 million minutes respectively in H1 2020), it said.
Coe acknowledged that the car retail sector was facing another period of uncertainty in his results statement. He said: “Against a backdrop of a cost-of-living crisis, rocketing interest rates, and global instability, the market once again faces challenging conditions.
“Although it won’t be immune to these financial uncertainties, I do believe there’s a range of factors unique to the automotive sector which will shield it from much of the broader economic disruption.
“And whilst I’m confident the industry will again prove its resilience, as we demonstrated throughout the height of the pandemic, we will continue to invest in our platform and products and support them through the challenges that may lie ahead.”
Giving an insight into its future plans for the Autorama leasing platform in its results statement Auto Trader said the business would transform Auto Trader’s existing leasing proposition and help meet the demands of the growing number of leasing consumers while providing “an efficient and professional channel to market for manufacturers and leasing companies”.
Auto Trader said that it intends to integrate the Autorama journey onto Auto Trader over time, gradually showing more leasing offers to relevant consumers, adding: “By leveraging its platform, Auto Trader believes it has a compelling proposition for manufacturers, retailers, and funders, whilst reducing customer acquisition costs and grow the business profitability.”