An update from Nathan Coe, Auto Trader CEO

I wanted to share my observations and outlook on the market today, along with three key observations from our team as food for thought as we approach the year end.

Market conditions are still strong despite supply side challenges

I remain optimistic about the months ahead based on the strong trends we continue to see on Auto Trader. Consumer demand remains at record levels, in fact September was the strongest we’ve seen, with demand over 30% higher than August 20191. Consumers spent 10 million hours on Auto Trader in September researching their next car, a 20.2% increase on 2019. This has been matched by consumer intent to purchase with leads to retailers in September up 51.5% vs 20192.

Demand for new cars on Auto Trader hit a record high in September with over 52,000 new car leads sent to retailers, up 104% vs 2020 and the recent fuel shortage has had a specific impact on demand for electric cars. Advert views for new and used EV models increased a record 28% and 61% respectively over the first weekend of the fuel crisis in comparison to the previous weekend3. This consumer interest wasn’t just window shopping as it was mirrored by a huge uplift in the number of enquiries sent to retailers, with one lead for an electric vehicle sent every two minutes. In our next webinar this Wednesday, we’ll be continuing to explore what the latest fuel crisis means for retailers, and the behaviour changes we’ve seen from consumers.

This continued strong demand combined with limited supply suggests the environment of fast speed of sale and strong pricing is likely to continue. Almost unbelievably September saw another all-time high with the average price of a used vehicle up over 21% compared to the same time last year4. The average speed of sale is currently just 22 days, meaning that vehicles are selling 15% faster than they were in 20195.

Use data to keep on top of pricing and maximise margin

We continue to see that not all retailers are taking advantage of the opportunity to use data to optimise pricing and maximise margin. There are a huge number of vehicles priced below the market average, and not being repriced to keep up with the current market trends. Currently there is £95m worth of margin, an average of almost £8,500 per retailer6, potentially on the table due to vehicles priced below the market. There’s no reason in this market to leave margin on the table when the tools such as Retail Check and Retail Accelerator can enable you to reprice regularly in a relatively painless way. This is more fundamental than ever at a time when demand outstrips supply and average prices continue to rise.

Lead management is more complex and important than ever

Consumers are looking to complete more of the process online before visiting a retailer. This has increased the number of consumers making contact digitally and decreased walk-in indicators. In September, leads from Auto Trader were up 51.5% vs 2019, yet map clicks and direction views were down 18.6%. With retailers seeing increased digital contact from consumers, effective lead management is becoming more important than ever, ensuring that you can quickly qualify and respond to leads quickly, so you don’t lose sales to your competition. Not being replied to remains one of the biggest themes of consumer feedback we get, and therefore remains one of the best ways for you to outperform your competition.

Create transparency online and a connected experience

The research phase of the buying process has traditionally been dominated by online. Auto Trader research suggests that 83% of car buyers would like to know up to date vehicle availability online with 83% also wanting full price transparency8. This underpinned our recent move to take the admin fee into account in the total price and through to our valuations. This is a milestone for the industry and an important step in providing a transparent experience for buyers and fair experience for sellers.

Our research continues to show that when completing jobs online, most buyers would prefer to complete the job with human support rather than entirely unaided online. For retailers, thinking digital first is of course a must, but it is equally important to get the handover from online to offline right and ensure the final forecourt experience is a good one to provide a great buying experience and create happy and loyal customers.

With this backdrop, my ongoing commitment to you is that we will continue to strive to be the best partner we can, by providing you with the solutions and support you need to hit your goals. Having spoken with many of you about the current supply challenges, it doesn’t feel like the right time to be running our usual double stock offer. Instead, we’ll be focusing our efforts on continuing to support you with stocking challenges through Guaranteed Part-Exchange, Instant Offer and Dealer Auction which all help unlock new sources of stock for you.

Thank you for your continued partnership, whilst the past 18 months have redefined the way we work with our customers, there is still so much more we can do together to improve both our businesses. If you have any feedback or suggestions on what we can do to support you, then please get in touch.

Sources

1 Auto Trader internal data, cross-platform visits vs the same period in 2019.

2 Auto Trader internal data for all retailer lead types

3 Advert views for new and used EV vehicles for weekend of 25 September vs the prior weekend

4 August Retail Price Index, 21.4% YoY increase September 2021 vs September 2020

5 Auto Trader internal data for w/c 27 September, using removed stock as a proxy for sales, 22 days speed of sale vs 26 days for the same week in 2019.

6 Auto Trader internal data, all advertised stock priced below the market average, snapshot for 29th September

7 Auto Trader Digital Retailing Research August 2021