An update from our CEO Nathan Coe
As always, I hope that you, your family & colleagues are well. It has been a while since I shared with you our latest views of the market and once again, we are seeing world events having an impact, although for very different reasons.
We are deeply saddened by the events in Ukraine and can only hope there is a swift and peaceful resolution, our thoughts are with all those impacted. We are offering our support by doubling our people’s fund-raising efforts to the Disasters Emergency Committee appeal.
Whist we saw consumer demand impacted in February by the storms in the UK and events in Ukraine, March performance has returned to strong levels, and we are on track to generate over 60m cross platform site visits¹. Despite wider concerns over the economy, consumer confidence remains robust as employment levels hit new records. Sentiment towards car ownership continues to track above pre-pandemic levels and consumers are more confident on affordability than they were this time last year². We’ll continue to monitor this closely given wider inflation trends and strong used car pricing growth, but for now we all have reason to remain positive.
We also expect pricing growth to continue as new car supply challenges remain. Whilst the very short-term supply outlook is slightly more positive, it seems inevitable that we will face some tightening in the months ahead as world events take their toll on manufacturer supply chains, which will have a knock-on effect on used car supply. Our latest data suggests the average price of a used car on Auto Trader grew 28.5%, marking the 98th week of consecutive price growth³;. Although this isn’t the same pace of growth we’ve previously seen, it is nevertheless exceptional, particularly as we are lapping significant increases from the year before. We continue to see retailers missing potential profit opportunities by not pricing to market totalling £127m in February⁴. We would urge you to look at this in your own business, it is ‘low hanging fruit’ in terms of opportunity.
Last year during the fuel crisis searches for electric vehicles peaked on Auto Trader with one in four new car buyers looking at electric cars⁵, which translated into 29% of all new car leads sent to Retailers⁶. We’ve seen levels of demand matching this in recent weeks as car buyers consider what fuel price rises could mean for them. Many of these buyers of new electric vehicles are choosing to lease and are fuelling growth in this quite distinct part of the car market. To ensure we have the largest choice of cars available online on Auto Trader, we could not ignore this growing demand for leasing deals. You may have seen the announcement earlier this week that we acquired Vanarama, a marketplace for leasing new vehicles, the business enables the sale of vehicles for OEMs and Leasing companies, with the transaction being fulfilled by Retailers.
Vanarama have made great progress in developing an online journey for consumers looking to the new car market and electric vehicles. The business will strengthen our existing leasing marketplace which was launched in 2019 and accelerate our own digital retailing plans focused on enabling all Retailers to sell online. I have had some questions from retailers about our intentions, some of them suggesting that Auto Trader might look to compete with retailers following this move. I can assure you that this is not our intention, the leasing market is large, distinct and has been around for a very long time alongside our retailers core businesses. We have said for some time that we see our role as an enabler for all retailers and that has not changed. Retailers underpin our business and so we don’t have an incentive to do anything other than make their businesses as successful as they can be. We will share more in the coming months as we progress through the regulatory process to complete the acquisition.
I remain confident that 2022 will be another strong year for our industry as consumer demand remains robust, pricing strong, and as we continue to enable digital retailing. Our partnership is more important than ever and together, we really can do more.
Data sources
1. Auto Trader Internal Data – Monthly visits 1st February – 28th February 2022 (inclusive)
2. Auto Trader Digital Retailing Research Feb 2022 (n=529)
3. Auto Trader Retail Price Index March 2022
4. Auto Trader internal data comparing retailers advertised price vs Auto Trader Retail valuation March 2022
5. Auto Trader internal data – new car searches September 2021 and February 2022
6. Auto Trader Internal Data – Count of calls, emails, texts and chats 1st February – 28th February 2022 and 1st September 2021