An update from our CEO, Nathan Coe
As we come towards the close of another busy year, I hope that you and your family find the time to rest and recharge over the festive period.
True to form the Automotive industry and all its people have shown their resilience, adaptability, and commitment to keeping UK consumers moving during 2023. The end of 2023 has been more turbulent than any of us would have hoped, but we continue to see good transaction volumes and speed of sale which makes me confident in a good start to 2024. I’m also really pleased with the new data products we’re launching, which is timely given the recent negative headlines about vehicle pricing. We continue to believe opportunity is out there and that these new tools can help you find and maximise them.
2023 in review
2023 has been shaped by robust consumer demand, the return of new car supply and will be remembered as the year when Electric Vehicles, Agency and new market entrants dominated the headlines. It is also the year when omni channel retailing became settled on as the industry model for the future – combining the best of digital journeys with physical forecourt experiences. As we exit 2023, the biggest trend capturing the headlines is the disconnect between wholesale and retail markets. Wholesale prices are reportedly declining significantly, yet retail pricing has fallen but at a much slower rate, and only then in younger vehicles impacted by the return of new car supply. The temptation is for retailers to follow trade and revise retail prices down, which worryingly we’re already starting to see. However, as we heard on our recent pricing webinar, that can cause unnecessary harm to your margins and will only contribute to retail values falling further. Most vehicle types are seeing faster speed of sale than this time last year and positive market health, yet vehicles are entering the market at lower price positions than a year ago and below the market average.
Vehicle supply has been the defining driver of market dynamics in recent years against a backdrop of robust consumer demand. The last three years were dominated by supply constraints, which caused used vehicles prices to rise significantly. This has started to adjust as supply returns in new vehicles, causing price pressure on younger segments of the market, but vehicles older than 5 years have remained strong.
So, all the data suggests there is no need to discount on all but some of the younger segments of the market – but as ever, I would urge you to look at retail data before making any decisions. Seasonality always plays a big role at this time of year and we’re confident consumer demand and transactions should return strongly in the new year and want you to be able to benefit from this. Our account teams can support you with all the data and advice you need to start 2024 in the strongest possible position.
Outlook for 2024
As we move into 2024, we expect some key trends to shape the market. The new car forecasts from Manufacturers show that we should expect modest growth of low single digits on new car supply, with just under 2 million new car sales forecast. We also know that the ZEV mandate requires 22% of new car sales to be electric next year, and we expect a number of new manufacturers to enter the UK. We’ve never been better placed to support retailers with the sale of new stock, with over 1 million unique users viewing new vehicles per month and a 16% increase in leads per car versus last year[1]. Over 2,000 franchise retailers use Auto Trader to advertise their new cars, if you don’t, I would strongly urge you to speak to your Account Manager as I consistently hear it is very good value for money in terms of new car marketing.
The used market was robust in 2023, with November data showing supply up 3%, consumer demand up 9%[2], and transactions up 5% year to date[3]. We expect a similar picture in 2024 with incremental growth in supply and continued strong levels of demand despite the pressures facing UK consumers. We consistently see consumers prioritise car buying over other purchases, and our consumer sentiment trackers remain positive. The gradual return of supply will continue to impact different age cohorts, with the 3–5-year age cohort next to see the impact of the supply constraints throughout 2021 to 2023, which needs to be factored into retailers pricing decisions. This all points to the fact that you can’t apply a forecourt-based approach to retailing vehicles, retailers need to adopt a vehicle led approach, looking at the metrics for each stock unit before making decisions. When selling into the retail market, this market should be your frame of reference, reviewing the data on supply, demand and pricing trends to make informed decisions so you can spot profit opportunities and risks. To make this easier for you we’ve prioritised launching our new Trended Valuations product which will be available in early January. We will also be making enhanced Retail Check features available, with powerful new metrics to simplify making those all-important vehicle-by-vehicle sourcing and pricing decisions.
Making our marketing work harder for you
In 2023, we’ve spent 18% more on marketing than last year, across more channels, driving 14% more visits[4] from potential buyers to engage with your vehicles. From this boxing day we’re making our biggest investment ever into marketing to drive even more buyers to engage with your vehicles on our platform. We’re reaching buyers through nationwide advertising campaigns on TV, Radio, broadcast video on demand, as well as digital channels including YouTube, Facebook, Instagram, Tik Tok, Snapchat and Podcasts. We have new, exciting year-long partnerships with Global Radio and Channel 4, plus a brilliant new Show on the Road podcast to engage new audiences which you can expect to translate into interest, enquiries and sales throughout 2024.
Supporting you when you need it with BEN
The wider economic uncertainty and cost of living crisis continues to impact many of our colleagues and friends. This is where Ben and its extraordinary work comes in. In the aftermath of a global pandemic and with an environment of rising financial pressures, Ben has continued to respond to more and more automotive people reaching out for support. This year they’ve managed over 300% more enquiries through their helpline and supported over 200% more individuals through their support and specialist services. If it wasn’t for the remarkable commitment from all of those at Ben, I have absolutely no doubt our industry would be worse off. That’s why we and so many others continue to support Ben and have once again made a significant contribution on behalf of all our partners to ensure they can continue to offer its valuable services to all in our industry who need them.
Overall, I’m excited about the opportunities that 2024 will bring, although I am sure there will be challenges along the way. Our account teams are here to help you stay ahead of the market and to partner with you in achieving your goals. Please do reach out if there is anything more we can do to support you as we move into the new year.
I want to wish you all a good festive break and look forward to working together into 2024. Please share any feedback you have with me at nathan.coe@autotrader.co.uk or speak to one of the team.
Sources
1 New car stats
2 Auto Trader Internal data, November 2023
3 SMMT used car sales Q1 – Q3 2023
4 Auto Trader internal data, Snowplow analytics
