An update from our CEO Nathan Coe
I hope that you, your families, and colleagues are well. It has been good to spend time with many of you at our recent forums, webinars and retailer events and I look forward to seeing more of you at our Retailer Awards in October.
The market backdrop remains robust
The used car market is robust, driven by good levels of consumer demand with transaction levels up 4% so far this year compared to the same period last year [1]. We’ve seen buyers turn to Auto Trader in record-breaking numbers; with 390 million site visits in the first five months, an increase of 16% vs. last year [2]. That’s 30 site visits every second to our platform from potential buyers searching for their next car from our retailer partners. Buyers continue to shop ‘car first’ on Auto Trader and start their journey with a digital experience before then connecting with a retailer to purchase.
Younger vehicles, in particular those under five years old continue to be in short supply which means competition for stock is fierce. With robust demand from buyers, this is translating into a buoyant market with prices continuing to drive upwards. May marked the 38th consecutive month prices have risen year-on-year , rising 2.9% on the same period last year [3]. These market dynamics don’t show signs of changing and so the outlook remains stable for the time being.
That said, electric vehicles remain a challenge for all of us to work on together. Whilst consumer demand for used electric vehicles remains strong, up 43.6% year-on-year in May, we have seen a huge influx of supply over the last few months up 200% year-on-year [4] which has led to difficult price reductions for some retailers to clear the stock. Many of you have spoken to me about the impact this has had on performance, and about a lack of confidence in stocking electric in the future. Encouragingly, we’ve seen more stable pricing in the last few weeks as the supply and demand imbalance begins to settle. Electric vehicles are destined to make up more and more of the UK car parc over time and so it is important that we grapple with how to successfully trade these vehicles now.
Digital journeys, physical retailing – the most successful retailers are unlocking the potential of omnichannel.
At the start of the year, I talked to the three forces of change shaping our industry: supply, electrification of the parc and changing consumer behaviour. Our latest research, from over 3,000 car buyers along with 227 retailer directors (representing 1,800 retail sites), shares insights on how car buyer behaviour is changing, the opportunities this presents and what it means for our industry. Here are my key takeaways from what car buyers and your peers have told us. You can read the full ‘Digital Journeys, Physical Retailing’ Report here.
The headlines are that consumers want to do more of the journey online with retailer contact still critical, but usually coming later in the buyer's journey. The number of consumers arriving at a forecourt ready to buy has increased by two thirds. This creates efficiency opportunities for retailers who can facilitate this through digital journeys with a seamless transition to a forecourt experience. While only a quarter of retailers surveyed have made operational changes so far, those who have are seeing the benefits in terms of more sales per salesperson as well as significant time saving benefits. I’ve included a couple of my favourite quotes from retailers who took part in the research below:
“For us it’s an easy sell really, it saves us time. The customer has got to their own buying decision without much input from us. We’ve made the effort in the online presentation, and you reap the benefits of this.”
Saber Ali, Alfa Romeo Sales Manager, Research Garage Group
“If you can’t even offer the ability for a customer to do the things they want to do in the order they want to do it, at the time they want to do it, then you’re just going to be irrelevant.”
Andy Bateman, Director of Customer Experience, JCT600 Ltd.
Read the full report
Retailers embrace technology and data in huge numbers to transform the industry
It’s clear from all of this feedback that retailers who are embracing data and digital tools, and focussing on their forecourt experience are seeing huge benefits with more opportunity to come as they embrace this change fully. We’re supporting you on this journey by providing access to the latest technology, data and advertising products.
"Having Auto Trader Valuations built into our own systems assists us massively when sourcing cars and working out the exact amount that we're happy to spend; not just when buying but also when looking at part-exchanges - it seems the days of having to cross reference multiple different websites to value a car are long gone.”
Mike Cowap, Director, MSC Motors
We launched Auto Trader Connect last year to transform connectivity in the industry and to enable real-time data transfer between systems. Over 90 partners have now integrated with the solution, replacing out-dated data feeds with the latest API technology, enabling real-time advert and imagery creation and updates, price changes and live stock availability for buyers. As a result, we have seen retailers deliver significant performance improvements and enhanced consumer trust with a more accurate and consistent digital experience. In April this year, we added valuations into the solution and over a third of eligible retailers now have our valuations data available in their systems to power retail-led decision making to improve margin.
Retailers who use Auto Trader Portal have embraced our new Vehicle Insight tool which brings together key vehicle performance indicators in one single view to help with fast data-driven decision making. We’re delighted to see retailers run towards this and we’re now seeing over 7,000 retailers using the tool, logging over 20,000 unique sessions every day. Retailers love the fact they can easily review market trends, pricing and performance data for every in-stock vehicle on one screen, enabling them to react to the market fast.
“Getting all that information on one screen is excellent, not only from a time saving point but also from that ability to manage and act on the data that little bit quicker. Using Vehicle Insight, the amount of time that I can save and the speed of decisions I can make on the pricing strategy for each car gives me the potential to retain more profit from every sale.”
John Tustin, Director, Mike Brewer Motors
We’re also making good progress in bringing powerful VIN Specification data from manufacturers to all brands. This will raise the bar even further between our valuations and other industry providers. We want all retailers to benefit and so this is now included as standard in all packages. We have 11 manufacturers onboard, which means that retailers stocking these brands can instantly see all optional specification the vehicle left the factory with, and our valuations automatically adjust for that specification. As a result, you can always price the vehicle accurately to maximise performance and give potential buyers correct advert information.
You may also have seen our end of year results this morning, where we talked to our continued focus on enabling retailers with data, technology and advertising solutions to help drive your business performance. One of the things I love about this industry is that it is continuously evolving, and our priority is to support you through this next wave of change as we move towards an electric and digital future. While we acknowledge we still have lots to do, I really am proud of the Auto Trader team who work tirelessly to support our retailer partners and the industry.
As always, please do get in touch if you would like to share any feedback or thoughts on Auto Trader and our partnership.
All the best,
Nathan.
Sources
[1] Auto Trader Proxy sold data, 1st January – 29th May 2023 vs the same period last year
[2] Auto Trader internal data, site visits - 1st January – 29th May 2023 vs the same period last year
[3] Auto Trader Retail Price Index
[4] Auto Trader internal data
