An update from our CEO

I hope that you are well, and that 2024 has got off to a good start. The market is looking positive so far this year. While January was slow to start, strong demand has very much flowed into sales and prices are starting to stabilise. In this update, I want to touch on the health of the market including demand, supply and pricing. I also want to talk to insight over instinct which will be critical this year to achieving good performance and margin.

Market delivers on the early promise

It’s reassuring to see a strong used market with positive sales growth and prices stabilising. Consumer confidence is improving and is now the highest it’s been since January 2021. Demand is up 7% and supply is up 3% which is good for price stability. In January, Auto Trader’s site traffic was the highest we have ever seen with 85.5 million visits. This continued into February with traffic up 5% from the same time last year. As a result, cars took just 27 days to sell in February which is the fastest it's been in 12 months. Sales in February were up 3% which is even stronger than the 2.7% increase we saw in January.

Despite these strong indicators, retail pricing is down on last year, but it is levelling out after the declines driven by the wholesale market at the back end of last year. Retail pricing  started the year -7.5% for January, was -8.3% in February compared to last year but largely flat month-on-month, suggesting recent declines are bottoming out. But there are still over 40,000 vehicles with a high Retail Rating that are currently advertised below their market value. We can’t stop some Retailers using trade prices to determine their retail prices, but we can say without doubt that it has led to  unnecessary discounting and margin pressure to the tune of  £27m today. The best performing retailers I meet are buying and selling based on retail pricing and demand which is all available as part of your Auto Trader package.

The new car market is quite different to the used car market. Most of the growth in the last year has been driven by fleet channels with retail under pressure and broadly flat year on year. As ever, the March plate change is critical for retailers to kick start the year driving volume, but this year it's even more important as manufacturers are under pressure than ever due to the electric car ZEV targets. They need to ensure  22% of their sales volumes are electric or face significant fines. The good news is that we are better placed than ever to help you sell new cars. We had 2.7 million car buyers looking at new cars in January on Auto Trader, up 15% on last year. We launched a new marketing campaign over the weekend to raise awareness of the new 24 plate with consumers, to highlight the vehicles in stock and available now from our retailer partners. We’ve also launched an updated New Vehicles Masterclass to help get your new vehicle adverts in great shape for plate change. You can watch it here.

Key theme in focus: Using Insight over Instinct

As a digital business we are used to using data and insight over  trusting our instincts alone, this is now a core part of automotive retailing as well. Data can tell you what is happening at a market level, right down to a vehicle level, to drive better decisions. We will continue to invest to ensure you have the right data and insight tools, so you don't have to grapple with the complex world of AI, data modelling, data scientists and infrastructure.

We recently launched our Trended Valuations solution and improved our Retail Check product. Both are powerful tools to aid decision-making and improve profitability. Since its launch, over 9,000 retailers have accessed our valuation trends, engaging with the new “Valuations & pricing” tab in Portal over 100,000 times. Over 11,500 retailers have run 1.73 million retail checks since launch, which is around 80,000 checks  every day of the week.

Improve performance by working with us

If you ask our people they will tell you that I care deeply about being a great partner to you. We have over 250 people in our partnership team and their only objective is to work to help you achieve your goals. They have access to one of the best data platforms in the UK, to help improve your performance, beat the competition and ensure you are getting the most out of your forecourt and from Auto Trader. However, we can only do this if we know your goals and if we are working together. So, if that’s not the case get in touch with your Account Manager or send me an email.

Finally, you may have heard about the ongoing investigation by the Financial Conduct Authority (FCA) into the handling of historic discretionary commission payments prior to 2021. Today, this focuses on automotive finance lenders. Whilst we don’t know the outcome yet, we will continue to keep you informed and seek input from experts as we learn more. We covered what we know so far in a recent webinar which you can watch on demand and have we summarised the outputs in this blog post.

We also continue to track developments in the Electric vehicle market closely and have a webinar dedicated to this on Wednesday 6th March at 09:30, so do register here and tune in to hear the latest insight on the EV market.

As ever, if you have any feedback at any time, you can always contact me directly at Nathan.coe@autotrader.co.uk

Regards,

Nathan.