Reasons to feel positive about the current trading environment
By Nathan Coe, Auto Trader CEO
I hope that you, your family and your colleagues are well. We are all hoping that the worst of the health crisis is behind us, and we can focus our efforts on selling vehicles. We believe there are a number of reasons to feel positive about the current trading environment and there are encouraging signs that this will continue in the coming months.
Consumer demand is at record levels
The positive news is that the pent-up consumer demand we predicted is translating into sales for retailers and we continue to see strong demand on our platform in all areas. Key highlights include:
Record audience performance in June with a 29% increase in visits year on year and July already showing 23% up vs. the same period last year.(1)
29% more minutes being spent on Auto Trader last month than in June 2019, and July to date is up 25% on the same period last year.(2)
Leads to retailers in June were 96% higher than the same period last year and are tracking 71% up for July. This increase is even more significant in New car where leads have seen 154% growth year on year.(3)
There is growing evidence that this is more than just pent up demand and that many consumers are considering buying a vehicle that would previously not have been in market. Audience performance has continued to be strong into July and doesn’t show signs of slowing down. Our research suggests that 56% of UK driving licence holders who don’t currently own a car are now considering a purchase4. We have also had reports from many franchise groups that the percentage of transactions with a part exchange is down as much as 15% which again suggests more new buyers coming to market.
Our marketing activity is now back to pre-COVID levels to support this trend. We’re investing in new channels and have an exciting announcement to share with you soon, so please look out for this.
Valuations remain robust
It’s also encouraging to see that used car prices have seen sustained growth since April and the growth rate is accelerating, as demand continues to outpace supply. The average price of a used car increased by 4.4% year on year in the first week of this month, growing to 4.7% in the second week5. Our valuations reflect observed pricing from you and other retailers, with no ‘editorial’ adjustment or overlay. As well as this data being available real-time through our pricing tools, we’re publishing it bi-monthly and working hard to ensure that the industry has access to this data. Whilst we do not imagine this growth rate will continue, we see no reason for prices to decrease.
Sourcing remains a challenge
Whilst every retailer is facing a different set of circumstances, we are hearing that sourcing remains a challenge for many. Auctions have taken time to recover but volumes are now back at pre-COVID-19 levels. This is positive, but we need a period of sustained activity and a stronger recovery in leasing and new car volumes to support the level of market demand. Dealer Auction has reported their highest transactions on record in the last week for the new platform suggesting this challenge is starting to ease. Over 500 Auto Trader retailers are now utilising the free trial period and actively buying and selling on the platform.
Flexible Stock Benefit
Many of you have already taken advantage of the double stock offer and are now benefitting from a 75% discount on this additional stock. We are very aware that the journey back to retailing has been unique for each retailer and some are still finding sourcing a challenge. To ensure you can benefit from the discounted additional stock we have introduced new flexibility to allow you to participate at any time between now and the end of August. Full T&Cs can be found here but please speak to your Account Manager to ensure your stock is visible to all your customers.
We’re very aware that whilst there are many reasons to feel positive about the current market momentum, the market backdrop remains challenging and many retailers are making difficult decisions about how they operate dealerships. I’ve talked previously about the importance of our ongoing partnership and I hope that by updating you as much as we can, our regular webinars and the tools you have available in your package will ensure that we can navigate the continuing challenges that COVID-19 presents together.
Our teams are available to help and want to work with you to ensure you are getting the most from your package and our partnership.
Best wishes to you, your families and employees.
Sources:
1: Auto Trader internal analysis of Google Analytics data, total number of sessions, 15th – 21st June 2020 vs 15th – 21st June 2019 (inclusive). 2: Auto Trader internal analysis of Google Analytics data, average number of hours spent on Auto Trader daily, June 2020 vs. June 2019 and 1st July to 21st July 2020 vs. 1st July to 21st July 2020 (inclusive). 3: Auto Trader internal tracking, increase in email, text and chat leads sent to retailers, for the month of June 2020 vs. June 2019 and 1st July to 21st July 2020 vs. 1st July to 21st July 2020 (inclusive). 4: Userzoom survey run 14th-17th April. 5: Auto Trader internal analysis of advertised stock, 13th – 19th July 2020 vs 15th – 21st July 2019 & 6th -12th July 2020 vs 8th – 19th July 2019 (inclusive).