A look at the year ahead and the transition to digital retailing

By Nathan Coe, Auto Trader CEO

As we first started to hear about COVID-19, almost a year ago, we couldn’t possibly have imagined what was to come. Fortunately, we can now start to look to the future as the critical vaccine roll out continues at pace, providing hope that some form of normality is soon to return.

I am sure we all have experiences from 2020 we will never forget. At times, when the fatigue of lockdown number three hits, we should remind ourselves that this has been a year that the automotive retailing industry should feel proud of.

After all, we came through the first lockdown, then capitalised on some of the strongest trade we have ever seen from June to October. This is thanks to the huge collective efforts of everyone to move as much of the transaction online as possible, through Click & Collect, Home Delivery and new and innovative ways of engaging with buyers.

Strong underlying consumer demand

Encouragingly, the underlying market has and looks set to continue to be strong when we are out of restrictions. The used market has traded up consistently when not in lockdown. Even whilst in lockdown, the market has been robust, we know that in November retailers were trading at around 70% of usual volumes and we are seeing a very similar picture in January [1]. Audience remains strong. Pricing remains strong. Retailers have not slashed prices and used car values have remained up over 7% year-on-year [2], which has underpinned unusually strong margins.

Throughout the last year we have supported our customers and our industry in every way we possibly could, from new products and features, to data and insight, marketing investment and the critical financial support we offered - all of which has come at significant cost to our business. I hope that our actions have demonstrated our ongoing commitment to support you and have demonstrated beyond any doubt that we are in this together, as a partnership to allow both our businesses to grow together in the years ahead. Now, it’s important that we start to look to the future.

Changes at Auto Trader from April

It’s at this point in the year that we review the value that we are delivering and the investment we continue to make into our products, sharing data and insight and our continued drive to bring more buyers to your vehicles than any other platform. The start of our new financial year on 1st April allows us to look ahead to a point where we anticipate retailer showrooms will be open and building on the robust trading that has been delivered.

There is no doubt that 2021 will be the year when digital retailing becomes a reality for our industry. Online selling has evolved from being optional to essential for retailers and consumers alike, as has Auto Trader’s role. As a result, we are delivering a lot more buyers, who are a lot more engaged in the buying journey.  In 2020, we delivered 1.7m more leads than in 2019 [3] and we’re determined to beat this in 2021. Furthermore, we have increased our marketing budget to ensure we deliver even more buyers in 2021.

We continue to invest in our products, taking on feedback from retailers to ensure we are always improving and becoming more useful to your business. We have a strong pipeline of products coming to support you to become a digital retailer, starting with Retailer Stores, which launch later this month. Through this new product, we have created a digital forecourt for you to showcase your brand and services on Auto Trader.

Looking to the future

We have learnt that you can never be sure what is around the corner. That said, I do believe we can be confident that our industry will continue to thrive and to evolve. Once we have confirmation on the end of this current lockdown, we expect to see the same strong levels of consumer demand as we did near the end of previous restrictions and emerge strongly.

We believe together we can capitalise on the huge shift we’ve seen towards car ownership, which will continue to underpin transaction volumes for many months to come. Consumer research we conducted in January showed:

·       49% of consumers are now saying that owning a car is more important to them than it was before the pandemic- the highest we’ve seen [4]

·       45% of consumers are more confident about the affordability of their next car than 12 months ago, with 44% feeling about the same [5]

As we enter February with Auto Trader again providing free advertising [6], we hope you see the importance of advertising all of your stock online, whether its brand new or used stock.  Given current restrictions, online is the only way people are shopping for their next vehicle, we are not taking this for granted. In fact, our ambition to build the best possible partnership between ourselves and our retailers has only strengthened.

So, we should approach this year with confidence and a commitment to invest in the future of our businesses. Consumer behaviour has shifted dramatically in a short space of time and depending on your response it can be an opportunity or challenge. We are here to support you to make it an opportunity, by providing the technology, tools and support you need to compete in the “new normal”.

I look forward to the years ahead, however, there will undoubtedly be challenges still to come, so if we can help, please don’t hesitate to reach out, we are here and ready to support you.

 

Sources:

1 Sales proxy data based on the levels of stock removed from Auto Trader.

2 Auto Trader Retail Price Index January - December 2020 vs 2019 (like for like pricing)

3 Auto Trader internal tracking, increase in email, text and chat leads sent to retailers, 2020 vs 2019

4 On site survey conducted in January 2021, of 1322 consumers

5 On site survey conducted in January 2021, of 348 consumers

6 View full terms here https://www.autotraderinsight-blog.co.uk/auto-trader-insight-blog/auto-trader-support-2021

 

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January performed above expectations as consumer demand remains robust