The firm reported pre-tax profits down 37% to £157.4 million for the year to April, compared to £251.5 million in 2020. Revenues were down 29% to £262.8 million, which Auto Trader put down to offering free listings to retailer customers for several months during lockdowns at a cost of £5-7 million per month.
But the company, which bolstered its balance sheet through a £183 million share placing in April 2020, said it has used cash to boost its digital offering - including trialling reserving cars through the site, and buying up financing platform AutoConvert to bring in new online-focused buyers.
Site visits were up 15% to 58.3 million per month on average in the year, and the firm believes its free ad move inspired customer loyalty.
Car sales have seen a spike over the past year as Britons avoided public transport in the pandemic, and CEO, Nathan Coe, told the Standard that current “bonkers” demand shows no signs of stopping despite the vaccine rollout.
He said Auto Trader is ready to keep up with market disruptors like Cazoo, saying the dramatic shift towards buying online since Covid hit makes the firm “even more relevant to retailers and manufacturers”.
Cazoo, launched last year by tech entrepreneur Alex Chesterman, is now the UK’s biggest online-only secondhand car dealer.
Coe said: “We’ve really shifted forward our development in buying and selling online… we believe it’s very material to where this business could end up.
“It is getting towards 50% of people who want to do their finance online or reserve a car online and then go and pick it up from a retailer.”
He stressed Auto Trader’s scale - it has 480,000 cars for sale - and said: “Most people can’t raise £1 billion like Cazoo and they can’t build the technology to be able to do it [sell well online] themselves, and the UK automotive retail space is incredibly fragmented, so we believe we can be the technology provider to all our customers and enable them to sell in the same way [online] in very short order - which is why we have doubled down on building those solutions in the last year.”
Prices of used cars on Autotrader are currently up 8% year-on-year, as the sector sees restricted supply due to high demand and the global semiconductor shortage hit to new car output.
Hargreaves Lansdowne’s Susannah Streeter said the firm “continues to be the go-to online destination for car sales” and that it is “in pole position to capitalise on the shift to online car sales”.
Interactive Investor’s Richard Hunter said the numbers were “better than expected” and highlighted firm’s 8% costs reduction - largely due to slashing marketing spend - “cost efficient and powerful pricing model”.
Shares were up 6.6% on Thursday morning.