An update from our CEO Nathan Coe

Happy new year, I hope you had a peaceful and relaxing Christmas and managed to enjoy some time off over the festive period. Thankfully the return of restrictions to retail did not materialise and we have been able to get the year off to a good start.

We’re continuing to support retailers throughout this period. Our regular webinar series kicked off early to ensure you can access the latest data and insights on both consumer demand and supply, giving you that live view of the retail market that is proving so critical for success in these rapidly changing times. You can also access this data directly through Market Insight, which is available in Portal and comes as part of your Auto Trader Package.

We also recently launched our biggest ever marketing campaign with a strong message highlighting buy online features and ability to interact with retailers from home. We’ve had a strong start to the campaign, with TV already reaching 22% of all UK adults at least once in the first two weeks, and over 24 million impacts across TV and video through on demand channels [1]. It is on target to reach over 80% all adults over the course of the campaign.

Consumer Demand continues to grow

This activity led to consumer demand continuing to grow on Auto Trader with 1.3 million unique users between Christmas and New Year [2]. Heading further into January this desire from buyers to find their next vehicle is continuing with the latest data showing 1.4 million unique users [3]. Last year this extraordinary demand saw leads to retailers exceeding 17.1 million, up 20% on 2020 [4] and a staggering 62% on pre-pandemic 2019 [5]. These are clearly not just empty enquiries, they are buyers with strong intent, leading to our proxy sold data suggesting 12% more sales [6]. The new car supply challenges we saw throughout last year are showing some signs of easing but look like they will still be a factor for many brands well into 2022 and possibly beyond. The impact of this on the overall used car parc means younger stock supply will continue to be impacted and the all-important flow of new car part exchanges remains behind historic levels. Our Instant Offer and Guaranteed Part-Exchange solutions are bringing some of that consumer sourced stock immediately back to retailers through Dealer Auction.

This supply and demand dynamic means that the strong pricing we have seen for used vehicles looks set to continue with demand outstripping supply. We’ve now seen 21 months of price rises and the average advertised price of a vehicle on Auto Trader has exceeded £20,000 [7] for the first time. I’d encourage you to continue to access the latest data and insight on retail pricing in Portal and re-view your forecourt regularly. Our latest data shows over £120 million potential lost profit [8] on forecourts with stock priced below the current retail valuation. This will remain a key factor for maximising profit opportunities throughout the year.

Looking ahead into 2022 and beyond

I never cease to be impressed by the innovation and resilience our industry displays time and time again. 2021 was another challenging year for us all and I anticipate 2022 will present new challenges, although I remain confident that these challenges also bring opportunities. We are in the midst of a significant transformation for our industry. We all know that buyers’ relationships with car buying is changing, and the increased expectation is that more and more of the car buying process will be able to take place online. We are focusing our efforts in this area and will continue to develop the tools to support you on this journey. Auto Trader Connect, our industry first data solution that makes stock management quicker, easier and more profitable has reached an important landmark this week as over 2,500 retailers have now

made the switch. This gives you access to our advanced vehicle data in your own systems allowing easy creation of more accurate, spec-rich adverts, shared seamlessly to key sales channels in real-time. Advert creation and management is streamlined making the whole process more efficient, saving valuable time, and ensuring consistency across sales channels. The combination of accurate vehicle spec data and real-time updates is helping retailers to improve pricing and margin and achieving higher profits. If you haven’t already accessed this transformational solution, I would encourage you to speak to your account manager or visit this page to ensure that your stock management provider is working with us.

Our focus for 2022 will be on ensuring every retailer can compete online and an important part of this journey is to help your buyers become transaction ready. 72% of consumers are already interested in buying a vehicle online [9] and this increases further when we start to bring in additional measures to give buyers more confidence. For example, only 28% of buyers would consider buying a vehicle without a test drive [10], but when the same question is asked with a money back guarantee offered, this increases to a staggering 63% [11]. We believe Auto Trader, as one of the UK’s most trusted brands, is in a unique position to highlight the assurances you can give to buyers and enable more of the journey to be completed online. Reserving a vehicle is a great indicator of intent and our Reservations pilot is allowing us to understand what your buyers want. We’ll continue to share the findings as we learn more in the coming weeks.

As we look forward to 2022 and continue to enable all our retailer partners to do more, we’ll be contacting you later this month with details of your annual package review. As you know, we’ve committed to ensuring every retailer on our main packages has access to Auto Trader Connect, Retail Essentials [12], and as ever, we’ll continue to enhance your packages to meet the evolving needs of buyers.

I’m incredibly proud of the partnership we have built, and I am relieved that we are finally able to look forward to the year ahead. We will continue to be by your side in 2022, navigating the challenges we face and embracing every opportunity for continued success together.

Data Sources

1. The Specialist Works data, 25th December 2021 – 3rd January 2022. Google, The Trade Desk, Facebook and Snapchat data, 22nd December 2021 – 10th January 2022

2. Auto Trader Internal Data - Average Daily Users 27th Dec-31st Dec 2021(inclusive)

3. Auto Trader Internal Data - Average Daily Users 2nd-9th January 2022(inclusive)

4. Auto Trader Internal Data – Total count of calls, emails, texts and chats 1st January - 31st December 2021 vs 1st Jan – 31st December 2020 (inclusive)

5. Auto Trader Internal Data – Total count of calls, emails, texts and chats 1st January - 31st December 2021 vs 1st Jan – 31st December 2019 (inclusive) and will include behavioural change

6. Auto Trader Internal Proxy Data based on stock removed – 1st January - 31st December 2021 vs 1st January - 31st December 2020.

7. Auto Trader Retail Price Index December 2021

8. Auto Trader internal data comparing retailers advertised price vs Auto Trader Retail valuation December 2021

9. Auto Trader Digital Retailing Research Aug 2021 n=5176

10. Auto Trader On-site Survey 31st Mar - 14th Apr 2021 n=2144 - we have an updated stat for this which is 31% (Auto Trader On-site Survey 16th Dec 21 - 6th Jan 22 n=1655)

11. Auto Trader On-site Survey 16th Dec 21 - 6th Jan 22 n=1463

12. Auto Trader Connect, Retail Essentials will be included in core advertising packages which includes Starter, Basic, Standard, Enhanced, Super and Ultra, but excludes our bespoke contracts.