AutoTrader is seeing an increase in the number of people selling their cars to make some extra money during this time of cost-of-living crisis.
Autotrader estimates that the shortage of computer chip is preventing car manufacturers from producing as many new cars as they would wish. This has fueled demand for used cars with prices increasing by 12 percent over the last year.
Nathan Coe is the chief executive of the online marketplace. He said that private sellers are increasingly looking to capitalize on the imbalance between supply and demand. Coe, 44 said that private listings tend to do well when the economy starts to strain.
“Selling a car privately will get you the most money. With the current cost of living crisis people are willing to work a little harder to get an extra £500 or £600.”
The increase in private listings has more than compensated for the drop in new car ads from 29 000 in 2021 down to 25,000 in the last 12 months. Autotrader listed 437,000 cars for sale in total last year. This is a 2 percent increase.
Coe stated that despite the uncertainty of the economic climate, there was still a strong demand for both new and used vehicles. Vehicles on the website were selling faster than before the company’s debut at the stock exchange in 2015. The average time it takes to buy a vehicle listed on AutoTrader is 30 days.
Coe stated that “it has always been true that cars are not seen as discretionary spending, but as necessities, such as to take the children to school or get to work.”
AutoTrader is Rightmove for the automotive world. It makes its money by charging nearly 14,000 retail car lots to advertise. It is unusual for a company with a value of close to £6 billion to employ only around 1,000 people. Many are highly-paid software engineers.
The FTSE100 company reported a 16 percent increase in revenue, to £500.2 millions, for the 12-month period ending March. This was due in part to price increases and additional services, like more prominent listings, or greater data insight, which it managed to push out to its customers. The pre-tax profit fell 2 percent to £293.6 from £301 in 2021. The decline was caused by the company’s acquisition of Autorama last summer, a marketplace that offers leased cars. Coe believes this will increase in popularity.
Autorama suffered a loss last year of £11.2million and Autotrader incurred costs of £44.1million.
AutoTrader’s core business saw its operating profits rise by 10 percent to £332.9 millions, while maintaining an enviable profit margin of 70 per cent.
AutoTrader paid £225 million in dividends and buybacks to its shareholders. Dividends for the last year will be paid out in September and are increasing from 5.5p per share to 5.6p.
The company’s shares fell by 21 1/2p or 3.40 percent to 608 1/2p. However, they are still almost a fifth higher than where they started the year.