Auto Trader's £345 million profit from 2023 to support investment in AI tech and dealer insights

Auto Trader has strengthened its competitive position significantly, achieving a tenfold advantage over its nearest competitor in terms of people looking to buy and sell cars online.

In impressive financial results for the year ended 31 March, the online marketplace reported a significant increase in both revenue and operating profits, underlining its dominance.

Group revenue, which includes the Autorama leasing business it acquired in 2022, rose by 14% to £570.9m against £500.2m last time.

Group operating profit rose by 26% to £348.7m against £277.6m in 2023. Pre-tax profit reached £345.2m from £296.2m the prior year, equating to a 60% return on sales.

The stock market has welcomed the results, with Auto Trader's share price rocketing from 733p per share yesterday afternoon to 827.6p within two hours of the financial results being published.

This latest good news for Auto Trader comes less than a month after it won the 2024 AM Award for Supplier of the Year, after getting more dealer votes than all its rival entrants.

Split out, the Auto Trader marketplace business generated a 12% rise in revenues to £529.7m (2023: £473.0m), and operating profit increased by 14% to £378.6m (2023: £332.9m), which included £2.8m share of profit from joint ventures (2023: £2.5m). The increase in operating profits in the core Auto Trader business helped generate an uptick in group operating profit margin to 61%.

Auto Trader's marketplace continued to expand, attracting record numbers of buyers and sellers. The platform experienced an 11% increase in cross-platform visits, averaging 77.5 million per month (2023: 69.6 million).

Cross-platform minutes also grew by 8% to 553 million per month (2023: 514 million), accounting for over 75% of all time spent on automotive marketplaces in the UK.

Retailer participation saw a total of 13,783 retailers advertising on Auto Trader, marking a 1% year-on-year increase and setting a record for the highest level of UK retailer engagement. The adoption of Auto Trader's products and services led to a 12% rise in average revenue per retailer.

Auto Trader has been active in launching new products and services to enhance its offerings.

The introduction of the second Auto Trader Connect module allowed retailers to benefit from retail valuations.

December saw the early release of Trended Valuations and enhanced Retail Check functionality, which were incorporated into all core packages by the following April, enabling retailers to make quicker and more profitable sourcing, advertising, and pricing decisions.

The Deal Builder product, aimed at streamlining the car buying process, has seen substantial uptake. By the end of March, around 1,100 retailers were actively using the product (March 2023: 50), and approximately 16,000 deals were completed through the platform over the year (FY 2023: 200). 

The business said it is well-positioned to play a larger role in new car sales and advertising, and that it would continue investing heavily in its data platform and AI capabilities to provide both retailers and car buyers with real-time data and insights, enhancing decision-making.

With the rise of electric vehicles (EVs) and the shift towards omnichannel retailing, Auto Trader said it is also enhancing its EV content, tools and marketing campaigns and will continue to enagage with policymakers to support EV adoption and regulatory changes.

To provide a seamless car buying experience, Auto Trader plans to expand its digital retailing capabilities and that the Deal Builder tool will be further developed to include new cars, offering a complete digital transaction journey with better functionality and consumer engagement.

Nathan Coe, chief executive of Auto Trader, said: “The automotive industry is going through a period of huge transformation; electric vehicles are changing how and what consumers drive, while omnichannel retailing is changing how consumers buy.

"The role of the retailer will change but with it will come opportunities to redefine and strengthen the role retailers play. We’re committed to ensuring none of our partners are left behind in this transformation.

"We’ll continue to invest significantly in our data, technology, and brand so that retailers have the tools and insights they need to confidently navigate the changing market and remain at the centre of automotive retailing.”