Auto Trader revenues declined 37% following car dealer COVID support

Auto Trader has reported a 37% decline in revenues and 48% dip in operating profit in a COVID-19 impacted half-year trading update.

Nathan Coe, chief executive of the online car marketing giant, said that the six month reported period to September 30 had been “heavily impacted by our decision to support our retailer customers”.

Auto Trader’s average revenue per retailer declined by £745 per month, to £1,206 (H1 2020: £1,951), in the period of which £695 was attributed to the offer of free advertising for car retailers in April and May and a 50% reduction in June.

Total revenues declined to £118.2m (H1 2020: £186.7m), with trade revenue down 38% to £100.2m (H1 2020: £161.8m) as operating profit down to £68.5m (H1 2020: £131.4 million) as its operating profit margin decreased to 58% (H1 2020: 70%).

The business said that its operational performance could be split into defined quarters, the second of which delivering a strong rebound following the June lifting of COVID-19 lockdown restrictions and a return to charging dealers “at higher rates”.

Following the Welsh ‘firebreak’ and England’s return to a partial lockdown, Auto Trader this week announced that it would be once again suspending fees for a month and extending payment terms for its customers, however.

In his trading update statement, Coe said: "The past eight months have represented perhaps the greatest challenge ever faced by our company and our industry.

“However, as a result of the early and decisive actions that we took to protect our people and support our customers, we believe that our business, culture, and customer relationships are in a strong position.”

Auto Trader furloughed around 25% of its staff and also placed approximately 46 million shares, raising proceeds net of all fees of £182.9m to strengthen its balance sheet and liquidity position.

Net bank debt at the half-year period end was down £217.3m to £58.1m (March 2020: £275.4m) as a result.

Coe said: "Our Q1 performance was heavily impacted by our decision to support our retailer customers by allowing them to advertise for free during the months of April and May, and for a 25% discounted rate in June.

“Since that time the used car market has bounced back strongly.

“We have seen a steady increase in the number of retailers advertising on our platform and our revenues in Q2 were only marginally down on prior year, with profits flat.

"The recent government announcement once again restricts our customers' ability to meaningfully trade. As we have announced today, we remain committed to supporting our retailer partners by making our advertising packages free for the month of December and extending payment terms by a month for November services.

"I want to thank all our employees, customers, suppliers and our loyal car buyers for their support. The coming months will no doubt present many challenges, but we are confident in our ability to navigate these successfully, while continuing to execute our long-term strategy to enable retailers to bring more of the car buying process online."

Auto Trader’s growth in online traction appeared to have been undiminished during the COVID-19 impacted half-year reported period.

It reported cross platform visits up 12% to 57.3 million per month on average (H1 2020: 51.2m) as cross platform minutes rose 12% to 556.6 million per month on average (H1 2020: 496.4 million).

The average number of retailer forecourts using Auto Trader in the period decreased by 2% to 13,056 (H1 2020: 13,316), however, and physical car stock declined 1% to 478,000 cars (H1 2020: 481,000) on average.