An update from our CEO
I hope that you are well and making good progress towards your goals for 2024. As we enter the second quarter of the year, I wanted to share my reflections on what we’ve seen in the used car market. I also want to share an update on our new Deal Builder solution for Retailers which is gathering momentum.
We set out to build Deal Builder so all retailers could benefit from the opportunities omnichannel retailing brings. Car buyers want to do more online, and retailers are looking for ways to drive performance and to operate more efficiently. Our goal with Deal Builder is to work together with you to achieve both aims and to improve car buying for the industry. We did not get caught up in the hype of full online retailing, instead we remained focussed on omnichannel retailing recognising the importance of the physical aspects of buying a car. We’ve learned a lot on this journey and adapted the product in response to your feedback, and now have over 1,000 retailers using the product. We are now ready to open this trial up to all FCA authorised used car retailers[9] and I’ll let you know how you can get involved.
Strong market momentum as we enter Q2
The used car market is showing good momentum as we enter Q2. March was an exceptional month for used car, with record-breaking consumer demand and speed of sale. In March we had 89.1 million visits[1], another record, which goes some way to explaining the strength we are seeing. The trend continued into April with demand up 9% and speed of sale at 26 days in the first two weeks[2], leading to a 12% increase in sales so far[3]. Supply has been slower to come back, it is back –1% year-on-year and is most tight in 3 – 5-year-old vehicles. Younger used stock is coming through strongly, likely driven by some pre-reg activity. New car demand is also looking positive, up 14% year-on-year for the first two weeks of April[4] with demand for new electric vehicles increasing sharply in March due to OEM marketing and discounting activity. However, despite this new car private sales are challenging, and we expect more Manufacturer activity in the coming weeks.
The strength of the market has meant retail pricing is finally now in line with seasonal trends, and prices in April are positive month-on-month for the first time in 12 months, up 2.3%. That said, prices are still lower than last year, down -8.4% so far in April[5]. Overall though we have a more stable price environment, making trading more predictable.
Key theme in focus: The Year of Omnichannel
A few years ago, everyone was talking about online retailing being the future, but we’ve seen the decline of online only retailers, who now serve a small segment of the market. Retailers remain central to car buying with over 90% of people still wanting to visit Retailers as part of their journey[6]. That said, digital journeys play a big and increasing role, with 7 in 10 consumers either already completing or wanting to complete key buying tasks online[7]. Offering a joined-up experience will be critical to providing the service car buyers are looking for, whether online, on the forecourt, or in most cases, a combination of the two. The best-performing Retailers we see, provide both brilliant digital and in-person experiences.
Introducing Deal Builder: Enabling you to deliver omnichannel retailing
For the last 12 months we’ve been trialling our new omnichannel retailing solution, Deal Builder, with a small group of retailers. Deal Builder has been created to help retailers of all sizes to meet the growing demand for omnichannel sales. Consumers have the option to add a part-exchange, complete a finance application (from your chosen finance provider) and choose their handover preference before finally reserving the vehicle on Auto Trader. The buyer can then inspect, test drive, and finalise their purchase on the forecourt benefiting from the in-person experience and support that only a retailer can provide.
Following our successful beta trail, which now has over 1,000 retailers taking part, I want to share what we’ve learned as we open the trial up to more retailers. Throughout the trial, we've worked closely with our retailer partners to adapt the journey and improve performance, the experience, and conversion rates. Retailers have reported some impressive results - digital deals convert at twice the rate of normal leads and almost half the deals are completed outside opening hours[8]. So you can be open for sales 24/7 and more efficient with your time when you are working. Given this feedback we're now inviting all eligible[9] FCA authorised used car retailers to join the trial. Now that any retailer can join the trial we will also be ramping up consumer activity to raise awareness of the option for buyers to complete more of their buying journey on Auto Trader, which you can read more about here.
If you’d like to hear more Karolina, our Chief Product Officer shares our perspectives in her latest blog post. She shares what we’ve learnt and details on how you can get involved to help us shape a more technologically driven automotive retailing industry for the benefit of you and car buyers. This was also talked about on our most recent webinar last Friday which you can watch back here.
“It’s like a second income stream for us and it’s a great feeling when you arrive in the morning, and you see that little sentence “A deal is waiting for you”. Its brilliant.”
Thank you for your continued partnership. As ever, if you have any feedback at any time, please contact me directly at Nathan.coe@autotrader.co.uk
All the best,
Nathan
Sources
1 Auto Trader internal data
2 Auto Trader internal data, Snowplow analytics up to 16th April
3 Auto Trader Retail Sales data, up to 16th April
4 Auto Trader internal data, up to 16th April
5 Auto Trader Retail Price Index, up to 16th April
6 Auto Trader Car Buyers Tracker 2023
7 Auto Trader Consumer Buying Journey Research 2024
8 Retailer quantitative survey, January 2024. N=23
9 Certain standards and criteria will need to be met to join the trial. Deal Builder is also currently only available for FCA registered retailers on used cars.