An update from our CEO

As we head towards the end of another busy and eventful year in automotive, I hope you find the time to relax and recharge over the festive period. The market is in good shape with record buyers browsing Auto Trader now for January. In this update I will take a look through how 2024 will be remembered, our year together and what 2025 might have in store. Hopefully this gives you some food for thought on how we can work together to set your business up for success throughout the next year.

A Look back on 2024

2024 has seen lots of change but also strong used car market performance and overall health. We’ve seen a new government and a new budget, which has put cost pressures on all businesses. As always though, there has still been plenty of opportunities through 2024. We’ve seen the short supply of vehicles flow through to 3–5-year-old cars against strong demand for all cars, including new cars at the right price. That’s meant we’ve seen cars turning very, very quickly. So, we’re urging retailers to make sure they are paying close attention to their forecourt pricing, to ensure you’re not leaving margin on the table. At the moment on Auto Trader, we see just over £26 million worth of lost profit opportunity on vehicles underpriced compared to the market, with a very high Retail Rating – meaning they are in strong demand.

Trended Valuations is helping you to make the most margin available.

A year of partnership and progress

The good news is that more retailers are choosing to partner with us than ever before and we have more consumers yet again choosing Auto Trader as their destination when looking to change vehicle. This has driven a positive impact on sales, with used car transactions in 2024 up 5%. Our approach to partnership is really quite simple. We take your goals as a business, whether that’s how many cars you’re looking to sell or the PPU (profit per unit) you’re looking to achieve and then use our data, people and products so that we can put together a solution that helps you achieve those goals. One example of a new solution which has really taken off is Trended Valuations, with 3 in 4 of you using this regularly to understand on any individual vehicle how the value of that car has evolved over time and how we expect it to evolve in future. This is proving very valuable for many to make the most margin available by looking into the valuation trend on every vehicle. We've also launched and grown Deal Builder, which gives consumers more choice in how they go about buying their car. It's always about buying the car from the retailer with the retailer's products, but it lets them get an idea of their part exchange, apply for finance or see what finance deals might be available, and then they can finish by reserving the car. These reservations convert twice as well as any other inquiry on Auto Trader.

How to make the most of the market in 2025

2025 is going to have some similar themes to what we've seen in 2024 from a new car perspective. In 2024, we expected to see more push activity in new cars, which wasn’t as strong as expected due to continued fleet demand. As we move into 2025, we again expect to see some push activity as many of the fleets have now replenished their stock and will resume more normal buying levels. We’ve also seen a lot more new car brands, especially focussed on electric vehicles, coming to market, with 17 more brands today than in 2019. This gives consumers more choice but puts brand loyalty into question. So, there will be more push activity on new cars, which means retailers need to both be managing those new car sales and any tactical registrations that they do there.

On used, anyone stocking younger used stock needs to make sure that they're taking account of those new car offers. In terms of the broader used car market, the shortage that we've seen this year and in under three and four-year-old vehicles comes to a peak, and we expect to see that shortage start to move out into the five year-old vehicle segment. All of this talks to that shortage in supply rippling its way through the market. The only way to manage that is using data. Of course, retailers need to rely on their own intuition and experience, but there's no way you can pack into your head all the things that have affected supply over the past five years. Our data can help you do that in a really easy to manage way. And to make that easier, we are going to be revisiting and relaunching our pricing page in portal, which will make it much, much easier for you to recognise where your cars are versus valuations and things like the price flags that appear on Auto Trader.

You can check out our full 2025 market forecasts here.

Co-Driver – your AI toolkit

We've just announced our Co Driver product and that comes amidst a whole flurry of media activity and news around AI models. Our approach to this is different to the hype around using some of these tools, which are typically driven by prompts. We’ve built a model trained on the unique vehicle data that we’ve got at Auto Trader, combined with the huge number of consumer interactions we see on Auto Trader. That means whether it’s imagery, descriptions or key vehicle highlights, you can have confidence that it’s deeply ingrained in the very specific data about that vehicle, the spec it’s got and what consumers want to see on your advert. This is all about helping you become more efficient, take some manual work out of your day so you can focus on the real value adds. The first features of Co-Driver focus on making that process of describing a car, presenting a car for marketing and providing the images in a way that will get their cars the very best chance of selling quickly. This is just the start, though. Co-Driver is going to become a banner of products which we’ll develop with and for all of you based on your feedback and the opportunities to use AI to help make your lives easier and improve your performance.

What else can retailers look forward to from Auto Trader in 2025?

As I mentioned earlier, the key to success next year is going to be about managing supply and pricing to ensure you're getting this most out of your forecourt in terms of PPU (profit per unit) and stock turn. This will continue to be our focus, evolving our data tools, technology and products, to make sure we're working with you to understand your goals so that we provide the right advice to help you achieve them.

We're going to support your new car business throughout the year. We know that consumers are no longer brand loyal. They have always looked at two to three brands but that's expanded out as we move towards electric vehicles.

Finally, we will always ensure we're investing to make sure the Auto Trader site and brand is the first and last marketplace people go to when choosing their next car to make sure you can be the ultimate beneficiary of that.

A massive thank you from all of us at Auto Trader

I just wanted to finish by saying a massive thank you. I hope you’ve experienced that Auto Trader can really help with not only sales and gross margin, but your business process and operations too. Co-Driver is a perfect example of that. Next year it is going to be critical to use data to make sure that you're taking advantage of pricing and the opportunities that will be there . If you speak to your account manager, you'll find that we've got a whole range of data that we can use to help you achieve your goals. Finally, it's worth remembering that January and February can be some of the strongest periods for used car sales. The foundations for that performance is built now. 75% of those new year buyers are in-market looking during November and December. So, it's a really, really important time. As much as it can sometimes feel a bit quieter on forecourts, it is when you're doing the important job of building sales for some of the strongest months on the year, setting you up for a good 2025, which is our hope for all of you.

So, thank you and I wish you all the very best for the festive period and hope you get some time out before what will no doubt be another very eventful year.

Take care.

Nathan.