Auto Trader business review

BUSINESS REVIEW: AUTO TRADER An AM promotion

Helping ‘9 to 5’ dealers adapt to the digital marketplace Many dealers have yet to adapt to the demands of digital-age consumers, but Auto Trader says its research and expertise can help them make the transition

T

he end of the “9 to 5” car dealer model is on the horizon, warned the chief executive of Auto Trader. Trevor Mather predicts increasing competition from digital-based dealers tailoring their business to consumers’ online preferences.

“The digital age is empowering for consumers. They can read reviews of cars by people who bought them – and of the dealers who sold them – and find out how to get the best deal,” he said.

“I can’t see the ‘9 to 5’ dealer model lasting, because an increasing number of online searches are in the evening, with 67% coming between 6pm and 9pm.

“I think dealers will have to adapt their opening hours,

because consumers want to talk about a car at a time that suits them.”

Mather was the chief executive of an IT consultancy, ThoughtWorks, until he moved to head Auto Trader in June 2013. One of his first big decisions was to pull all the Trader Media Group brands into one single brand, Auto Trader.

Future dealers will be ‘online and out-of-hours’ The retail motor industry has developed increasingly into large groups of dealerships, but Mather believes digital development has helped new start-ups with a low cost base and has resulted in an increase in the number of dealers: “I expect to see an increasing

BUSINESS REVIEW: AUTO TRADER An AM promotion Auto Trader chief executive Trevor Mather: ‘I expect to see an increasing number of digital dealers setting up in the next few years’

number of digital dealers setting up in the next few years. They will run businesses in tune with the way people now search for cars – that’s online.”

He said it was possible that wholly digital dealers could account for 10% to 20% of the total within five years.

Mather said dealers feared margins being squeezed by the digital revolution, but believes car buyers will pay for good service they can trust.

“Auto Trader has taken ownership of the digital car-buying landscape, which is the best way to ensure success for our customers,” he said. “That’s why we say we will lead the future of the digital automotive marketplace.”

Mather said the company bridges the gap between consumers’ current behaviour and a retail motor industry that is struggling to keep pace with change: “We want to create a trusted marketplace where everyone wins.

“We are moving away from telling car retailers what they need, to a situation where we are providing data and advice to help them make the best decisions.”

“Our products and services will support dealers in four key areas: buying, selling, marketing and managing their stock and business. We call these the four pillars of both Auto Trader and businesses operated by our dealer customers.”

Auto Trader is today one of the largest sites in the UK, with about 11 million unique visitors a month. The company started as a weekly print title 37 years ago and peaked with a circulation of 367,000 copies in January 2000. Sales of the print magazine gradually declined and the final issue was

11m

users visit the Auto Trader website every month

64%

of Auto Trader’s website traffic comes via mobile phones and tablets

W H Y AU TO TR A DER S TILL BELIE V E S IN THE P OW ER OF R A DIO Despite its focus on the digital marketplace, Auto Trader still maintains a presence in traditional media. To raise awareness of its ‘What drives us is you’ campaign, it bought one hour’s worth of airtime on Bauer’s Absolute, Magic 105.4, Heat and Kerrang! radio stations for eight Fridays this summer, allowing drivetime commuters to listen to the radio ad-free.

Jonathan Williams, marketing director at Auto Trader, said: “Of all UK radio listening, 22% is in cars. Three listeners were able to choose a song during an ad-free hour. This improved the driving experience and was a way for us to pay tribute to the 11 million Britons that use Auto Trader every month.”

He said Auto Trader had been listening to UK motorists for nearly four decades, designing a marketplace based on their needs and feedback: “Our ad-free radio hour celebrated their contribution, while expanding the concept of ‘What drives us is you’ for all those looking forward to a relaxing weekend.”

published in July 2013. As it refocuses, Auto Trader will close offices around the country to operate from two sites – one in London opposite Google’s future UK headquarters at King’s Cross, another in central Manchester. Mather sees these moves as key to the company’s success in a rapidly evolving digital world.

He accepts that Auto Trader made mistakes in the past in its relationship with motor retailers.

“The internet has changed the way people buy and sell cars,” said Mather. “Buyers make more informed decisions and retailers are adapting to keep pace with changing consumer behaviour. Auto Trader has also changed.

“We try to listen to our dealers, and to what matters to buyers. We need to understand what concerns dealers and we have to find solutions and services that meet their needs.”

This, said Mather, means Auto Trader is investing more in research. This is done in cooperation with dealers and all the data and insight is shared with dealers to help drive their business.

One of the buyer behaviour trends Auto Trader has identified is rising consumer expectations, with a new generation of consumer-driven online companies setting the benchmark.

Mather said: “There is also a need for trust because consumers want to feel in control of a complex and emotionally charged purchase. The job of a marketplace should be to facilitate a transparent, open and effortless journey for the buyer.”

The rise of the mobile customer Mather said the largest innovations affecting car retailing in

DRI V ING T HE DIGITA L C A R BU Y ER TO DE A LER S

“Dealers will have to adapt their opening hours, because consumers want to talk about a car at a time that suits them” Trevor Mather, Auto Trader chief executive

the past few decades were the internet and mobile phone, now one and the same: “Nearly two thirds (64%) of all traffic comes to Auto Trader via mobiles and tablets.

“Consumers expect businesses and services to adapt to their needs and changing behaviour patterns. Two-thirds of all searches (67%) are made between 6pm and 9pm.

“Buyers expect to get answers when they need them, including times when the traditional dealer sales operation has closed for the day. More than one in three (36%) of consumers expect a voicemail response within one hour: three years ago it was 28%.

“We at Auto Trader live and work by our motto ‘What drives us is you’, which reflects a complete change in the company.”

Jonathan Williams, marketing director at Auto Trader, said dealers could already see how Auto Trader was entering a new era with the closure of the magazine.

“We have now been able to set up Auto Trader as a brand representing the digital era and all our products and services,” he said. “Our new, modern Auto Trader logo represents this change.”

Williams said dealers understood that Auto Trader was listening to them because of the consolidation and greater harmonisation of all that it was offering.

He said he visited dealer groups each week to explain how they, their customers and Auto Trader were all aligned to perform in the best way in the motor retail marketplace.

“We want to learn from dealers what we can do to help their businesses,“ he said.

Jonathan Williams, marketing director at Auto Trader: ‘We want to learn from dealers what we can do to help their businesses’

Auto Trader’s spring advertising campaign generated a sharp increase in searches by car buyers.

Between mid-January and April, the volume of visitors to the website rose from 5.68 million to 8.84m, according to Experian Hitwise, which provides daily rankings of the world’s most popular sites.

Jonathan Williams, marketing director at Auto Trader, said: “Strong and continued investment in a consumer marketing campaign benefits dealers – ‘Say hello’ is a good example. The new campaign – What drives us is you – will continue to deliver value to retailers.

“Auto Trader is one of the UK’s largest advertisers and our extensive research shows how marketing benefits our customers. The ‘Say hello’ campaign appealed to emotions and positioned Auto Trader as the place to go when looking to buy and sell cars.”

As part of the campaign, Auto Trader offered one independent and one franchised retailer the chance to win a revamp for their dealership. The prize included a personalised consultation to develop a bespoke business plan, a free set of Auto Trader products and services to deliver it and £3,000 towards a showroom spruce-up.

Williams said: “We asked dealers to tell Auto Trader what they would like our help with and why they should win. The competition – ‘Say hello to your best year yet’ – was run in response to the rapidly changing digital marketplace.”

Hitwise reported that in the first quarter of 2014, Auto Trader attracted more than half of all automotive classified visits, including 50% in March. Average daily stock on Auto Trader has risen from 330,000 in Q4 2013 to more than 400,000 in August 2014.

According to HPI, Auto Trader’s unprompted brand awareness is rated at 64%, against Ebay’s 24% and Motors.co.uk’s 3%. On consideration to buy, Auto Trader scored 49%, compared with Ebay’s 7% and Motors’ 0%. On consideration to sell, Auto Trader scored 50%, against Ebay’s 9% and Motors’ 0%.

Research by Experian Hitwise and other sources shows Auto Trader’s visitors spend an average of more than one-and-a-half hours on the site per month, compared with about 10 minutes for Motors. co.uk. In April, there were 24 times more referrals to 155 selected dealer websites from Auto Trader than from Motors.

“We have spent time simplifying our products and services to make working with us easier. The modernisation of our logo and simplification of our brands is part of this change.

We have done this so customers can better understand how we can help them. We still have plenty to do.

“What drives us is our customers’ success. Our approach to marketing has changed and we are now aligned to the success of both buyers and sellers.”

Auto Trader has for a long time invested in a wide range of advertisement channels to build awareness.“This is part of our policy of reaching new customers who will sell or buy cars through our website,” said Williams. “Recognition of our brand is at an all-time high.”

Williams said dealers were able to benefit from the findings in Auto Trader research into customer behaviour, such as that half of people who use it to buy a car walk into a showroom with no appointment. “But the average car buyer visits close to five websites,” said Williams.

BUSINESS REVIEW: AUTO TRADER An AM promotion

Get the basics right to reach the mass market and build your brand Car dealers must present relevant information online and respond quickly to queries if they are to stand out among the 700 million websites on the internet

O

ver the past two-and-a-half years, Auto Trader’s regional masterclasses have attracted about 2,500 staff from dealerships. The best-practice sessions are based on a simple message: do the small things right, such as answering a ringing phone.

Nick King, research director at Auto Trader, said: “We also provide people with a lot of relevant data about buyer behaviour. This assists dealership teams to understand how much and how quickly the world of motor retailing is changing.

“The digital world is taking off. Consumers use automotive content sites to reach and influence other consumers. Dealers must use the most effective ways to reach the mass market and build their own brand if they want car buyers to return.”

King made a film, due to be live on the Auto Trader dealer portal by the end of September, based on the message of the masterclass. It briefs dealers on new ways to market cars and how to relate to customers.

Out-of hours opportunities “Around 9pm is the most popular time for people to browse for a car on their mobile device,” he said. “They’re probably relaxing on their sofa watching television. This is why dealers need a live chat link on their website, otherwise sales leads will probably be lost.

“The next best thing is to invite an email enquiry, but that makes it essential to ensure a response is sent early the next day. Research for AutoTrader by Kantar found 57% of car seekers expect a response to an email message within four hours, while 36% want one to a voicemail within an hour.

Consumer expectations are increasing – three years ago, the equivalent percentages were 48% and 28%.”

King said it was essential for dealers to appreciate the radical changes affecting their businesses: “Their website is one of a global 700 million, so it’s essential to find a way to stand out and then respond quickly. Every second, someone

57%

of car seekers expect a response to an email message within four hours

is searching for a car to buy. So be sure your stock can be seen on a mobile device.” He said good pictures are vital because people were no longer prepared to spend a weekend trudging around forecourts, particularly in bad weather.

The importance of dynamic pricing “There is now no such thing as a really bad quality new car,” said King. “Renault Group is pricing a new Dacia Duster from £9,495, so dealers have to make average used cars look appealing on their website.”

Dynamic pricing of used cars is important. “EasyJet moves prices of flights up and down depending on a range of factors,” said King. “Dealers can do this if they are aware of other dealers’ prices. It’s no good fixing a price until you’re desperate to sell and then price the car so low your margin disappears.”

“Attract car buyers by giving them everything they need. Fill your website with answers to the sort of questions you would expect to address face-to-face” Nick King, Auto Trader research director Car buyers remain brand promiscuous: less than two in five (39%) consider only one make during their purchase. Most people take a look at a range of brands when choosing a car.

GfK found buying decisions are made out-of-hours: “This is the touchpoint with the consumer,” said King, with 78% of internet research happening after 6pm.

“Retailers need to reach consumers before they visit a dealership. That’s because by the time they arrive on a dealer’s forecourt it is too late to influence them. Car buying is happening online – dealers must adapt or die.”

GfK discovered that nearly a quarter of buyers visit more than 10 dealer websites (4.6 on average), adding: “Yet 51% visit just one dealer showroom as part of the journey and 21% visit two. Average dealer visits are 1.6 when buying a new car and 2.2 for a used one.”

King tells dealers that active social media engagement is essential because so many people use Facebook, Twitter and other sites.

“A website is a digital forecourt and social media gives a dealer the chance to attract new customers,” he said.

“It should have personality and be funny. A dealer who ran a video of him eating a bowl of hot chillies collected 800 ‘likes’.

It made car buyers more likely to search his site for a car.”

Auto Trader has a wealth of information from analysing searches for the 400,000 cars available via the website on a typical day. As part of its regular appraisal of the retail market, the company also commissions research.

Research firm GfK talked to 601 car buyers from five automotive retail groups (three franchised, one independent and one car supermarket). This showed that 93% of people seeking a car use Auto Trader, three times as many as second-placed What Car? and nearly five times as many as Motors.co.uk. Auto Trader was judged most influential by 73% of car buyers.

Dealers must reach consumers before they visit a forecourt Competition among good brands is fierce and building loyalty is harder than ever.

71%

of people looking for a car check out dealers online before deciding to visit

Get the basic information right online King said providing basic information was essential and tells dealers: “Attract car buyers by giving them everything they need. Fill your website with answers to the sort of questions you would expect to address face-to-face, such as testimonials, contact details, history of dealership and images of your showroom. The two single most important facts on a website are, according to consumers, contact details (51%) and opening hours (56%).”

Research by Kantar underlines an important trend: a 41% drop in the average number of dealer visits by car buyers in the past four years, with mobile becoming the most important media by January of this year. In 2010, one in 10 car buyers visited one dealership, by June 2014 that had changed to one in two.

“Nearly two-thirds (64%) of all traffic now takes place on a mobile or tablet,” said King. “More than four in five (83%) of car buyers search at home, 68% at work, 48% on public transport, 27% en route to a dealership and 24% on the forecourt itself,” he said.

Most people (71%) looking for a car check dealers online before deciding to visit, looking for information about the business and car. “Testimonials, how long a business has been established and showroom pictures establish trust,” said King.

“Responsiveness must be reflected on a website, but also in business practices – Live Chat can bridge the ‘closed doors’ gap.

“One in five car buyers using social media have also sought advice about a future car purchase and researched what other people are saying about a dealership on social networks.”

Get your stocking policy right Auto Trader is setting a high priority on meeting the needs of dealers and has the necessary digital tools and other services, said King: “They can search multiple online sources to find good quality stock at the right price quickly and easily through our Autotrade-mail and multi-source + i-Control.

“Locating the right stock drives successful retail businesses forward. Yet 35% of cars on forecourts are not in demand locally, according to latest Auto Trader data. That means a third of available stock is denting dealer profitability, taking longer to sell and returning a lower margin for its seller.”

BUSINESS REVIEW: AUTO TRADER An AM promotion

Dealers urged to make used car stock stand out Dealers must market, remarket and price their stock intelligently to overcome growing competition for car buyers’ attention

i-Control automatically evaluates a dealer’s stock against demand, supply, margin potential and speed of sale

A

uto Trader urges dealers aiming to increase sales to get cars in front of as many buyers as possible, to focus on buying the right models, to market them across all channels and to manage their online forecourt intelligently.

Nick King, research director at Auto Trader, said: “Today, dealers compete with the entire online marketplace, so they should make sure their cars stand out from the crowd. This drives traffic to websites and customers into showrooms.”

“Dealers can reach buyers on any device at any time through Auto Trader’s platforms. They can do better than rivals by using our search stand out and showroom gallery options or place priority listings to ensure buyers see their cars first on mobile and tablet.”

An online sales team connecting car seekers with out-ofhours dealers through Chat Assist can increase leads by 25%. The impact of dealers’ stock presentation can also be boosted by Auto Trader’s digital image enhancement services.

“This improves click-through rates by an average 20%,” said King. “The face of auto retailing has changed and the pace is increasing. Forecourt visits are down and buyers come armed with all they need to make a deal.”

Marketing is important, and dealers should promote their business across the growing range of digital channels favoured by car buyers. King said: “We know that mobile is the fastest growing platform and already stands for nearly two out of three visits to Auto Trader. Dealers should have a mobile-first approach when it comes to marketing, retargeting and website functionality.

“To market well, you need to know your customers, especially those searching online, on mobile and in the evenings.

“Promoting your business across all channels is key to turning an online browser into a forecourt visitor. Dealers must challenge themselves, by asking: does our website answer the questions a customer might pose as effectively as you would face-to-face?”

HOW MANY DEALERSHIPS DID Y O U P H Y S I C A L LY V I S I T ?

25%

The potential increase in leads from connecting car seekers with out-of-hours customers via Chat Assist

31%

of used cars on sale for more than 60 days have not been repriced since the first day they were listed

I-control, the management and valuation tool from Auto Trader (previously Deltapoint), improves stock turn and gross profit potential. It gathers data from millions of searches on Autotrader.co.uk in a dealer’s region and from fleet and lease companies.

King said: “Our advanced software recommends what stock a dealer should buy, where to find it, how much to pay for it, and how much to sell it for.

“The internet has given retail car buyers power by enabling them to search for precisely what they want, before visiting a dealership. Our i-Control shifts the balance back to dealers by making sure they know exactly what customers want before they ask for it.”

Auto Trader customers can use real-time pricing and consumer demand data to appraise their stock and optimise sourcing and pricing decisions. “i-Control evaluates stock against demand, supply, margin potential and speed of sale,” said King.

“It ensures the margin on cars customers are buying has sufficient room to cover dealers’ costs and return a profit.

Auto Trader valuations help dealers manage the pricing of their stock in real time with a complete view of the competition. A support team is on hand if needed.”

King said that with this level of technology, dealers could create the right strategy for maximum profit and speed of

WHAT CUSTOMERS SAID ABOUT AUTO TRADER

“Dealers compete with the entire online marketplace, so they should make sure their cars stand out from the crowd”

ABOUT SELLING: “Having integrated Auto Trader into the Foray Motor Group, I am extremely pleased with the results. Our Auto Trader representative has already become an integral part of the team and was actively involved in the roll-out of Auto Trader products and services in each of our seven locations. Used car sales have increased by 40%, and profits have improved 100%, thanks to a partnership that has taken Foray beyond classified listings and into best practice digital retailing.”

Chris Green, director, Foray Motor Group

Nick King, research director at Auto Trader: ‘The face of auto retailing has changed and the pace is increasing.’

ABOUT BUYING “As a relatively small independent dealer, being able to locate and source good quality stock quickly, efficiently and from professional and trusted sources is always a challenge. Autotrade-mail solves this problem… It enables us to buy and sell stock effectively while building lasting relationships with dealers all around the country that without the system we would never have found.”

Tom Pawle, Victory Car Sales ABOUT SELLING: “Our relationship with Auto Trader has helped drive Caralot onwards and upwards. About 90% of our enquiries are Auto Trader-generated. Without the strong partnership we have, it’s fair to say we simply wouldn’t have the business we have today.”

Jamie Caple, Caralot ABOUT MARKETING: “Ingram Motoring Group took a managed chat trial to see if it would work for us. And it did. The chat came in to Josh at the call centre and an hour later, a car was sold. That sort of support is invaluable for a business like ours.”

Malcolm Ingram, Ingram Motoring Group

sale across every car on their forecourt. Latest Auto Trader data reveals 31% of used cars on sale for more than 60 days have not been repriced since the first day they were listed.

“It isn’t easy for dealers to stay on top,” he said. “They have dozens of cars in stock and more cars arriving daily, a website to maintain and a constantly changing market. This means saving time and money has never been more important in achieving business goals.”

WHICH WOULD YOU CONSIDER THE MOST INFLUENTIAL IN YOUR BUYING DECISION?

ABOUT MANAGING: “In the first two days of using i-Control, I sold over 20 cars. The majority were over-age models where our pricing strategy simply didn’t align with the live market.

With i-Control’s live market intelligence we were able to quickly identify the problem and re-price each model more accurately. The results speak for themselves.”

Richard Hardie, Peugeot Sunderland ABOUT MARKETING AND SELLING “Auto Trader supplies us with fantastic market insight that ensures we give customers everything they need online to make the decision to buy from us. With Auto Trader’s support, we are helping turn more and more of these interested online browsers into Imperial customers.”

Neil Smith, Imperial Car Supermarket ABOUT BUYING: “Using Autotrade-mail means I can be more confident that the vehicles I am buying and selling on a day-to-day basis are at today’s price – not values researched during the previous month. Autotrade-mail’s ‘real-time’ used car valuation system changes as soon as markets change. It has saved me thousands of pounds, by not paying over the odds for vehicles at auctions.”

Ryan Field, Field Motor Solutions

BUSINESS REVIEW: AUTO TRADER An AM promotion

‘We want to understand how dealers are thinking’ Auto Trader has simplified its business to work better with dealers and consumers

A

key component of change at Auto Trader is the way it now works more closely with dealers to ensure they are making the most of their advertising budgets.

Sharon Randall, UK sales director at Auto Trader, said: “We are moving from a product-led to a needled partnership with our 12,000 customers, and understand that they want to ensure a return on investment with us.

“We are raising our game because being smarter and developing trust with our dealer customers drives profits and speed of communication.”

Auto Trader based the changes on what it calls the ‘four pillars of retailing’: ■ Buying: working with dealers to stock the vehicles buyers are looking for. “We will make buying the right cars easier, using insight and intelligence based on live market data.”

■ Selling: working with dealers to make the most of their stock. Randall said: “Auto Trader is working with retailers to drive car buyers’ views of full-page ads”.

■ Marketing: working with dealers to present their business in the best way. “We ask if they are treating their online visitors in the same way as those on the forecourt and embedding trust during the buying journey. Dealers also need to encourage car buyers to visit their forecourt and not a competitor’s.”

■ Managing: working with dealers to price at the right level to accelerate stock turn and boost profits.

“We advise dealers to optimise price and stock to increase speed of sale and focus on intelligent forecourt management based on live data.” Randall said Auto Trader’s focus for the next three years was to simplify the business for its dealer customers and also its own teams.

“I want us to be seen as one proposition, focusing on our core business as we relate to dealers and car buyers,” said Randall. “We can do that now we are a digital publisher.”

“We want to understand how dealers are thinking about their businesses and what we can do to help them. Auto Trader will respond to their questions in words they can understand.”

Over the next 12 months, Auto Trader intends to do all it can to make motor retailers realise that its intention is to add more value to their businesses, not to just sell services to them.

“I hope they will see Auto Trader in a new way,” said Randall.

“Our cultural change means we are here to help and advise, and we want to understand what dealers need from us to improve their businesses.”

In a twin approach to the market, Auto Trader will also do more to support consumers.

“Over the next 15 months, we will introduce a suite of new products to support car buyers. There has been a belief at Auto Trader that everyone coming to our website is an experienced car buyer. That isn’t so, though most people trust our brand.

“A large number of people looking for a car can still feel

Sharon Randall, Auto Trader UK sales director: ‘We want to understand how dealers are thinking about their businesses and what we can do to help them’

“A large number of people looking for a car can still feel deeply intimidated when facing dealership staff, and also by the whole buying experience. We will give them support in a way they can relate to” Sharon Randall

deeply intimidated when facing dealership staff, and also by the whole buying experience. We will give them support in a way they can relate to.”

Randall said Auto Trader had improved significantly over the past two years, but knew there was more work to do: “Trust is proven by actions showing character and competence and by providing information and knowledge to build confidence among consumers.

“Also important is providing tools for automotive retailers to satisfy increasing expectations among consumers, and to make the management of their business easier. Most retailers will only have one point of contact at Auto Trader to make life easier for dealership staff.”

Randall said Auto Trader expected changes in the market.

One was that the high volumes of PCPs on new cars would lead to them being offered on cars up to two years old because of the volumes generated by manufacturer support to move first registrations. That would have a knock-on effect in the used car sector.

Auto Trader has recruited two senior retail motor industry managers as brand directors with a brief to help build worldclass business relationships with dealer customers.

They are Peter Watts, previously group operations director at Randles, a Staffordshire dealer group with Peugeot and Suzuki franchises, and Le Etta Pearce, who was retail services sales and operations director at Manheim UK. They were appointed to give Auto Trader greater insight into the motor industry as a whole, and to provide more value for its customers.

Randall said: “Peter and Le Etta will be working predominately with our sales force, supporting the teams helping our customers understand the constantly shifting digital marketplace. Peter has already started and Le Etta joins in January. They will also explain how the needs of consumers are changing and advise dealers on how to be successful internet retailers.

“We will effectively double the time we spend helping customers who will get a more personal relationship with us.

Our account managers and customer service teams will work seamlessly together to achieve that.”