12 minute read
Auto Trader get so big?
CAR DEALER INVESTIGATIONS
JUST HOW DID AUTO TRADER GET SO BIG?
Our latest Investigation video documentary looks at the rise and rise of used car advertising giant Auto Trader – morphing from a traditional magazine publisher into the tech giant that it is today.
by James Baggott
@CarDealerEd
Ask anyone with a passing interest in cars where they search for them and it’s highly likely they’ll say Auto Trader.
The classified car advertising giant has been a staple of the motor trade for four decades and has morphed from a magazine picked up from newsagents’ shelves to an app available on smartphones.
After years of paper-based publishing, the company conceived a website offering before Google even existed – and it was this early adoption of technology that set it off on a path of monumental growth.
But just how did Auto Trader get so big? How did it grow from a well-thumbed mag to a tech titan that last year made £25m profit every MONTH?
As part of our special Car Dealer Investigations series, we’ve chatted to car dealers, consumer and motoring experts, as well as the very people leading the business to look at how Auto Trader grew into the advertising giant it is today.
You can watch the video now on our YouTube channel or listen to it as a podcast on your favourite platforms by searching for ‘Car Dealer Investigations’.
IS AUTO TRADER NOW A TECHNOLOGY BUSINESS?
In a word, yes. Bosses like to compare the business to Zoopla or RightMove – similar marketplaces in the property world that don’t own or make anything, but instead simply connect buyers with sellers.
Today, the brand is built around a huge website that attracts a staggering 10.8m visitors every month.
Each week, it displays 3.7bn pictures of cars to consumers and has on average more than 400,000 models advertised for sale at any one time.
Auto Trader says its visitors spend 8.8m hours every month on its platforms and 14,000 car dealers across the country currently use them.
Steve Fowler, editor-in-chief of Auto Express, said: ‘Auto Trader is kind of a necessary evil for car dealers isn’t it? They just can’t avoid being on it.
‘It’s the biggest used car classified platform in the UK. And if you want to sell cars, you’ve got to talk to them, whether you like it or not.’
WHEN DID AUTO TRADER BECOME FULLY DIGITAL AND STOP PRINTING THE MAGAZINE?
The transition from print to digital wasn’t a quick one.
The website was launched in 1996 by a small team of engineers – two years before Google
WHAT HAPPENED TO THE AUTO TRADER MAGAZINE?
BEFORE the huge digital transition fired up its success, Auto Trader was a successful magazine publishing company.
It all started in 1977 when entrepreneur John Madejski launched Thames Valley Trader after bringing the idea back from the States.
That idea eventually morphed into Auto Trader.
In its heyday, nearly half a million magazines rolled off the presses every week, and they were split up into 13 editions that spanned the length and breadth of Britain.
Auto Trader had 70 offices around the UK and even owned two regional presses that not only printed its magazines but those of other publishers, too.
But in June 2013, the final print edition was published and the firm went 100 per cent digital.
Auto Trader is now a webbased giant with millions of users logging on to its techladen platforms every day.
The car search function is so popular that at its busiest times it serves more than 5,000 requests every second.
was even conceived – but it was a full 11 years later before digital revenue matched print for the first time. And it took a further six years before time was called on the physical print edition for good in 2013.
These days, it likes to think of itself as more Google cool than stuffy mag publisher.
In its offices in Manchester and London, the firm has winched classic cars through the windows of its fourth floor offices to be used as meeting rooms. There are free drinks for staff, soft seating breakout areas for collaborating colleagues, while software engineers can doodle on the walls as they come up with new ideas.
It’s all a far cry from the old-school publishing days where print adverts were collected by local sales staff who’d visit car dealers weekly, even taking pictures of the cars for them.
HOW MUCH MONEY DOES AUTO TRADER MAKE?
Auto Trader’s digital shift helped the business slash overheads and ratchet up profits.
In 2021, the firm posted its best-ever results with pre-tax profit up a staggering 91 per cent to £301m.
That’s an operating margin of some 70 per cent.
It’s these huge figures that have got up the noses of some car dealers, who look on enviously at their margins when they are lucky if they return two per cent on sales themselves.
WHAT DO CAR DEALERS THINK OF AUTO TRADER?
Ask car dealers what they think of Auto Trader and most will tell you it’s a love-hate relationship.
They love the results they get, but hate the bills they have to pay to get them.
In our video, most tell us they love the fact the firm generates impressive leads for them and don’t mind paying for the results.
Sean Kelly, MD of Vines BMW, tells us he ‘loves’ Auto Trader as it has ‘the biggest market reach’.
However, he added: ‘We get lots and lots of prospects and customers that might not naturally come to our business.
‘But I hate that [Auto Trader] is a bit of a monopoly as well.
‘The danger with that is there’s great power in that and, a bit like SpiderMan, you can only have great power if you have great responsibility, too. And sometimes I’m not sure they do.’
Independent Motor Dealers Association chairman Umesh Samani said he has a ‘love-hate’ relationship with Auto Trader.
‘It does sell cars for me,’ he explains in our video. ‘So I like it from that sort of perspective, but it comes at a cost. It’s very, very expensive.’ CONTINUES OVER PAGE
WHAT DOES AUTO TRADER THINK OF ITS RELATIONSHIP WITH CAR DEALERS?
IN THE video, we speak to Auto Trader’s CEO Nathan Coe and the firm’s chief operating officer Catherine Faiers.
Faiers, pictured below, explains that Auto Trader thinks of its relationship as a ‘partnership’ and says it helps that the firm has ‘huge influence over the carbuying journey’, which means it delivers ‘value for money’.
She added: ‘We’d say that we influence more of [car dealer] sales than any other partner they work with – we’re their most effective marketing channel.
‘When we look at our influence over the car-buying journey, typically 70 to 80 per cent of retailer cars are advertised on our marketplace and we influence a similar percentage of those sales. We know the ROI from that is really, really strong.’
CAR DEALER INVESTIGATIONS
AUTO TRADER BOSS ON BIGGEST THREATS TO CAR DEALERS
Chief executive Nathan Coe speaks exclusively to us as part of our latest special Investigation video.
Car dealers need to prepare for big changes coming to the automotive industry if they’re to survive and thrive in the coming years.
Auto Trader CEO Nathan Coe told Car Dealer that he believes the car industry is ‘well placed’ to be around for a ‘very long time to come’ – but there are obstacles to watch out for.
Coe was speaking to Car Dealer as part of a special Investigation video into how Auto Trader grew into the advertising giant it is today.
The special documentary is published on YouTube and as a podcast on your favourite podcast platforms.
Coe said: ‘I think the car industry itself is likely to be around for a very, very long time to come. So I think as an industry, actually, it’s pretty well placed to cope with the threats to come.
‘Who does well in the industry is probably the more important thing.’
Coe said he believed electric vehicles will shake up how the industry performs both in new and used car dealerships.
‘I do think electric vehicles are going to come at us very, very quickly,’ he said.
‘Certainly, as a new car retailer if you’re not good at electric vehicles, you could find yourself caught out very quickly.
‘For anyone that’s in used cars, it’s easy to not be thinking about electric now because they make up such a small proportion of the car parc. But at some time in the next 10 years, electric vehicles are going to be the sort of cars that you need to be good at selling.
‘And at some point, they’re going to be most of the cars that you’re selling. So thinking forward, even though the business is so much about trading day to day, you need to know that your business is at some point going to need to be ready for electric in terms of how you prep vehicles, store vehicles, what you do on batteries and how you sell those cars.’
AGENCY SALES
Coe also believes that electric cars will have a knock-on impact on new car dealers as manufacturers roll out more agency agreements for sales.
These will see car manufacturers sell new cars directly to consumers on their websites with car dealers paid a fee to hand them over.
‘The industry itself is in a really good position, and fundamentally people are going to want cars and the freedom and independence that they provide. It’s really important for retailers to be thinking about how they make sure they’re thinking today about what they need to be good at in 10 years’ time and being prepared for that,’ he said.
Coe also gave his opinion on online sales and how important they will be to car dealers in the future. He said Auto Trader currently believed that ‘about five to six per cent’ of car sales are made without an interaction with a physical dealership.
‘Over time, that might grow to 10-15 per cent,’ he explained.
‘But I think many retailers, and you’re even seeing this with the online car retailers, are starting to set themselves up to be omnichannel businesses, because probably in five to 10 years’ time the majority of people will have some interaction with the retailer, because at the end of the day, these are used goods and they are all unique.’
ONLINE SALES
NATHAN Coe said Auto Trader will be helping dealers set themselves up to offer as much of the buying process online as a customer would like to do – but also ensuring they can complete what they want to in a physical dealership.
He added: ‘They might want to reserve a car, they might want to get a part-exchange quote, but then actually they’ll complete that deal with the retailer.
‘We very much believe in a bricks and mortar – or “clicks and mortar” if you like – world where it is going to be omnichannel.
‘And that’s exactly what we’re building, because that is going to be the way that most consumers go about buying a car.’
DON’T COMPARE OUR PROFITS WITH THOSE OF CAR DEALERSHIPS
CEO says 70 per cent margin is nothing to be embarrassed about.
Car Dealer’s latest Investigation video looks at how Auto Trader got so big.
The documentary features interviews with a host of car dealer bosses – including franchised and independent – as well as motor trade experts.
We ask bosses from Auto Trader if they’re embarrassed by the profits the firm makes, what they think was the catalyst to its huge growth and whether they believe the firm has peaked.
And we chart how it all began for the advertising giant and look at how it grew into the hugely successful business it is today.
The exclusive video has interviews with Auto Trader’s executive team including chief executive Nathan Coe, chief operating officer Catherine Faiers and Chris Kelly, the firm’s chief technology officer.
Last year, Auto Trader made record pre-tax profits of £301m – a margin of around 70 per cent – which equates to some £25m a month.
Coe says the motor trade shouldn’t compare these profits to what car dealers make – instead, they should look at other marketplaces such as RightMove or Trainline.
‘I think that our margins are very, very high.
‘But you’ve got to remember that we operate a very different business to a retailer – we have no plan to be a retailer – and actually, in the marketplace space, the sort of business that we are, those margins are more normal.
‘There are, believe it or not, businesses with much higher margins.
‘So I think it’s not something that I feel embarrassed about, I think it is just the nature of the business that we run.
‘We are always thinking about doing the right thing, making sure that any price changes that we make are reasonable and respectful of what’s going on for retailers and the value that we’ve delivered.’
Consumer motoring journalists and finance experts also give their opinion on Auto Trader in our video.
Steve Fowler, editor-in-chief of Auto Express, says: ‘Auto Trader is kind of a necessary evil for car dealers isn’t it? They just can’t avoid being on it.
‘It’s the biggest used car classified platform in the UK. And if you want to sell cars, you’ve got to talk to them, whether you like it or not.’
Top car dealers including Snows chief operating officer Neil McCue, Vines Group managing director Sean Kelly, Swansway Motor Group’s Peter Smyth and Luscombe’s boss Robin Luscombe all give their frank opinions about the brand.
We also speak to Specialist Cars and IMDA chairman Umesh Samani, Car Quay’s Jamie Caple and Emerald House of Cars CEO PJ Quinn about the independent dealers’ thoughts on Auto Trader.
