The UK’s leading online automotive marketplace Auto Trader (AUTO) reported better-than-expected growth in revenue and earnings for the first half of the year thanks to record buyer levels.

The shares accelerated more than 7% to a new 12-month high of 683p, taking them to the top spot on the FTSE 100 leader board and bringing year-to-date gains to more than 30%.

POLE POSITION

According to analysis by Comscore, over 75% of all minutes logged on automotive classified sites in the six months to September were spent on Auto Trader, giving it a dominant position in the used-car market and increasing its attractiveness to new-car dealers.

Revenue for the period rose 12% to £281 million, well ahead of the £259 million consensus estimate, while operating profit rose 10% to £165 million and EPS (earnings per share) were 14.3p against a market forecast of 13.8p per share.

While the average number of dealer forecourts represented on the site was down slightly and the average physical stock of cars on the site was flat at around 440,000, average revenue per retailer per month jumped 12% thanks to the ‘continued strong adoption’ of additional products and services and a successful annual pricing round in April.

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The firm said the used car market remains ‘resilient’ with the volume of buyers on Auto Trader ‘at record levels, supported by stable consumer sentiment towards car buying and the continued availability of finance’.

The ‘Deal Builder’ product, which allows buyers to value their part-exchange vehicle, apply for finance and reserve their purchase online, has been expanded from 50 to 500 dealers and is receiving positive customer feedback.

Changes in the new car market are also creating opportunities for the firm to take market share, with manufacturers able to operate an agency model to advertise their products direct to consumers.

‘It has been a strong start to the year with more buyers spending more time and completing more of their car buying journey on Auto Trader. We are working in partnership with record numbers of retailers and manufacturers, who are turning to our platform as the most effective and efficient way to source, price and sell their vehicles’, said chief executive Nathan Roe.

EXPERT VIEWS

‘We’re pleased to note the resilient performance and progress described in this morning’s release, which reinforces our view that Auto Trader is as a well-managed company with a robust business model and a strong commercial and consumer proposition’, commented Shore Capital analyst Roddy Davidson.

Numis analysts Gareth Davies and Steve Lietchti described the interim results as ‘ahead of our expectations at every level driven by the core business’.

They upgraded their March 2024 earnings forecast but have left their March 2025 figure unchanged after Auto Trader flagged it expected to pay around £10 million in digital services taxes as by then its full-year revenue would likely top £500 million.

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