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Auto Trader motored in with solid results showing upticks in revenue and profit despite a testing market backdrop / Image source: Adobe
  • Revenue tops £600 million
  • Strong demand for used cars
  • Growth outlook downgraded

Automotive online marketplace Auto Trader (AUTO) motored in with solid annual results showing upticks in both revenue and pre-tax profit despite a testing market backdrop.

However, shares in the second-hand car platform were the biggest FTSE 100 fallers early doors on 29 May, skidding 13.5% lower to 780p as investors fretted over a slowdown which has continued into the current financial year.

GROWTH DECELERATES

Revenue rose 5% to top £600 million in the year ended 31 March 2025, and operating profit increased 8% to £376.8 million.

Unfortunately, this represented a slowdown from the 14% top line growth and the 26% operating profit advance delivered the previous year due to a reduction in the number of retailer paid stock units.

Said reduction was the result of a buoyant used car market, which meant demand outstripped supply, reducing the need for retailers to purchase advertising slots from Auto Trader.

Since these dynamics have persisted into the current year, Auto Trader downgraded its full-year 2026 retailer revenue growth guidance to between 5% and 7%, although the company expects growth to accelerate in the second half, which will benefit the start of full-year 2027.

The asset-light company generated an impressive 70% operating margin last year, which helped drive pre-tax profit up from £345.2 million to £375.7 million, and despite the temporary slowdown Auto Trader’s competitive position remains formidable.

Record numbers of buyers and sellers continue to use the platform, and the company remains more than 10 times larger than its nearest competitor.

COE EXCITED BY CO-DRIVER

Chief executive Nathan Coe commented: ‘Despite broader macroeconomic uncertainties, the UK car market is in good health and we continue to deliver against our strategy to improve car buying and retailing.’

He drew attention to a key highlight of the year, being ‘the launch of our suite of AI-powered products called Co-Driver, which is delivering one of the most significant improvements to our search experience and our retailer tools in years. The first wave of Co-Driver products has already successfully enhanced the quality of adverts, while reducing the amount of time it takes for retailers to advertise their vehicles. We see significant potential for the use of AI to improve the buying and selling of cars in the years ahead.’

AJ Bell investment director Russ Mould commented: ‘You would think a buoyant market for used cars would be great news for a platform like Auto Trader, but actually if anything it’s been too easy to sell second-hand vehicles of late.

‘Thanks to limited supply and exceptionally strong demand, car tyres are barely touching the forecourt before they are snapped up and this means there is less need for retailers to buy advertising slots from Auto Trader.’

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Mould added: ‘These market dynamics have also made it harder to upsell clients to more expensive packages. This has caused growth to stall and seen the shares go firmly into reverse on the publication of full-year results.

‘There has also been some disquiet from independent garages online who feel they are being squeezed a little too hard by the company. Although whether this will translate into lost business is another question.

‘After all, Auto Trader’s website is the one most visited by prospective car buyers because it has the most listings. Car retailers are therefore compelled to use its products, reinforcing its leading position.’

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Ian Conway) own shares in AJ Bell.

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Issue Date: 29 May 2025