Auto Trader, an automotive marketplace, has released its full-year results:
- Auto Trader’s core marketplace business grew revenue by 9%, operating profit by 10% and maintained 70% operating profit margins.
- Overall revenue rose 16% but operating profit fell by 9%, due to a loss of £11m at the recently acquired leasing business, Autorama.
- The new financial year is said to have started well and the Board is confident of meeting its growth expectations for the year.
Charlie Huggins, manager of the quality shares portfolio at Wealth Club, commented: “Auto Trader’s core marketplace has once again enjoyed an excellent year, delivering double-digit profit growth even against the backdrop of supply chain challenges in both the used and new car market.
“The only fly in the ointment is the losses at Autorama, the recently acquired vehicle leasing business. This business is making annualised operating losses of £15m. Shareholders will want to see that loss significantly reduce in the year ahead.
“The acquisition of Autorama is part of Auto Trader’s transformation from an advertising platform where consumers go to research used cars, to a fully online marketplace where consumers can go to transact.
“Large-scale transitions like this always bring risk. But Auto Trader has a major string to its bow that significantly increases the chance of success – it’s the first place people go to start their car-buying journey. And that’s a great position to be in order to facilitate the online transition.
“Nevertheless, it won’t be a quick or easy transition. It takes time for consumers to change their habits, let alone car dealers, many of whom are still stuck in the slow lane when it comes to embracing the shift to online transactions.
“But the rewards if Auto Trader gets it right could be substantial, further entrenching its market position, while opening up new revenue opportunities.”