Nathan Coe, the CEO of leading British auto vertical Auto Trader, has said the company doesn’t have a strategy to sell its own cars or compete with dealers. Instead, it wants to collaborate to improve dealers’ ability to sell cars online through Auto Trader’s platform.

In an interview with Car Dealer Magazine, Coe also outlined how its new guaranteed part-exchange and finance products work and contribute to Auto Trader’s overall aim to link together more elements of the car-buying process online.

Coe said the decision to give dealers free advertising during the first lockdown in the U.K. came after seeing a daily drop in demand and audience in mid-March as restrictions were being applied.

“As we went into lockdown dealers didn’t know what would happen and were not set up for delivery or click and collect as they are now,” he said.

Many of its customers are small businesses and their Auto Trader costs are a high proportion of overall costs.

“If they can’t operate to turn a profit from our services we took the view that we shouldn’t charge them,” Coe said.

Guaranteed part-exchange facility

Auto Trader’s new part-exchange product was launched in October. When customers are interested in a car on the site they can now get a guaranteed part-exchange price immediately. Auto Trader’s own research found 70% of people are more likely to go to a retailer if they have this guarantee.

The dealer has the option to accept this price and add the car to its own stock or to sell or push back to Auto Trader for them to sell, with the guaranteed part-exchange price unaffected. Coe said this also provides a way to get new stock, it’s not intended to rival and that Auto Trader is working with dealers to get the process right.

Buy online hub

Coe also confirmed that Auto Trader’s new buy online hub, launched in November, which promotes cars available for home delivery or click and collect, is not intended to rival to Cinch’s new platform.

“We don’t have a strategy to sell our own cars or compete with dealers,” Coe said. Instead, Auto Trader wants to partner dealers to help them set up online sales capability.

‘We can do the technology for retailers, particularly those retailers who feel like they won’t be able to do it themselves,” Coe said.

Car finance

Auto Trader’s car finance product, Auto Convert, which it acquired back in July, is gradually being rolled out and is “heading toward a fully online” process to be available across the site soon.

“We want to provide a simpler version on Auto Trader that allows dealers to collect finance applications and for consumers to be able to check eligibility without leaving a credit check mark,” Coe said.

If the consumer wants to go forward with the application they can apply and complete a full finance application.

The move to a fully-online purchase

Although Coe thinks industry experts who expect between 5% and 10% of car sales to be fully online by 2025 are not way out with their prediction, he thinks more like 70% will want to do some parts of it online by then.

“It can help retailers gain market share and sell quicker with better margins.” Coe said.

Auto Trader’s ambition to join up all elements of the car-buying journey online could be completed within two years, though currently it is still working on how to achieve this.

“We need to understand better how we integrate into dealers’ own systems and processes so that we’re not taking deposits on cars retailers are selling somewhere else,” Coe said.

Auto Trader plans to start this during its next financial year, from April 2021 and work in the part-exchange and finance process over the next 18 months or so.

“Tightening up all the processes that go into digital sales is a priority,” Coe said.

Market outlook for 2021

Coe thinks underlying demand remains strong, lower than 12 months ago but higher than in February. In January, Coe expects vehicle supply to tighten but that margins will remain constant.

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