U.K.-based auto marketplace Auto Trader has completed the acquisition of vehicle leasing marketplace Autorama for £200 million ($245 million U.S.) which it will pay for 75% in cash and 25% in shares.
The deal was first announced in March and regulatory approval has now been confirmed in a statement to the London Stock Exchange. The share elements of the deal will be paid subject to “customary performance conditions 12 months after the completion date.” The £150 million in cash is coming from funds built up since the end of the company’s most recent financial year to March 2022.
Autorama is an end-to-end digital leasing platform, which aggregates leasing deals and services from a variety of OEMs, allowing buyers to buy online and choose from a wide selection of vehicles. It mainly operates under its Vanarama brand and has sold over 120,000 vehicles to date. The deal will help Auto Trader offer another option to give customers access to new cars at a time of supply shortages.
Auto Trader will now be able to establish itself as a marketplace option for leasing new cars, an area the company thinks will benefit from the increase in adoption of electric vehicles as well as new manufacturers entering the U.K. market, the lower take-up of company-car schemes and a move towards digital distribution models.
The company thinks leasing gives consumers a cost-effective way to get a new car using a model consistent with a future move towards usership.
“We are pleased to have completed the acquisition of Autorama, which will transform our leasing proposition and help us meet growing consumer demand to lease, rather than own, new cars,” said Nathan Coe, Auto Trader COO.
“The combination of Auto Trader’s large consumer audience with Autorama’s digital platform and operational capability complements our strategy to bring more of the car-buying journey online.”
Auto trader expects the deal to help it during the final nine months of its current financial year with the delivery of between 11,000 and 14,000 vehicles and bring in net revenues of £18 million – £21 million ($22 – $26 million U.S.) but result in an operating loss for the year of between £5 million and £7 million.
Earlier this week, Auto Trader outlined how its ongoing electric vehicle promotion is delivering more leads to its dealers and higher traffic to its website.