Direct sales biggest threat to dealers and Auto Trader, says Trevor Mather

Direct car sales are the biggest threat to Auto Trader but Brexit could prompt a two year business boom for the UK, according to chief executive Trevor Mather.

Speaking to AM at the online car listing specialist’s Christmas Briefing in London, Mather acknowledged that car sharing services and the autonomous car could affect levels of car ownership in the future and pose a threat to the traditional retail model which are the foundations of Auto Trader’s business.

But he said that such changes were probably some way off, with regulation of autonomous vehicles probably set to take “a number of years”.

Mather said that more of a threat to retailers and, potentially, Auto Trader were direct sales by manufacturers.

He said: “Cutting the dealer out of the equation to such an extent would reduce their requirement to advertise and would surely impact us. That is the worst case scenario.”

But Mather added: “Auto Trader is a fantastic business and one that has really worked and innovated to change and develop.

“The main thing for us is that, if that direct sales model gains more traction, we have to be there, making ourselves available to the manufacturers and dealers, to facilitate that.”

Commenting on the effects of the Brexit vote, Mather said that many dealers outside the M25 were perplexed by the doom and gloom reported widely in the media.

And he told AM that the outcome of the referendum could actually prompt an economic boom in the UK.

He said: “There may well be a rush to do business over the next two years.

“Any restrictions on immigration and the like will be triggered after we leave the EU and I suspect there might be a growth in the population until that time.

“Much of our economy is services based and, we might be servicing ourselves, but such a large population guarantees a certain amount of growth.”

Auto Trader used its Christmas briefing to reveal plans for open reviews of dealers, deliver dealers' part-exchange offers online and a move to promote monthly payments to hand consumers the ability to search by monthly payments by either PCP or PCH payment methods.

The changes are part of a drive to build greater "trust" and “transparency”, said Karolina Edwards-Smajda, Auto Trader’s retailer and consumer products director.

Edwards-Smajda conceded that dealers had expressed concerns about open reviews after a trial period in which they were able to view the comments returned by customers – with around 25% negative feedback.

Auto Trader as direct finance provider

Auto Trader moved to rebuff rumours that it would become a direct finance provider itself, stating that it was currently building a database of retailers willing to provide its best offers before launching a search facility in the new year as part of a partnership with Codeweavers.

Currently, 35,000 adverts with monthly payments have been received by Auto Trader.

 

Our whole model has been designed to help dealers win on finance

Karolina Edwards-Smajda

Edwards-Smajda said: “Used car finance remains quite low, around 25% to 30%, so there is huge opportunity there for dealers to grow.

“It is for us to make dealers’ best offers more transparent.

“Our whole model has been designed to help dealers win on finance.”

The new part-exchange builds on a facility offered by Auto Trader offers a provenance check - powered by Experian - to provide consumers with a part-ex price.

Edwards-Smajda said that consumers were 81% more likely to use a dealer if they were offered an early part-exchange price.

Around 8,000 Auto Trader customers have now signed up for the part-exchange service, she said, adding: “It has been so popular that some have asked us to turn it off because they cannot cope with the sheer number of enquiries.

“We have found that car supermarkets are best place to embrace the part-exchange offering because they have the systems in place to process a large number of enquiries.”

In October Auto Trader launched a new car search facility – offering consumers the option of viewing a range of ‘virtual cars’ – but Mather said that it was unclear whether the manufacturer or retailer would pay for the resulting leads when the offer ends its current status as a free service.

He said: “So far, some manufacturers have indicated they will embrace it, but some have been somewhat opposed, especially premium brands with longer lead times who do not need extra leads.

“We’ll have to wait and see which side of the fence things eventually falls on.”