Auto Trader will suffer April losses of up to £7 million in a bid to help car retailers mitigate the impact of coronavirus by axing its fees for next month and deferring March payments for 30 days.
The online automotive classified advertising specialist revealed details of its measures in an unscheduled company update issued via the London Stock Exchange this morning (March 19), stating that the move would result in an operating loss of between £6 million and £7m next month.
Auto Trader said that, in light of the “unprecedented levels of uncertainty” facing the UK car retailing market, it had “chosen to act in what we believe is a responsible way to protect our customers”, which it described as key stakeholders in its business.
It said that it would waive its advertising package charges during April and allow our customers to defer payment of their March costs by 30 days, adding: “We have chosen this approach not in response to immediate pressures on our business, but rather to continue to support an industry that we have supported for the past 40 years, and one which has supported us.”
Auto Trader’s statement said that its balance sheet remained strong.
At the end of February, Auto Trader had drawings of £289m on its £400m revolving credit facility, with a net debt/EBITDA ratio of 1.1x, which it described as being well below its covenant level of 3.5x.
The business said that it would not buy-back any further shares until it scheduled reporting of its full year financial results in June, adding that it retained its long-term commitment to return cash to shareholders.
Nathan Coe, Auto Trader Group Plc’s chief executive officer, said: “In these unprecedented times, we have made this decision because it is the right thing to do for our industry, for our customers, and for our business.
“It remains important for retailers to advertise their stock online as people are still buying cars and if they can’t see those cars, it will be even harder for retailers to make sales.
“It is equally important that we continue to prioritise the wellbeing and safety of our people, and we are taking all necessary action to ensure that they are receiving the support they need to continue to serve our customers.”
Earlier today (March 19) AM reported that property and tax consultants are working to obtain "urgent clarification" of Government business rates relief for 2020/21, after it emerged that “car showrooms” were among the employers eligible for an exemption.
Questions still exist over the vital relief’s application to car retail businesses which could be classed as “hybrid-use” operations by local authorities due to their function as aftersales and parts sales centres.