Auto Trader is targeting further automation of the car sales process following the acquisition of finance, insurance and compliance software platform AutoConvert.
The AutoConvert platform, which also features integrated customer relationship management solutions, claims to help its customers to both increase finance penetration and to reduce costs by automating the full customer journey for the automotive sector.
Car retailers and financial brokers are among the existing customers of the business, which is expected to contribute more than £1 million to the Auto Trader’s total group revenue.
Prior to any amortisation of acquired intangible assets, AutoCovert is expected to make an operating loss of over £0.5 million for the remainder of the year ended March 31, 2021, however.
Commenting on the acquisition of the business in a statement issued this morning (July 31), Auto Trader chief executive, Nathan Coe, said: “AutoConvert is an impressive platform that dramatically improves a retailer’s finance conversion and operations through automation.
“We will invest in AutoConvert’s technology solutions to drive growth of their products to enable more dealers to benefit.”
Auto Trader launched a finance advertising product in 2018 which delivers over 35,000 finance leads each month as over 1.5 million consumers interact with a finance calculator each month.
The business said that it has been focussed on creating a technology platform to support dealers to make the finance sales and transaction process more efficient since 2018.
“Many dealers run finance from multiple systems, with different processes that often require manual intervention, which is time consuming and costly,” it said in today’s statement.
“By consolidating lenders and processes into one technology platform, it’s been proven that dealers not only save costs but also gain significant insights which enable them to improve finance conversions and sales.”
Coe said: “This acquisition provides us with a capability that will be critical as we work with our customers to support them to digitise their businesses and to move more of the car buying process online.
“We look forward to working with Paul and the team to make this happen.”
Paul Livesey, the co-founder of AutoConvert, said: “We started AutoConvert because we recognised the need, in the automotive industry, for one system which would combine finance and insurance with a modern automated CRM.
“We felt a combined solution would alleviate the need to re-key in information and automate tasks, resulting in a reduction of user errors, time savings, improved conversion, and better consumer outcomes.
“We wouldn’t be in the position we are in today without the continuous feedback from our customers, as this has enabled us to develop the platform quickly – an approach we are committed to continuing.
“We have an extremely exciting development roadmap ahead and an amazing team to execute it, only now we’ll also have the support of Auto Trader who will enable us to bring these plans to life much quicker than we had planned.”
Last month Auto Trader’s annual financial results for 2019/20 showed that the business generated revenues of £368.9m - up 4% on the £355.1m announced in its 2019 financial results - as profit before tax rose 4% to £251.5m (2019: £242.2m).
This growth in profitability came despite a one-off £8.7m profit recognised on disposal of Smart Buying to its new Dealer Auction joint venture being included in its results in the prior year.
The average revenue generated per retailer forecourt each month during the period up to the end of March this year was up 6%, or £105, to £1,949 (2019: £1,844), with “growth from product and price offsetting the expected reduction in stock”, according to Auto Trader.
Auto Trader's acquisition of AutoConvert comes nine months after its October 2019 acquisition of KeeResources for consideration of £25.3m.
That deal gave the business access to data that now underpins part of its Dealer Auction joint venture with Cox Automotive.
During the six month period post acquisition, KeeResources contributed £2.4m of revenue and £2.6m of costs, it said.
The business launched its new data tool, Market Insight, earlier than anticipated, in response to the COVID-19 crisis, enabling retailers to identify and adapt to market trends in supply, demand and pricing.
In addition, it created ways for retailers to advertise vehicles through the crisis with safety features, home delivery and live video flags.