Report Overview

Cars market and used car marketing: Pandemic accelerates digital

Contents

Executive summary: digital car buying enters a new phase

  • The market for cars entered 2020 with sales of new models on a moderately declining trend (impacting used car supply downstream) and buoyant used car sales. The pandemic caused the collapse of sales in each lockdown, but deconfinement provoked only a limited catch-up of used car sales, and none in the new market, resulting in steep declines of volumes sold in 2020: -15% to 6.8 million used cars and -29% to 1.6 million new car registrations
  • Bottlenecks in supply also impacted sales. Chip shortages reduced new car production. Shortages in transportation services to move stock and the inability to prepare cars for consumers during lockdowns impaired used car supply. At the newer end (3-5 years) preferred by consumers, used cars are in a genuine shortage, especially from the pool of cars initially sold into fleet and lease
  • Purchasing in 2020 became impulsive, mapping onto surges in driving activity, with consumer preference for private over public transport accelerating. Auto Trader used car price indices show high inflation in like-for-like models and a marked pivot towards cheaper and clean-fuel models
  • Dealerships remain at the heart of distribution, cemented by the rising prevalence of financial and other services to buyers. Used car sales drive inventory and marketing platform subscription expenditure on Auto Trader, the industry leader by some distance. For the first time in recent history, Auto Trader posted revenue decline of 29% in the year to end-March 2021, largely the result of a necessary but self-imposed four-month subscription holiday while dealerships were closed. Operating profits fell a brutal 38%. We estimate total used car marketing expenditure across all media fell c. 25%
  • Online dealerships have been much-hyped, with Cazoo and Cinch valued almost on par with Auto Trader and c. 23-35x as much as the top UK listed dealerships. However, online-dealerships like Cazoo and Cinch are not direct competitors of Auto Trader—in fact, both Cazoo and Carzam are customers of Auto Trader, leveraging Auto Trader’s larger audience to generate reach
  • Auto Trader captured the transition of marketing spend from print to digital over the past two decades, and the pandemic accelerated the transition to the digitised consumer buying experience. The end-to-end process of buying a car—from discovery and finding the next car, through part-exchange, finance and insurance, to physical collection—is being digitised to different degrees, but fully digitised buying remains an edge-case. Scale players able to invest in transaction propositions are destined to benefit from this trend; Auto Trader has long been planning for a move into facilitating transactions

The pandemic hits near-term swells in new and used car sales

Stronger demand for cars anticipated as the pandemic endures

Used car inflation held down by radical shifts in purchasing

The automotive supply chain: dealers remain core, even as all stages move online

Acceleration and limits of supply chain digitisation

Used car marketing expenditure: stable digital transition, 2021 impacted by Q1 lockdown

Key players overview: UK online marketplace

Auto Trader retains leadership scale as competition restructures

Classified tectonic plates: Schibsted’s Adevinta acquires eBay classifieds

Tech platform giants: Facebook starting to squeeze the middle?

Auto Trader: crunch year, holds steady

Rapidly evolving online marketplace models

How to think about the dealership-disruptors

Auto Trader shifts gears for online

Disclaimer

Figures and Tables

New and used car sales volumes by month in year

Car sales track Apple mobility data on driving

Auto Trader Retail Price Index, year-on-year decomposed

The new and used car supply chain

Digitising the car buying process

Auto classifieds advertising expenditure (£m)

Top automotive sites by unique visitors (000), May 2021

Share of visits to auto sites

Share of time spent on auto sites, April 2021

Adevinta + eBay Classifieds Group revenue mix by Geography and by Vertical

Facebook’s Automotive Industry Ads

Revenue (£m, FY ending March)

Auto Trader retailer client numbers and ARPR (£ per month)

Revenue models of online marketplaces

Automotive market value, dealerships, classifieds and disruptors

Auto Trader’s initiatives to digitise the car buying process