Auto Trader revs up profit despite car market challenges
Auto Trader – the UK’s largest new and used cars marketplace – reported a jump in revenue and profit in the first half of the year despite the challenges facing the UK car industry.
Shares in Auto Trader jumped as much as five per cent after the online car dealer reported that revenue increased six per cent to £187m and operating profit was up nine per cent to £131.4m.
Read more: Auto Trader bullish on growth prospects
Profit before tax jumped 12 per cent to £127.7m in the six months ended 30 September.
Basic earnings per share increased 14 per cent to 11.13p and the company announced an interim dividend of 2.4p per share.
Why it’s interesting
The UK car market has been hit particularly hard by the uncertainty caused by the ongoing Brexit negotiations, as potential buyers delay big-ticket purchases.
Other hurdles for the industry include the Worldwide Harmonised Light Vehicle Test Procedure and Real Driving Emissions Test.
Auto Trader’s own retail price index – which tracks the average trade retail price of a used car on a like for like basis – showed that prices fell 0.6 per cent in the first half of the year.
“Uncertainty around trade valuations and volatility in the supply of vehicles has impacted auction markets, which has started to feed into the retail market,” the company said.
In a note to investors Peel Hunt analyst Jessica Pok said: “We believe in the long term growth for Auto Trader but going into the second half we do expect the car market to continue to be challenged with the political and macro uncertainty in the UK.”
What Auto Trader said
“We have had a good first half and have seen an even greater number of car retailers opting to partner with Auto Trader to access our growing consumer audience,” chief executive Trevor Mather said.
Read more: Auto Trader announces board shake up
“We continue to be the clear market leader in used cars and have extended this into new cars, with over 30,000 brand new cars on Auto Trader being viewed by 1.6m people in September alone.
“Despite ongoing market uncertainty, the board is confident of meeting its growth expectations for the year.”
Main image credit: Getty