Manchester-based Auto Trader Group plc — the UK’s largest digital marketplace for cars — on Wednesday published a trading update “as a result of the ongoing COVID-19 situation” and said it will provide its advertising packages for free during February.

The firm said it will also extend payment terms for January invoices.

“The Government’s announcement on 4 January increased the level of COVID-19 restrictions across the UK and has once again forced all car retailers to close their showrooms,” said Auto Trader.

“In the third quarter of our financial year (October to December 2020), demand for car buying has remained strong, with visits to our marketplace 20% above prior year levels.

“Despite this demand, we do expect sales volumes to be impacted in January and February.

“We have consistently supported our customers throughout the pandemic, and will again offer our support to them by providing our advertising packages for free during February.

“We will also extend payment terms for their January invoice.”

On current trading, Auto Trader said: “As reported in our first half results on 5 November, the business recovered well through our second quarter and we have seen continued improvement in customer numbers and stock on site through the third quarter to December.

“Despite the underlying positive momentum of KPIs, being free for customers in December 2020 and February 2021 will result in a £5-7m operating loss for each month in which we are free.

“The group’s balance sheet remains strong.

“At the end of December, we had drawings of £45m on our £400m revolving credit facility and remain substantially below our covenant requirements for both debt and interest cover.”