Shares of Manchester-based FTSE 100 firm Auto Trader Group plc fell as much as 12% despite the firm announcing that revenue rose 5% to £601.1 million, profit before tax increased 9% to £375.7 million and dividend per share rose 10% to 10.6p in the year to March 31, 2025.
Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club: “Auto Trader’s revenue growth slowed to 5% in fiscal year 25, held back by a reduction in the number of retailer paid stock units.
“This, ironically, was a result of a buoyant used car market, meaning demand significantly outstripped supply. As a result, cars are selling like hot cakes, reducing the need for retailers to buy advertising slots from Auto Trader.
“These dynamics have continued into the new year, meaning Auto Trader expects retailer revenue growth of 5-7% in FY26. This is below analysts’ expectations.
“Overall, Auto Trader maintains an incredibly strong market position and the used car market remains in good shape. At some point, demand for used cars will moderate and supply constraints will ease, which should feed through to stronger revenue growth for Auto Trader.
“For now though, market conditions aren’t overly favourable. This means investors will likely need to moderate their growth expectations for the coming year.”
Auto Trader said: “We continue to see strong levels of demand for used cars, with a record number of cross-platform visits and minutes spent on Auto Trader. As we have moved through the year, supply has remained constrained for vehicles aged 3 to 5 years old. This combination of high demand and restricted supply in key age cohorts has led to cars selling at a faster rate than any time in our recent history.
“We have seen a 5% increase in the number of cars advertised through Auto Trader which is slightly higher than the increase in overall used car transactions. Fast speed of sale has meant retailers have benefitted from increased utilisation of Auto Trader’s slot-based advertising model. As a result, even though consumer and retailer activity have both increased, it has not directly benefited revenue. Used car pricing has been stable over the last 12 months, following declines in the previous financial year.
“The new car market has grown over the past 12 months, driven by the fleet channel. This took share from the retail channel which declined 4% year-on-year. This calendar year new car sales are up 3% and retail volumes were the fastest growing channel growing 6%.
“With the announcement of a UK/US trade deal and the Government’s plans to soften the Zero Emission Vehicle (‘ZEV’) mandate, we expect overall new car registration volumes to be well supported over the next two to three years.”
Auto Trader CEO Nathan Coe said: “Despite broader macroeconomic uncertainties, the UK car market is in good health and we continue to deliver against our strategy to improve car buying and retailing.
“A key highlight of the year was the launch of our suite of AI-powered products called Co-Driver, which is delivering one of the most significant improvements to our search experience and our retailer tools in years.
“The first wave of Co-Driver products has already successfully enhanced the quality of adverts, while reducing the amount of time it takes for retailers to advertise their vehicles. We see significant potential for the use of AI to improve the buying and selling of cars in the years ahead.
“We remain confident in the outlook for the business given our strong market position, the value we deliver for customers, and our unique data and technology capabilities.”