Auto Trader : Annual Report and Financial Statements 2024

Driving Change

Together.

Responsibly.

Auto Trader Group plc

Annual Report and Financial Statements 2024

Auto Trader Group plc

is the UK's largest automotive marketplace

Auto Trader's purpose is Driving Change Together. Responsibly. Auto Trader is committed to creating a diverse and inclusive culture, to build stronger partnerships with customers and use its influence to drive more environmentally friendly vehicle choices.

With the largest number of car buyers and the largest choice of trusted stock, Auto Trader's marketplace sits at the heart of the UK car buying process. That marketplace is built on an industry-leading technology and data platform, which is increasingly used across the automotive industry. Auto Trader is continuing to bring more of the car buying journey online, creating an improved buying experience, whilst enabling all its retailer partners to sell vehicles online.

How to use this report

The following symbols indicate that further supporting information can be found elsewhere in this report or on our PLC website:

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plc.autotrader.co.uk

01 Strategic report

01 At a glance

1. Chair's statement
2. CEO's statement

1. Market overview

1. How we create value
2. Strategic progress

1. Section 172(1) statement

1. Key performance indicators

1. Non-financialand sustainability information statement
2. Financial review

1. Working responsibly

1. How we manage risk

1. Principal risks and uncertainties

61 Governance

1. Governance overview

1. Board of Directors

1. Corporate governance statement

1. Report of the Nomination Committee

1. Report of the Audit Committee

1. Report of the Corporate Responsibility Committee

1. Directors' remuneration report

1. Directors' report

104 Financial statements

104 Independent auditor's report to the members

of Auto Trader Group plc

1. Consolidated income statement
2. Consolidated statement of comprehensive income
3. Consolidated balance sheet
4. Consolidated statement of changes in equity
5. Consolidated statement of cash flows
6. Notes to the consolidated financial statements

1. Company balance sheet
2. Company statement of changes in equity
3. Notes to the Company financial statements

1. Unaudited five-year record
2. Shareholder information

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Strategic report

At a glance

Our company purpose explains why we exist, our strategy is what we do, and we have clear ways of working, with a strong values-led culture.

The pillars below are strongly interconnected and together they influence whether we're successful in the execution of our strategy. Over the past 12 months our marketplace has continued to strengthen, with growing numbers of both buyers and sellers. We are supporting more of the industry using our platform and data to power their businesses, at the same time as bringing more of the new and used car buying experience online, on Auto Trader. We've introduced an all-employee share scheme, underpinning the sense of ownership that already exists amongst our employees, and have evolved our company values.

Governance

Financial statements

  OUR PURPOSE-DRIVEN STRATEGY P10

  WORKING RESPONSIBLY P25

  OUR VALUES P41

01 - 60

01 At a glance

02	Chair's statement
03	CEO's statement
06	Market overview
09	How we create value
10	Strategic progress
14	Section 172(1) statement

WHY WE EXIST		WHAT WE DO

HOW WE WORK

WHO WE ARE

18 Key performance indicators

Driving Change Together. Responsibly.

Our purpose of "Driving Change Together. Responsibly" encompasses our strategic approach, ways of working and culture. As an organisation we aim to be purpose driven, principled, and values led.

Delivering on our strategic focus areas

Alongside working responsibly, we have three strategic focus areas:

• Marketplace: be the best place to buy a car
• Platform: be the industry's data and technology platform
• Digital retailing: be the enabler for all retailers to sell online

Working responsibly, working together

Whilst it lacks precision, our culture is often described internally as 'doing the right thing', which comes through as 'Responsibly' in our purpose:

• Working as one Auto Trader
• Working in partnership
• Thinking as owners

Our values define who we are

Our values are the guiding characteristics that underpin our culture. They are embedded into our ways of working and core to our success:

• Community
• Curious
• Humble
• Determined
• Decisive
• Adaptable

1. Non-financialand sustainability information statement
2. Financial review

1. Working responsibly

1. How we manage risk

1. Principal risks and uncertainties

01

Auto Trader Group plc  Annual Report and Financial Statements 2024

Chair's statement

Strategic report

Governance

Financial statements

• "It's a privilege to succeed Ed Williams as Chair of Auto Trader."

At a Group level, Autorama revenue was £41.2m (2023: £27.2m) and therefore Group revenue was £570.9m (2023: £500.2m). Operating profit in the core Auto Trader business was £378.6m (2023: £332.9m), up 14% on last year, with an operating profit margin of 71% (2023: 70%). Autorama recorded a reduced operating loss of £8.8m (2023: £11.2m). Group operating profit increased by 26% to £348.7m (2023: £277.6m),

Following this AGM, the number of Independent Non-Executive Directors will reduce to five and our Board will comply with the recommendation in the FTSE Women Leaders Review and Listing Rules with respect to appointing a woman in one of the roles of Chair, Senior Independent Director, Chief Executive or Chief Financial Officer.

CAPITAL STRUCTURE AND DIVIDENDS

01 - 60

01 At a glance

Matt Davies

Chair

INTRODUCTION

It's a privilege to succeed Ed Williams as Chair of Auto Trader and I would like to thank him for the support he has provided to me in taking on this role and acknowledge the immense contribution he has made over his tenure. As Nathan summarises on the subsequent pages, we believe that the drivers of our future performance are likely to be reasonably consistent and I am clear as to the value creation opportunity that lies ahead from pursuing the strategy that is outlined below.

RESULTS OVERVIEW

This year marks another strong financial and operational performance for Auto Trader. Whilst parts of the automotive market have seen some softening, the market has generally been robust and more customers than ever have opted to partner with us. We continue to improve our product offering, enabling customers to compete on our marketplace through greater access to our data-driven insight and enabling more of the buying journey to be completed online, all yielding greater efficiencies for customers. We continue to grow and invest in our people, creating an environment where there is increasing alignment between employees, customers and shareholders. Excluding the pandemic recovery year, the business achieved record revenue growth in the core Auto Trader business, increasing 12% to £529.7m.

reflecting the increase in revenue and the £23.0m reduction in Group central costs to £21.1m (2023: £44.1m). Group operating profit margin was 61% (2023: 55%). Basic earnings per share increased 13% to 28.15p (2023: 25.01p).

BOARD CHANGES

An important enabler for our success over the years has been a capable, diligent and supportive Board. Following my appointment as Chair with effect from the 2023 Annual General Meeting ('AGM'), much of my focus has been on succession planning. Geeta Gopalan joined the Board on 1 May 2024 and Amanda James will join the Board on 1 July 2024, both as Non-Executive Directors and as members of the Audit, Remuneration, Corporate Responsibility and Nomination Committees. With effect from the conclusion of the 2024 AGM on 19 September 2024, Geeta will be appointed as Senior Independent Director and Remuneration Committee Chair, and Amanda will be appointed as Audit Committee Chair, both subject to shareholder approval. These appointments replace David Keens and Jill Easterbrook who came to the end of their third three-year terms in 2024, and therefore will not stand for re-election at the 2024 AGM. We are deeply grateful for the contribution Ed, David and Jill have made in their time at Auto Trader.

The Directors are recommending a final dividend of 6.4 pence per share. Subject to shareholders' approval at the AGM on 19 September 2024, the final dividend will be paid on 27 September 2024 to shareholders on the register of members at the close of business on 30 August 2024. The total dividend for the year is therefore 9.6 pence per share (2023: 8.4 pence per share).

The Group's long-term capital allocation policy remains unchanged: continuing to invest in the business enabling it to grow while returning around one third of net income to shareholders in the form of dividends. Following these activities any surplus cash will be used to continue our share buyback programme and steadily reduce gross indebtedness.

ANNUAL GENERAL MEETING

The AGM will be held in our Manchester office on 19 September 2024 at 11am.

Matt Davies

Chair

30 May 2024

1. Chair's statement
2. CEO's statement

1. Market overview

1. How we create value
2. Strategic progress

1. Section 172(1) statement

1. Key performance indicators

1. Non-financialand sustainability information statement
2. Financial review

1. Working responsibly

1. How we manage risk

1. Principal risks and uncertainties

02

Auto Trader Group plc  Annual Report and Financial Statements 2024

Strategic report	Governance	Financial statements

CEO's statement

• "This has been another year of strong financial, operational and strategic progress for Auto Trader."

Group revenue and operating profit

£600m

£500m

£400m

£300m

£200m

£100m

1. A GROWING AUTOMOTIVE MARKET

Today, most of our economics are linked to the number of used vehicle retailers who choose to advertise on Auto Trader. Used vehicle supply is determined by new vehicle sales (less scrappage) in preceding years, meaning it does not meaningfully change with economic conditions and therefore our business does not see significant cyclicality. When economic conditions or consumer demand do change

it is used vehicle prices that adjust, not supply.

01 - 60

01 At a glance

02 Chair's statement

Nathan Coe

CEO

STRATEGIC AND OPERATING REVIEW

With almost 10 years since IPO in March 2015 and two years since our last investor day we thought it worthwhile to look back at our performance over this longer period. We believe many of the contributing factors are still equally relevant to our future. Historically our results statements have focused solely on what has happened in the previous financial year, which whilst important, does not always highlight the key factors shareholders might consider when thinking about our longer-term prospects. We will look to supplement the usual full year detail

with this forward-looking view each year.

Since Auto Trader's IPO the business has delivered consistent execution and performance. During the first few years of being a public company, revenue grew steadily whilst much of the focus was on transitioning to a pure digital business and changing the cost base from a model that had remnants of our magazine heritage. This transition yielded cost efficiencies and stronger profit growth, which was largely

a one-time opportunity. Since then, our performance has been characterised by higher revenue growth, with a focus on our core marketplace and product growth, coupled with investments in our platform and adjacent opportunities. These revenues have driven profit growth that is only slightly lower than the period during which margins expanded significantly.

Our profits have been consistently distributed through a combination of dividends and share buybacks, which is something we expect

£0m	2016	2017	2018	2019	2020	2021	2022	2023	2024
Revenue (excluding vehicle sales)	Operating profit

Cash returned to shareholders

£300m

£200m

£100m

£0m

£(100)m

£(200)m	2016	2017	2018	2019	2020	2021	2022	2023	2024
Dividends	Share buybacks/equity raise

to continue. During our history as a listed business, £1.1bn of surplus cash has been returned to shareholders (net of the equity raise during COVID-19) and we have delivered total shareholder returns of 225% versus 60% for the FTSE 350 (excluding investment trusts). We don't always expect our performance to be linear, with 2021 being a good example, but we do expect the drivers of our historic and future value creation to remain reasonably consistent. These drivers include: a growing automotive market; our market leading position; our heritage of innovation; a focused and consistent strategy; and our purpose and culture.

Over the past 20 years, the total size of the UK car parc has gradually increased, growing on average by just over 250,000 cars per year. The COVID-19 pandemic broke this consistent trend, as new car production fell to levels below even those of the Financial Crisis in 2007-09. From time to time there will be these anomalies, but over the long term we expect the used car market to grow as a result of population growth and stable trends in car usage.

At times there have been concerns about a material consolidation within our customer base, although to date this has not materialised. We do expect the biggest retailers to get bigger and we have seen consolidation in our very largest customers, but not at a level that materially changes the overall market fragmentation. At the time of our IPO, we had 13,452 retailers and today we have 13,783, despite losing c.550 retailers when we sold our business in the Republic of Ireland.

Finally, we expect the value of both new and used cars to increase over the long term. During a short window of time, used car prices will adjust due to supply and demand movements, but over longer time periods we expect used car values to increase gradually due to GDP growth, population growth, inflation, improved functionality, longer useful lives and the move towards more expensive electric vehicles. In the period from 2011 to 2024, used car prices have increased by an average of 4% per year.

These factors combine to provide an underlying market that is resilient and likely to grow in both volume and value over the long term.

03	CEO's statement
06	Market overview
09	How we create value
10	Strategic progress
14	Section 172(1) statement
18	Key performance indicators

1. Non-financialand sustainability information statement
2. Financial review

1. Working responsibly

1. How we manage risk

1. Principal risks and uncertainties

03

Auto Trader Group plc  Annual Report and Financial Statements 2024

Strategic report	Governance	Financial statements

CEO's statement continued

2. OUR MARKET LEADING POSITION

As the automotive market increasingly embraces digital channels, technology and data we are uniquely placed to help. In financial year 2016 Auto Trader had visits of 47.9 million per month, last year that number had increased to 77.5 million. This past year we accounted for over 75% of all minutes spent on automotive classified sites and were 10x larger than our nearest classified competitor (2023: 7x). Over time we have seen 21 million downloads of our app and currently see 89% prompted brand awareness with UK consumers. In addition to this, third-party data suggests that more than 8 in 10 car buyers use Auto Trader during their shopping journey, and two thirds of buyers only use Auto Trader. In order to ensure this position is maintained, we will continue to invest in improving our site experience, maintaining high levels of trust, evolving our brand, building our content and marketing capabilities, launching new tools and functionality for retailers, and deepening our partnership with customers.

Many of the changes we are currently developing are as significant as any in our history in terms of deepening the experience we provide to car buyers. These will improve our marketplace, enable our customers to power their businesses with our technology and data platform, whilst moving us towards digital retailing.

3. OUR HERITAGE OF INNOVATION

Almost every retail category has been impacted by the growing role of the internet in how

we purchase goods, and the car market is no exception. New cars are still at a much earlier stage, but researching and shopping for used cars online has been commonplace for many years. Today over 90% of car buyers use the internet for some part of their car buying process. However, the physical part of the shopping experience is and will remain important due to the value and unique characteristics and condition of every used car.

Most car buyers will use the internet to find a used car, ensure they're getting a good deal and to check the reputation of the retailer. This is because the choice available is significant and platforms like Auto Trader make navigating the car buying process much simpler than it otherwise would be. Our trusted position and brand heritage in this area is significant, from initially operating as a magazine to the fully digital business we are today, leveraging technology to support more of the buying and selling journey. On Auto Trader buyers are now using retailer reviews, seeing professionally produced video content, benefitting from enriched data about the specification and performance of the car, checking the history of the vehicle and whether it has outstanding finance, seamlessly using artificial intelligence ('AI') to get a market value for the car they're buying or selling, applying for finance and reserving cars online. This continuous improvement in the way buyers use Auto Trader

has underpinned much of our past success and we know there are significant opportunities to further enhance the consumer experience.

The shift to digital has also brought real benefits to retailers. It has meant they can advertise their vehicles as quickly as it takes to photograph and upload an advert. The insight they have on vehicle performance and what they get for their advertisingisdetailed,real-time,andcanbeacted upon at the click of a button. Over time retailers have also accessed our AI models for pricing and demand metrics that use almost one million vehicle observations a day. This helps customers decide which vehicles they should be buying for their local area, what prices they can expect at retail and how long it is likely to take to sell. These products might otherwise have been unattainable or have required significant investment by our customers, and we have every intention of continuing to use our brand, data and technology to enable any retailer to access the very best tools and achieve their business goals.

Over time we will continue improving and building on these areas, strengthening the partnership we have with customers and increasing their use of our software products, and unlocking new revenue streams for the business.

All this innovation is delivered through our well-invested technology platforms, built by Auto Trader people who have many years of experience enabling infrastructure and products for our customers. This year we delivered 65,000 software releases (2023: 51,000) and saw 22.1 million API calls a week (2023: 10.2 million).

1. A FOCUSED AND CONSISTENT STRATEGY Our strategy as set out at our investor day in September 2022 outlined three strategic focus areas: our marketplace; our platform; and digital retailing. These areas are closely interconnected, as our platform and digital retailing capabilities build on the strengths of our marketplace whilst also deepening our relationships with customers and car buyers. These have all been multi-yearinvestments which have progressed over the past 12 months and are covered in more detail in Catherine's update on our strategic progress.
2. OUR PURPOSE AND CULTURE

Our purpose is Driving Change Together. Responsibly, which encompasses our ways of working and our culture. Culture has been a fundamental part of the changes we've made and the results we've achieved for at least 10 years. As an organisation we aim to be purpose driven, principled, and values led. Whilst it lacks precision, our culture is often described internally as 'doing the right thing', described as 'Responsibly' in our purpose. Within this we're looking to achieve a balance between investing in the future, performing today and ensuring our customers and other stakeholders see the benefits of working with us.

'Driving Change' runs deep within the organisation. We are restless, self-critical and comfortable embracing new and disruptive technology, which is something the organisation has done for decades. We launched our website

01 - 60

01 At a glance

1. Chair's statement
2. CEO's statement

1. Market overview

1. How we create value
2. Strategic progress

1. Section 172(1) statement

1. Key performance indicators

1. Non-financialand sustainability information statement
2. Financial review

1. Working responsibly

1. How we manage risk

1. Principal risks and uncertainties

04

Auto Trader Group plc  Annual Report and Financial Statements 2024

Strategic report	Governance	Financial statements

CEO's statement continued

back in 1996, which went on to completely replace the magazines that were the business for much of our 47-year history. When the mobile internet arrived, we were quick to launch mobile sites and apps some 15 years ago. We embraced server virtualisation, then private cloud, then public cloud which we completed our full transition to last year. We invested in building out a new data platform and data science capability 10 years ago, making artificial intelligence available to the automotive industry. This history of innovation is a core part of our culture and our results. These initiatives take a long time to build at scale, but once operational they enable us to act fast without the constraints of legacy systems and significant technical debt.

'Together' points to three aspects of our culture. The first is being 'One' Auto Trader. This refers to working as a single team, not in silos, with trust and collaboration over hierarchy and bureaucracy. We are one organisation which means tech is tech for all of Auto Trader, finance is finance for all of Auto Trader, product is product for all of Auto Trader, marketing is marketing for all of Auto Trader. Therefore to progress any piece of work or initiative, our people have to talk, be aligned with our priorities, listen to each other, and collaborate authentically.

The second important aspect of 'Together' is the way in which we work with customers, retailers, manufacturers, leasing companies, finance companies and other players in the automotive ecosystem. We aim for partnership. We believe that there is a lot more we can bring to our customers than just the products we sell. With our data, brand, people and technology we can help our customers achieve their business goals, which makes them much more likely

to understand and use our products, advice, insight and services. We believe this will lead to a much bigger and more influential business, not least because to be successful in areas adjacent to our core we often need the advice and support of customers.

The third aspect of 'Together' is an ownership mindset amongst our people which strongly reinforces the two points above. In September 2023 we announced our One Auto Trader all-employee share scheme that provides employees with an extra 10% of their salary in shares each year, vesting over a three-year period. This builds on an already strong ownership culture, aligns our people with our shareholders and can be accommodated within our long-term Auto Trader margin target of above 70%.

Finally, a big part of our culture and 'Responsibly' is creating an environment that attracts diverse groups of people and enables them to fulfil their potential for both the business and themselves.

This requires long-term commitment to structural changes that take years to come to fruition, but we are making progress. As an example, like all technology companies we would like more women engineers, but it is a career still under- represented by women. To address this, we have a range of initiatives including outreach programmes with universities and schools, graduate and apprenticeship schemes (not requiring a computer science degree) and retraining. This is just one example, but we apply the same thinking to other groups such as the neurodivergent, those from ethnically diverse backgrounds, the LGBT+ community, those with disabilities and those that are later in their careers. Our employee-driven networks have been instrumental in supporting these efforts which represent women, ethnicity, LGBT+, early careers, disability and neurodiversity, social mobility, parents and age.

This is by no means a complete view of our culture, but hopefully gives some sense of how we work at Auto Trader and more importantly how it contributes to both execution and the results we have achieved this year, this decade, and that we aspire to in the years ahead.

OUTLOOK

The new financial year has started well.

We anticipate another good year of average revenue per retailer ('ARPR') growth across all three levers. In FY24 there was some positive ARPR benefit from the Webzone disposal, as on average their retailers were lower yielding, which won't be replicated in FY25. We expect ARPR price growth of £90-£100, product growth of £120-£130 and stock growth of £20-£40, with average retailer forecourts likely to be marginally down year-on-year, as market conditions continue to return to normal levels. Consumer Services and Manufacturer and Agency are expected to grow at a rate of mid-to-high single digits.

We expect Autorama operating losses to reduce year-on-year, despite tight supply conditions in the leasing channel for new vehicles continuing. Group central costs, which relate to the amortisation of Autorama acquired intangibles, will be c.£13m for the year.

As mentioned at our last results, in FY25 we will exceed the threshold for the UK's digital services tax ('DST') which will be taken as an operating expense in the core Auto Trader segment. We therefore expect FY25 operating profit margins within this segment to be 69%, or 71% when excluding DST. However, at a Group level we expect to see modest margin expansion.

Our capital policy remains unchanged, with most surplus cash generated by the business being returned to shareholders through dividends and share buybacks.

Nathan Coe

CEO

30 May 2024

01 - 60

01 At a glance

1. Chair's statement
2. CEO's statement

1. Market overview

1. How we create value
2. Strategic progress

1. Section 172(1) statement

1. Key performance indicators

1. Non-financialand sustainability information statement
2. Financial review

1. Working responsibly

1. How we manage risk

1. Principal risks and uncertainties

05

Auto Trader Group plc  Annual Report and Financial Statements 2024

Strategic report

Governance

Financial statements

Market overview

A changing new and used car market

We are continually adapting our onsite experience to meet the changing needs of both consumers and customers. This is core to remaining the UK's largest automotive marketplace.

01 - 60

01 At a glance

RETAIL PRICE INDEX

The Auto Trader Retail Price Index tracks the average retail price of used cars based on c.800,000 daily pricing observations. Despite strong levels of demand on Auto Trader, like- for-like average retail prices have softened over the past 12 months. This has been due to increasing supply of both new and used vehicles impacting trade prices which have then fed into the retail market, coupled with an increasing level of discounts on new

electric vehicles. The average price of a used car on Auto Trader for the 12 months ending March 2024 was £17,833, a like-for-like decline of 1.3% year on year (2023: £17,544).

£17,8331

average price of a used car advertised on Auto Trader for the 12 months ending March 2024, a decline of 1.3% year on year on a like-for-like basis (2023: £17,544)

NEW CAR REGISTRATIONS

The new car retail market has been challenging and discounting has started to return. We are well placed to support structural changes in this market, which remains a significant opportunity. We now have products in market supporting franchise retailers, manufacturers and leasing companies selling new cars directly to consumers on Auto Trader.

The supply constraints that impacted new car registrations over a number of years following the pandemic have continued

USED CAR TRANSACTIONS

The used car retail market has been robust throughout the financial year, which we expect to continue. Demand is resilient with cars continuing to sell faster than before the pandemic, and used car supply has gradually improved. Trade prices softened in the latter months of the calendar year, which subsequently impacted retail prices, but monthly pricing movements have since stabilised.

There were 7.3 million used car transactions in the 12 months to March

02	Chair's statement
03	CEO's statement
06	Market overview
09	How we create value
10	Strategic progress
14	Section 172(1) statement

£20,000			40%
			35%
£15,000			30%
			25%
£10,000			20%
			15%
£5,000			10%
			5%
£0			0%
			-5%
			-10%
FY22		FY23	FY24
Like-for-like pricing	Mix impact	Average asking price

• VIEW THE FULL INDEX plc.autotrader.co.uk/news-views/retail-price-index

to ease over the past 12 months. Total new car registrations for financial year 2024 increased 18% to 2.0 million (2023: 1.7 million), with most of the growth coming from the fleet segment which has seen low volumes over much of the previous three years. Despite the Government delaying the ban on the sale of new petrol and diesel vehicles, the penetration of electric vehicles was stable, making up 17% of all registrations (2023: 17%).

2.0m2

new car registrations in the 12 months to March 2024, +16% year on year (2023: 1.7m)

1. Auto Trader internal data.
2. Society of Motor Manufacturers & Traders ('SMMT').
3. DVLA transaction data.

2024, up 6% year on year (2023: 6.9 million). Supply has gradually improved through the year as new car registrations have grown through the fleet channel, which has in turn increased the availability of ex-fleet stock for franchise and independent customers. The growth in used car transactions is larger than our increase in live car stock on site as the speed at which cars have been sold has continued to be quicker.

7.3m3

used car transactions in the 12 months to March 2024, +6% year on year (2023: 6.9m)

18 Key performance indicators

1. Non-financialand sustainability information statement
2. Financial review

1. Working responsibly

1. How we manage risk

1. Principal risks and uncertainties

06

Auto Trader Group plc  Annual Report and Financial Statements 2024

Strategic report

Governance

Financial statements

Market overview continued

Key trends shaping the future of our industry

More of the buying	The increasing
journey moving online	importance of data

01 - 60

01 At a glance

02	Chair's statement
03	CEO's statement

KEY TREND

Consumer appetite to do more of the car buying journey online continues to be strong. Our internal research showed that around 7 in 10 car buyers either have completed or want to complete more of their car buying jobs online. It's worth noting though that whilst this desire to do more online exists, the forecourt experience remains an important part of the process for buyers and we expect the car buying journey, particularly for used cars, to be omnichannel for a number of years to come.

AUTOTRADERPROGRESS

Building on both our marketplace and platform strategic focus areas, we are bringing more of the car buying journey online through our digital retailing solutions. Our approach to digital retailing is to be 'car first' and to enable any retailer (including manufacturers and leasing companies) to combine an exceptional digital journey with a great physical experience. During the last financial year, we have further scaled our Deal Builder trial to end the year with c.1,100 retailers on the product and over 40,000 cars. Consumer feedback continues to be positive and deals are converting at roughly double the rate of any other enquiry type, with many deals being completed outside of retail hours. We also now have a new car leasing journey available on Auto Trader.

STAKEHOLDER PERSPECTIVE

• "We've started to get reservations coming in after hours, which has made it as if we have a 24-hour forecourt, which has been really good for us. We wake up in the morning and we've sold a couple of cars, which has been absolutely fantastic. It's really given us the confidence to grow our business."

NIAZ KANJI

General Manager, SR Motors

FUTURE OPPORTUNITIES

Looking ahead, we will continue scaling Deal Builder and building out the functionality for new vehicle leasing on Auto Trader. For Deal Builder we expect to integrate further with technology partners and increase our penetration with lenders to extend the offering to more customer segments.

We have started to monetise a small cohort of customers which we also expect to increase over the next 12 months.

KEY TREND

Changes in supply dynamics, electric vehicle demand and wholesale trends are driving complexity and volatility in the used car market. In turn, it's creating uncertainty for retailers and making forecourt strategies harder to manage.

AUTOTRADERPROGRESS

Up until the end of financial year 2024, we had launched two modules of our Auto Trader Connect strategy. The first gave customers access to our taxonomy, improving advert quality, and introduced real-time updates between our systems and those of our customers. The second module gave access to our market leading, specification adjusted valuations, enabling customers to make quicker and more profitable sourcing, advertising and pricing decisions. Both these data sets were made available in our Retailer Portal or via API.

STAKEHOLDER PERSPECTIVE

• "I think Trended Valuations is essential. As retail and trade markets don't always move in sync, a point in time trade valuation only tells part of the story when sourcing and puts margin at risk when you hit the retail market. Trended Valuations will provide us with a broader view of retail pricing over time, to chart the trajectory of a vehicle's past performance and, crucially, where it's forecast to go."

ANDREW MUFFETT

Group Used Car Buyer, Allen Motor Group

FUTURE OPPORTUNITIES

From 1 April 2024, we made a further module of Auto Trader Connect available which included Trended Valuations and enhanced Retail Check functionality. Combined, this powerful new layer of intelligence helps retailers confidently understand the past and present trends in terms of pricing and demand so they can make better decisions when buying or retailing vehicles.

06	Market overview
09	How we create value
10	Strategic progress
14	Section 172(1) statement
18	Key performance indicators

1. Non-financialand sustainability information statement
2. Financial review

1. Working responsibly

1. How we manage risk

1. Principal risks and uncertainties

07

Auto Trader Group plc  Annual Report and Financial Statements 2024

Strategic report

Governance

Financial statements

Market overview continued

Key trends shaping the future of our industry continued

Significant changes	Supporting the
within the new car market	transition to electric

01 - 60

01 At a glance

02	Chair's statement
03	CEO's statement

KEY TREND

The new car market has seen increased levels of supply throughout the last 12 months, which has resulted in growing levels of discounting and price reductions. These changes in the balance of demand and supply are on top of significant structural changes. These changes are the growth in electric vehicles; new market entrants; a move to more direct and digital sales channels; and the implementation of agency agreements

by a number of manufacturers.

AUTOTRADERPROGRESS

Within our marketplace we continue to invest in our new car experience. Franchise customers have been able to advertise physical new cars for a number of years, and we ended the year with c.2,100 paying retailers on this product. Alongside this, we have launched a new car product allowing manufacturers operating an agency model to advertise new cars directly to consumers nationally.

STAKEHOLDER PERSPECTIVE

• "As the availability of new cars improves and the pressure from the manufacturers to drive volume increases, the franchise networks are under increasing pressure to drive volume. Given the need to drive EV sales as a percentage of all new car sales, it is really important that we maximise our opportunities to showcase our product to as many potential customers as possible. Auto Trader gives us the perfect platform to showcase the Hyundai range to a wider audience and to let people know that we are a retailer that can look after them regarding their new car purchase."

PAUL SHARP

Retailer Principal of Hyundai Stockport

FUTURE OPPORTUNITIES

With the level of structural change and volatile market dynamics likely to continue, we believe we can continue to scale the products we have available to customers. The penetration of franchise customers is currently only 50%, which we expect to increase over the next 12 months, and as a growing number of manufacturers move to a more direct sales channel, we expect to have them advertising on Auto Trader.

KEY TREND

The introduction of the Government's Zero Emission Vehicle mandate is the defining feature of the electric market in 2024. As pressure from Government targets impacts the market, price and affordability will likely be a key factor in generating consumer demand. This has already been seen with average new car discount levels increasing on electric cars, which has also weighed on used electric pricing. As certain brands reach price parity in the used market, many buyers are considering switching to electric for their next purchase.

AUTOTRADERPROGRESS

Auto Trader's response to the transition to electric focuses on three key stakeholder groups:ourcustomers,consumersandpartners

• suppliers, which includes the Government. Actionsincludeleveragingouruniquemarket position by sharing data and insights on the electrictransitiontoassistourcustomersand GovernmentaswellaspositionAutoTrader asthe voice on the industry in the national media. We'realsoensuringourproductsand toolsarebuilt to show vital information about electric vehicles so that our consumers and retailers have the information they need when making buying and selling decisions.

STAKEHOLDER PERSPECTIVE

• "Auto Trader is a key stakeholder for the UK Government's Office for Zero Emission Vehicles ('OZEV') and a workstream lead in OZEV's Used EV Market Steering Group. Auto Trader's engagement and content is fundamental to OZEV's policy making process and monitoring the health of the market. Their outputs are visual and highly engaging, represented by presenters who are clear and very well informed. Auto Trader content is used in monthly dashboards for Department for Transport directors and regularly in ministerial briefings."

ABDUL CHOWDHURY

HeadofVehiclePolicy,OfficeforZeroEmissionVehicles

FUTURE OPPORTUNITIES

As the electric market matures and Government actions continue to impact, Auto Trader has a significant opportunity and responsibility to support the development of a successful electric market in the UK. With demand for electric cars stagnating and the second-hand market on the verge of substantial supply growth, Auto Trader can use its market position and insight

to guide and support its partners, the Government and consumers through this once in a lifetime transition.

06	Market overview
09	How we create value
10	Strategic progress
14	Section 172(1) statement
18	Key performance indicators

1. Non-financialand sustainability information statement
2. Financial review

1. Working responsibly

1. How we manage risk

1. Principal risks and uncertainties

08

Auto Trader Group plc  Annual Report and Financial Statements 2024