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magazineAuto Trader’s wholesale ambitions
Auto Trader (AUTO) 456.5p
Gain to date: 21.1%
Original entry price: Buy at 377.1p, 17 May 2018
Online car marketplace Auto Trader (AUTO) continues to motor ahead as it enters an interesting-looking new joint venture.
Its agreement with Cox Automotive UK will enable the launch of ‘Dealer Auction’ providing a digital platform for the purchase and sale of wholesale vehicles.
Essentially the venture, in which Auto Trader will have a 49% stake, opens up a new market for the company and it is expected to be earnings enhancing in the first year.
Chief executive Trevor Maher says: ‘The way in which vehicles currently move around the UK automotive ecosystem is overly complex and inefficient, and Auto Trader has the digital and data assets that can make it a quicker, more convenient and cheaper process for all parties.
‘However, we know that we will have an even better chance of disrupting the market by partnering with an established player which knows this particular industry intimately.’
The JV is subject to approval by the Competition and Markets Authority. Investors may have to wait until the first half results on 8 November to get more detail on the implications of the deal.
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