Are price indicators damaging business for motor traders?

Motor traders are continuing to express concern that new price indicators on online car sales sites may have a negative impact on their ability to sell their vehicles.

AutoTrader, one of the biggest car sales advertising platforms, has a price indicators system which allocates cars listed on the site a price rating intended to tell the customer whether it’s a good deal or not.

The ratings range from ‘no analysis’ and ‘low price’ through ‘great price’, ‘good price’, into ‘fair price’ and ‘high price’. The latter two are considered to be above market, while ‘great price’ is a little below market.

AutoTrader’s price indicators scale

The current price indicators were introduced in October 2019, replacing the simpler ‘Great Price / Good Price / Priced Low’ rating system previously in place. Since the change, motor traders have taken to forums and social media to express their concern that the price markers could be damaging to their business and are forcing them to adjust their sale prices in order to avoid a negative rating.

The AutoTrader website states that its price indicator calculation takes into account ‘make, model, year, mileage, fuel type and optional extras’. It does not include things like the car’s condition, regional supply and demand, special modifications or additional services and warranties.

CarGurus, another big online car trading platform, has a similar system which runs from ‘great deal’ to ‘overpriced’, and sorts its listings so those cars allocated as best deals appear first.

The Independent Motor Dealers Association (IMDA) has put out a call to its members to gather evidence of where they find different markers being allocated to the same stock across both platforms, so that they can gather data on how the price markers are specifically affecting motor traders.

Some traders report that they have still been able to sell cars marked by either platform as ‘high price’, but say they find themselves on the back foot with customers when the price is actually comparable with other similar models. Many traders have also found they have ‘sitters’ in the high bracket that they can’t shift. Some are choosing to make adjustments in order to get a ‘good’ or ‘great’ rating.

At present it does not appear likely that AutoTrader will change its system, despite protest from the industry. It remains to be seen what the long-term impact is for motor traders and how they may have to adapt to work within the new system.

Of course, in current times, these issues may be on the back burner as traders adapt to a situation in which regular sales methods don’t fit the government’s current guidance to protect us all from COVID-19. Whenever normal service resumes, will this still be a significant issue for traders?