Exclusive interview: Auto Trader COO on cost of living crisis
Catherine Faiers was appointed COO of Auto Trader in 2019
Catherine Faiers discusses culture, Auto Trader's extraordinary results, and much more
Catherine Faiers has been responsible for Auto Trader’s day-to-day operations since May 2019, when she was appointed chief operating officer. She joined the company as marketing director in 2017, and prior to that was COO at Addison Lee, corporate development director at Trainline and a director at Close Brothers Corporate Finance.
Here, Faiers discusses how she progressed to her current role, the state of the used car market, what makes Auto Trader special and why it always tries to be as open as possible with partners, plus why it has partnered with What Car? to display its used car stock.
*This interview is an extract from **What Car?**'s monthly Insight PDF. **Click here for access to the latest issue, exclusive to Autocar Business.*
*Tell us about your career?*
“I’ve had lots of different jobs in lots of different industries, but for the past 15 years or so I’ve only been working in relatively big digital businesses.
“Whilst I’ve never had a career plan, I’m curious, and I like to learn. Every new job that I’ve done has always been about learning something new. I also follow people I know or have a connection with. I believe you have a choice in who you work for, and have focused on looking for leaders who are going to support and get the best out of me.
“I’ve also always looked at industries that are going through a huge change, too. At Trainline we built an app and transitioned to being a digital business rather than a call centre. I joined Addison Lee just as Uber arrived in London, sparking huge change. And then I joined Auto Trader when the surge in interest in electrification, autonomy and new ownership models began.
“I’m a big believer that you can make things happen when you are in an industry where things are happening. I find that really exciting.”
*What culture sits behind Auto Trader’s success?*
“It is based on collaboration, which means a very flat organisational structure with almost no hierarchy. Everyone has a voice and is encouraged to express a point of view. And it’s very much a culture that welcomes challenge, different thinking and different perspectives.
“How do we maintain that? Firstly, a member of the senior leadership team meets every single person that joins the business as part of the recruitment process, for no other reason than to get to know them a bit and see if they think they’ll fit with our culture, and values.
“Secondly, our PLC board meets with people from across our employee networks every other month, and they spend an hour and a half or so with none of the exec team there, just the non-execs. It’s usually themed in some way, and it means the board is connected to our people directly, and vice-versa.
“We’re also pretty restless – success gives us the confidence to move on to the next thing, and that’s where we derive our satisfaction. Auto Trader people want to make stuff happen. That doesn’t mean we don’t celebrate success – obviously we do – but we do tend to go about it in quite a humble way and internally rather than externally. We have around 1000 people now, with a deep-rooted company culture that takes Auto Trader beyond being just a business.”
*Why does culture, and a diversity of culture, matter? *
“Personally, I just don’t believe that businesses can be successful over the long-term unless they represent the customers that they serve. It’s obvious, but businesses should reflect the communities and the stakeholder groups and the customers that they operate with.
“We’re fortunate at Auto Trader that we’ve got a rich history over 50 years. Our leadership team would say our job is to make sure we’re still here and relevant in another 50 years. We can only do that by hearing the voices of all of the car buyers, all of the retailers, all of the manufacturers, all of the people that make up the very rich and diverse industry that we operate in.”
*Last year’s results were extraordinary, with profit before tax up 91% and revenues of £433m. Your most recent six-month operating profits were £149.1m. What drove that success?*
“The first thing to say is that the year-on-year figure is comparing with a dire 2020, when we went free and discounted for large periods, so we were always going to be flattered by more normal trading conditions. But, yes, financial performance has been good since.
“There are some things we do very well compared with some other businesses I’ve encountered. The first is our unrelenting focus on partnership. I know that might sound like me saying the right thing, but as a marketplace we’ve got lots of different stakeholder groups; car buyers on one side, retailers, manufacturers and everyone else on the other side. We need to balance their needs for our shareholders – but generally doing the right thing for one group means the others also benefit. For instance, if we secure more stock for retailers then we have more choice for consumers.
“The priorities are always changing. The pandemic was an extreme example, but by going free we put our people and our customers first. That didn’t mean we weren’t focused on our business or shareholders, but the weight of priorities was different and we believe doing the right thing for one group in the short term will ultimately be to the benefit of all stakeholders over the longer term.
“The other thing that we’ve focused on in recent years is being open with everyone in the industry. Historically that wasn’t always the case, and nor were we always humble. From our CEO Nathan [Coe] down we’re naturally quite open people, and I think he’s led a shift in how transparent we are, and how eager we are to learn from others, and that has helped put us at the centre of the industry.
“Finally, I think our heritage gives us permission, encouraged by our board and our shareholders, to think very long-term. Anything we are doing now we try to play through to four or five years ahead. Will it solve a car buyer or retailer need? That allows us consistent and solid success.”
*Are there any risks that come with success? *
“The biggest potential downside has to be the risk of complacency, doesn’t it? That’s why our culture is so key – that curiosity to learn and restlessness to do better is crucial. It helps that the board and leadership team are continually challenging, and that new competitors enter the market regularly. It feels to me like we’re always on our toes.”
*Even so, there’s often a hint of resentment from parts of the industry when you announce your profits. How do you stay resilient?*
“There’s always tension in any customer supplier relationship. The strength of a good business is how you manage that, and try to change that conversation to manage the tension.
“Clearly, we see that our products deliver really tangible value and return on investment, especially the advertising products, where the profitability for sellers is stronger than ever and our price changes have not kept up with the margin growth that retailers have seen on every car sold in recent years.
“Beyond that, it comes back to that partnership theme. We’ve tried to work really hard on that partnership so, for instance, our sales team isn’t commissioned or paid a bonus to push a given product or hit an arbitrary target. That means they can start every customer conversation with a version of ‘What are your goals?’
“Today, we can help find answers, because we have data that can tell them the speed at which individual cars are selling, what price they are selling for, what stock profiles are working and so on. In minutes one of our experts can tell a retailer what they are doing well. I’m yet to meet a customer that one of our team can’t sit with and change their business for the better. We’ve got about 250 people in that team, and they exist to help our customers.
“Not everyone engages, but that means we have to work harder to demonstrate what more we can bring to the discussions. There are always challenges, but we’ll keep working on them.”
*How do you keep your focus when you are developing so many new ideas?*
“One of the biggest – if largely unseen – shifts in our business in recent years has been growing our tech team to 350 people. We do about 1500 releases a week directly into our software base. We have no contractors, so all of our developers are our employees and they ‘own’ the code base, and have a vested interest in not building up technical debt or looking for quick fixes or solutions.
“The result is we’ve got a brilliant software stack, which allows us to be incredibly agile. I see that as our biggest strength – more so perhaps than even the brand, our history and other assets.”
*What do you see happening to used car prices amid the rising cost of living?*
“It’s a genuinely fascinating time, because we’re clearly entering into a period of weaker consumer demand, and probably a recession. But the backdrop in which we’re entering that recession is exceptional. Used car profitability has been stronger than it’s ever been over the last couple of years, and the results of the big groups in particular are still very strong. “Our data shows that most prices are still up year on year and also month on month because demand, while still softer, is still there sufficiently to outstrip supply.
“We’ve also seen the price of new cars go up by 20% on average over the past three years, and that naturally provides a significant headroom for used car pricing to grow. Our data does not suggest there is going to be a sudden drop-off in values. The balance between supply and demand is pretty consistent to where it was pre-pandemic.”
*Do you think the pandemic will speed the uptake of online buying?*
“We’ve just done a big bit of research on this, and what’s clear is that more and more people want to do more and more of the journey online – but only about 3.5% actually want to buy their car entirely online.
“What’s more, that percentage isn’t growing at anything like the pace it was during the pandemic; it’s stabilised. My feeling is the shift is permanent, but not transformational.
“What might be more significant is the shift towards electric vehicles; it feels like they gained real momentum and that shows no signs of easing.”
*What Car?’s used car classifieds are now powered by Auto Trader’s stock lists. How did that come about?*
“It is a combination of two great brands in the industry – the greatest, probably – so it makes sense, right?
“But making sense doesn’t always mean something happens; in this instance, though, we acknowledged the two brands offer something quite different for our audiences, and we brought that openness to doing partnerships to the table.
“Our audiences are at different stages of their journey, so it became clear that there is relatively little overlap between them, and the overlap gave us a brilliant opportunity to get new people seeing our cars. Part of the reason our brand is so strong is that we don’t partner anywhere, so I’d say What Car? is one of the few brands that really does work for us. The numbers underline that too; we’re getting more engaged buyers, so the cultural fit and brand alignment are clearly working.”
*What Car? is Autocar Business's sibling publication, and its monthly Insight PDF is a critical source of exclusive information for car retailers and buyers alike. *