2008 Great Recession: Autotrader

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2008 Great Recession: Autotrader

Employee layoffs, its position as a major player in the automotive industry and internet advertising, as well as acquiring competitors and company reorganization helped Autotrader weather the storm of the 2008 Great Recession.

Brief History & Financials

  • Autotrader is a third-party automotive shopping site that features automotive consumer insights.
  • Autotrader is a brand of Cox Automotive which is a subsidiary of Cox Enterprises.
  • "The site aggregates millions of new and used cars from thousands of dealers and private sellers, and also provides reviews, advice and comparison tools." AutoTrader.com was originally launched in 1997.
  • A brief story published in November 2008 reports that Autotrader.com was for sale for about 1 month. That same year, apparently, Autotrader was estimating a 23% growth in revenue to $635 million. Cox withdrew the offering in late 2008 after a worsening financial crisis.
  • In 2012, Autotrader was noted to receive 28 million average monthly unique views and it had a pending IPO which was “dented” because of the $1.3 billion worth of debt by Autotrader at the time (likely, this debt was partially acquired during the Great Recession but there were no reports obtained that expressly implied or stated this).
  • Cox Automotive cites revenues exceeding $20 billion.
  • Currently, Autotrader.com, Inc. has an estimated 3,100 employees (1,180 headquartered in Atlanta) and made $1.11 billion in sales.

Acquisitions and Reorganization

  • In 2009, during the Great Recession’s official end (though many people and companies suffered from 2010-2014 from its effects), Cox Media Group restructured its television, radio, and newspaper businesses to be all under one umbrella. Further, the restructuring created "cross-platform opportunities for advertisers and it expanded its revenue sources within its internet platforms. The company notes this multichannel opportunity leveraged "its businesses’ shared research, sales, and digital resources."
  • In 2009, Autotrader was noted to have folded Automart into its operations within Cox.
  • In 2010, just after the Great Recession ended and during a time when some companies were still weathering its impact, Cox Automotive acquired Kelley Blue Book, vAuto and HomeNet Automotive.
  • Also in 2010, Cox sold 25% of Autotrader to Providence Equity.
  • In 2011 through 2014, Cox Enterprises bought, acquired, or partnered with additional automotive companies; the larger company formed Cox Automotive to house all automotive brands.
  • In 2015, AutoTrader rebranded as “Autotrader” and different sites of Cox Automotive began to launch globally (e.g., Cox Automotive Canada, Cox Automotive Australia). Also, Dealer.com was acquired.
  • Looking at the company’s acquisitions makes it appear that one of Autotrader’s current successes (post-2008 Great Recession) was through moves made by its parent company to acquire competitors (e.g., Dealer.com) and other automotive juggernauts (e.g., Kelley Blue Book).

Employee Layoffs

  • In 2008, AutoTrader.com laid off 15%-30% of its Atlanta staff. According to a tip report, Cox Communications was offering employees early retirement packages and getting employees ready for layoffs “for two months” before the layoffs. ~300 people affected. “ The entire FSBO (for sale by owner) team was cut including management. Nearly half of the BIS/IT department is gone. There has been no official word from management to the employees on what happened yet. Also, none of the contractors were let go.”
  • Because this event happened during the Great Recession, the company layoffs were likely a way to control for costs during the economic downturn.

Major Player Status

  • A review of Cox Enterprises’ history reveals that in 2005, the company experienced major global growth of its Manheim Auctions brand which opened offices in Shanghai, Beijing, England, Scotland, Belgium, Spain, Australia, New Zealand, and Thailand.
  • In a recent analysis of the rise and fall of local newspapers, AutoTrader.com was one of the agents that took advertisers from the newspaper industry in the 2000s.
  • In the 2011 CarMax annual report, Autotrader was listed, along with Cars.com, as a major part of its marketing effort to build awareness and drive traffic to their store. Because the Great Recession hit the auto industry especially hard, the Autotrader classified site may have been a vital lifeline for auto dealers in the industry.
  • These events help to frame the understanding that Autotrader’s parent site was focused on expanding and Autotrader, itself, was bringing in enough revenue to help sink an industry. Before the Great Recession, it appears Autotrader was in pretty good standing.
  • In 2012, the company reported a rise in earnings to $68 million in 2011 (from $9 million in 2009). Revenue was also way up (629.5 million reported in 2009, $1.03 billion in 2011). Most of these revenues were recurring from subscription services sold to dealers.
  • In a 2012 Reuters article on digital ad growth stalling, Autotrader, along with Yellowpages.com and Groupon, was stated to be one of the top 20 companies that “made all the money in local Internet advertising, more than two-thirds ... have nothing but advertising.”
  • Some Autotrader international sites (like AutoTrader UK) illustrate the power of Autotrader. In the UK, it attracts more than 247 million views each month and has more than 450,000 vehicles listed at any one time.

Competitors

  • In 2010, Cars.com and Edmunds along with Kelley Blue Book (Cox-owned) were listed as major third-party car dealing websites. In 2014, Autotrader was reported to be interested in acquiring Cars.com.
  • In a 2010 publication by PCG Digital Marketing, competitors of Autotrader and those listed as other third-party sites for car shopping were Cars.com, eBay Motors, Craigslist. Other “large inventory management sites” of the time were CreditAceptance, AutoMart.com, AutoExtra.com, theCIADANetwork.com, and Ace Motor Acceptance.
  • While Autotrader has partnered with eBay in the past, because eBay offers car auctions, it is a legitimate current competitor of Cox Automotive.
  • In addition to classified steps like Craigslist and Cars.com as competitors, other competitors are listed as CarGurus, Autocheck, Edmunds, uptown, AutoNation, and iSeeCars.

Research Strategy

The research team was not able to locate analysis already focused on how Autotrader survived the Great Recession. However, a review of their history, parent company reports, and news articles/analysis helped shed light on some likely aids that helped Autotrader survive.

Please note that financial details about Autotrader are limited as the parent company, Cox Enterprises, requires contact or investor sign-in for financial details.
Sources
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