The online automotive marketplace AutoTrader experienced a decline of 11% in its shares following lower-than-expected growth forecasts. Despite a robust used car market showing a year-on-year increase of 5%, AutoTrader faced challenges as vehicles were being sold more rapidly and dealers accepted reduced prices and margins.

This situation negatively impacted the group’s growth trajectory, leading analysts to downgrade their expectations. AutoTrader, recognized as a leader in online car sales, connects car buyers with dealers holding second-hand inventory.

The company reported a revenue increase of 5% to £601 million and an 8% rise in operating profits to £376 million for the fiscal year ending in March, though these figures fell short of some analysts’ projections.

Additionally, AutoTrader’s average revenue per retailer, a critical measure of its commission earnings, has been tepid. It reported a figure of 5% last year and is forecasting growth of between 5% and 7% this year, again not meeting higher expectations.

Investors, who had previously been buoyed by the company’s stock reaching nearly £8 billion in market value, reacted negatively to the forecasts, leading to a decline in share prices.

In morning trading on Thursday, the stock fell by 89 pence to 810 pence.

AutoTrader’s CEO, Nathan Coe, expressed a measured outlook regarding the used car market, stating, “We have been held back a bit because cars were selling so fast, but that is ultimately good for the consumer.”

Coe noted that disruptions in the automotive industry due to previous trade policies under President Trump have not directly affected AutoTrader, but could potentially create opportunities in the UK market as manufacturers migrate production there, helping to sustain demand in the second-hand sector.

He also mentioned the UK government’s recent easing of penalties for manufacturers to sell electric vehicles, which could result in more hybrid models being offered in the British market.

AutoTrader’s commanding position in the UK used car sector is evident, as it remains ten times larger than its nearest competitors, despite efforts from various international tech companies to capture some market share.

Coe emphasized the strength of the AutoTrader brand, stating, “They don’t seem to get traction against the AutoTrader brand, which has been trusted for decades. We have built the foundations on investment in technology, and no one does a better job.”

AutoTrader plans to focus on enhancing the car buying and selling experience within the UK, rather than expanding its model internationally. By the market close on Thursday, shares had decreased by 101.5 pence, or 11.3%, settling at 798.5 pence.