June 10 (Reuters) - British online car marketplace Auto Trader Group said it expects to benefit from a “dramatic shift” to online car buying, sending shares up 6.3% on Thursday, but warned that a chip shortage may limit new car production and hit supply.
The Manchester-based company, which sells both new and used cars online, expects revenue from the consumer services and manufacturer sectors to start recovering in the current year, but it is unlikely to reach FY20 levels as a chip shortage has impacted new car advertising.
A global shortage of semiconductors, triggered partly by surging demand for laptops and other electronic products during the pandemic, has shuttered some auto production lines globally.
Chipmakers have said it could take years to resolve the shortage, with the crisis forcing automakers including General Motors Co, Ford Motor Co and Toyota Motor Corp to curtail production of less profitable vehicles.
Auto Trader said demand, combined with periods of constrained supply, led to a year of growth for used cars. Repeated lockdowns also prompted more retailers to adopt a “click and collect” or home delivery model.
“There has been a dramatic shift towards buying online which means we now have more buyers than ever turning to Auto Trader to help with their next car purchase,” Chief Executive Officer Nathan Coe said in a statement.
Analysts at Jefferies said the company remains wary on guidance, even though COVID-19 is currently having little impact and more people pick online car buying.
Auto Trader has proposed a final dividend of 5 pence. For the full year ended March 31, its operating profit dropped 38% to 161.2 million pounds, while revenue fell 29% to 262.8 million pounds, as it provided discounted advertising to its retailer customers.
Reporting by Vishwadha Chander in Bengaluru; Editing by Devika Syamnath