Auto Trader Group PLC (LSE:AUTO) faces growing headwinds as its pricing power shows signs of strain, according to UBS, which warned that consensus revenue forecasts for the 2027 financial year may be too optimistic.
The broker reiterated its 'sell' rating on the shares, with its price target of 650p under review.
The note comes after CEO Nathan Coe appeared on the Car Dealer Podcast and disclosed a planned 5.5% price increase for April – lower than the 8% implemented last year.
This moderation, along with recent product missteps and pressure on dealers, signals a likely slowdown in average revenue per retailer (ARPR) growth, said UBS analyst Joseph Barnet-Lamb.
“While the 5.5% increase is within Auto Trader’s historical pricing range, it’s below the 8% referenced last year, and we interpret it as a sign the company is becoming more cautious,” the analyst wrote.
He added that Coe’s comments about dealer pushback and an unusual drop-off in customers could point to more widespread reluctance to absorb higher fees.
Auto Trader has recently come under pressure, with shares down 32% over the past six months amid an AI-led tech selloff and concerns about execution.
Its Deal Builder product, rolled out to streamline online transactions, has faced criticism from dealers, with around 100 opting to downgrade or opt out.
In response, the company is launching three new trial offers designed to boost uptake without upfront costs – a first for the platform.
While FY26 guidance of 5-7% retailer revenue growth remains intact, UBS thinks the key issue lies in FY27, where current Visible Alpha consensus of 7.4% ARPR growth looks unrealistic.
“Given mounting cost pressures on dealerships and internal challenges, we believe growth will likely be at the lower end of historical ranges."
The podcast commentary is likely to “raise concern” around future earnings, particularly as the firm recalibrates pricing strategy to reflect market realities.
For 2027, UBS’s internal estimate is for ARPR growth of £200, compared with £225 in consensus forecasts.
While Auto Trader remains a dominant player in UK online auto listings, UBS cautioned that investor expectations may need to be reset if pricing levers prove harder to pull than in previous cycles.