Auto Trader CEO: London Stock Exchange's problem isn't liquidity

The London Stock Exchange has to grapple with problems other than just liquidity, the boss of Britain’s biggest car market has said.

Auto Trader CEO Nathan Coe said the exchange’s woes also reflected the mix of companies listed on it.

He told the Standard: “As a tech company our valuation being on the London Stock Exchange has arguably held us back a little bit.

“[But] I’m not sure it holds us back as much as you would think because we have many US investors on our register, these markets are very liquid and there is nothing stopping a US investor investing in Auto Trader in the UK.

“There is a big difference in the mix of businesses in the FTSE and the S&P and the Nasdaq and it’s not just the stock market, actually we’d do well as a country to invest in the right skills...to make sure there’s the right environment to build valuable companies because that’s probably the biggest difference between the indexes.

“A small number of companies [on the Nasdaq] accounts for a huge amount of value creation.”

It comes as shares in Auto Trader jumped by more than 13% after markets opened following a bumper boost in profits.

Revenues at the firm grew by 14% to top £570 million as it posted a 26% jump in operating profit to just shy of £350 million amid a rise in demand to above pre-pandemic levels.

But Auto Trader warned its cost was set to go up next year as a result of taking a multi-million pound hit from having exceeded the threshold for the UK's digital services tax.

The firm said the new car market “has been more challenging and discounting has started to return”. Coe said higher interest rates making vehicle finance more unaffordable was partially to blame.

“The way the vast majority of people buy a new car is through a monthly payment through finance and so [their money] goes into the cost of the car and the cost of finance. One of those two things needs to come down.”