TrueCar's Perry Lays Out Plans to Win Back Dealers, OEMs
TrueCar's new CEO used the firm's recent quarterly investor call to lay out his plans to win back dealers and OEMs. The executive also discussed how the firm plans to better monetize car shoppers using its site.
SANTA MONICA, Calif. — TrueCar CEO Chip Perry, who joined the company this past December, used the firm's quarterly investor call to lay out his plans to improve dealer relations, OEM perception of TrueCar and user monetization.
Perry said his top priority is to repair dealer relations, acknowledging that a company like TrueCar, which has 9,000 franchised and 2,082 non-franchised dealer customers, needs dealer support to maintain sustainability. He said he hopes to remove the perception that TrueCar is undermining a dealer’s place in the industry.
“Our first and highest priority will be to turnaround the negative sentiment that some dealers feel today toward TrueCar,” Perry said. “Immediately after I took the helm, I began an active outreach to hear directly from our dealer customers, what they like and don’t like about our company. They’ve given me an earful of very helpful input, which I really appreciated.”
To improve OEM perception, Perry said the firm is working to show them that TrueCar can be a useful marketing channel, noting that firm can offer OEMs products that can help them improve the efficiency of the more than $50 billion they spend on sales incentives.
“This process will take some time, and the most important thing we can do in this respect is to win over more of the dealers,” Perry said.
Perry also addressed the need for TrueCar to monetize more of its users. He noted that, according to a 2015 J.D. Power study, 46% percent of new-car buyers visited the TrueCar network within 90 days of purchasing a vehicle — amounting to 5.1 million new-car buyers on the TrueCar network.
Perry noted that TrueCar was was able to monetize only 574,000 of the buyers on its network last year, which he said is a clear sign that customers aren't seeing enough inherent value in the TrueCar service.
“Clearly, we are not giving our new-car buyer audience sufficient reasons to see through our experience, connect with our dealer network and purchase a car from a TrueCar certified dealer,” Perry said. “These numbers suggest our traffic quality is incredibly high. So our third priority is to improve the overall yield to our user funnel.”
In order to boost its monetization rate, TrueCar plans to divert some of its online marketing budget toward hiring and training more TrueCar representatives at dealerships, growing its product and technology teams, and building an internal research team. By the end of the year, Perry said he expects the firm will be able to offer participating dealers at least one in-person service visit a month.
During July and September of last year, TrueCar lost 600 franchise dealers and ended the fourth quarter with 9,094 franchise dealers. That’s a recovery from the low of 8,702 dealers in its network at the end of the third quarter but down from the 9,300 dealers it claimed at the end of the second quarter.
Where TrueCar experienced losses and gains with franchise dealer customers, its non-franchise dealer base saw healthy growth. During the fourth quarter, TrueCar reported 2,082 non-franchise dealer customers, a 4% increase from the third quarter and a 55% increase from the prior-year period.
The $63.6 million in revenue the company reported for the fourth quarter represented a 15% year-over-year increase. The firm's transaction revenue also increased 16% from the prior-year period to $59.3 million. The company also made $324 per unit, which was essentially flat from the same time last year.
Officials also noted that customers shifted slightly toward used cars during the fourth quarter. A record 27% of TrueCar leads delivered to dealers resulted in a used-vehicle sale, a 3% increase from the previous quarter.
TrueCar’s total revenue for all of 2015 was $259.8 million, a 26% improvement over 2014. Full-year transaction revenue totaled $241.4 million, a 27% year-over-year improvement.
“TrueCar recognizes that dealers and OEMs are our revenue generating customers and we are passionate about helping them succeed in our marketplace, while also enabling consumers to obtain pricing transparency, leading to a high level of confidence in their purchasing decision,” Perry said.
Originally posted on F&I and Showroom
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