TrueCar's new CEO says top goal is mending Dealer Relations

[XDCX]

Originally Posted by mryan55

I did a little bit of clicking around to find an NADA position on TrueCar, and I couldn't find anything substantial.

I did find an Automotive News article from last summer that does state the position of the California New Car Dealers Association, which had at the time filed suit against TrueCar.

Link: http://www.autonews.com/article/2015...aga-continues#

Thanks for doing the leg-work and for updating this thread.

The article you linked was very interesting. It's clear there are some dealers who see TrueCar as a threat to their businesses - I wonder how widespread those sentiments are?

I'd also wonder how many of the State Dealer Associations have taken a position concerning TrueCar?

[XDCX]

Originally Posted by steve_biegler

NADA hasn't taken a meaningful stand on anything for a long long time. The definition of a paper tiger if I've ever seen one. Really to bad. NADA could be a huge help to the dealers if they had any testicular fortitude. Sadly I don't see that happening any time soon.

I totally agree on all counts.

I've often thought the OEMs must love the NADA because they are essentially a paper-tiger that fills a void. If the NADA didn't exist there would likely be another organization that would take a more aggressive stand on dealer issues. The fact the NADA exists lessens the likelihood that another organization could ever get a foot-hold.

[XDCX]

Originally Posted by 57years

Gosh... I really like that "Steve Biegler" guy....

NADA is a creature of the "go forward" dealers....

NADA will "rock" but never "overturn" the boat...for fear of risking the dues and participation fees of the membership.

When it comes to any major minority (not with racial meaning here) affected issue, NADA will bluster and fade.

Yeah, I like that Steve Biegler guy too - you can always count on him for having the courage to take a stand and vocalize his opinion.

Concerning the NADA, I had hoped the organization would become more pro-active when they signed on Peter Welch as their President but it doesn't appear that has happened. Welch was in charge of the California New Car Dealer Association and had a great reputation of looking out for dealer concerns. The CNCDA was the organization that forced Chrysler to sell their Factory Store that violated state law and they're also suing TrueCar for the manner in which the company is conducting business in California.

It would be interesting to see what has happened with the NADA's Dealer Count. I'd guess they've seen a fair drop-off in dues over the past 10 years.

[steve_biegler]

Thanks guys.....I like you all too! And X-man is correct I tend to be opinionated and won't shut up. HA

[mryan55]

The new CEO of TrueCar has some comments after some poor financials:

http://www.autonews.com/article/2016...s-losses-widen

I don't really understand how this is financially viable for investors, but TRUE was down only 2.2% today after the morbid results.

Revenue of US$63M in the quarter yet losses of US$27M in the same quarter? Wow.

[XDCX]

Originally Posted by mryan55

The new CEO of TrueCar has some comments after some poor financials:

http://www.autonews.com/article/2016...s-losses-widen

I don't really understand how this is financially viable for investors, but TRUE was down only 2.2% today after the morbid results.

Revenue of US$63M in the quarter yet losses of US$27M in the same quarter? Wow.

Thanks for the link - that was really interesting.

Like you, I question TrueCar's stock valuation given their recent performance. TrueCar is losing $9 Million per month and they acknowledge that their dealer count now includes more smaller dealers which apparently have lower closing ratios and accordingly produce less revenue.

I also think it's interesting to read how TrueCar calculates the number of dealerships that are on their program - it's the number of franchises, not the number of rooftops. That means TrueCar could add one small CJDR dealer but show an increase of four dealerships.

I also thought the comments following the report in Automotive News were interesting. I wonder if TrueCar has many dealers who are vocal in their support of the company?

[mryan55]

I'll need to go back and review the comments. At the time when I had stumbled across the article there weren't any comments yet.

As someone who has used TrueCar / Zag -- it's predecessor -- since 2009, I am not in vocal support of their business model or anything they do. I'm simply there because other dealers in my trade zone are, so I don't want to miss out on the incremental sales.

Although I have actually inched my pricing upward over the years, closer to invoice. Especially since I haven't really noticed any increase in sales that I can attribute to TrueCar.

[XDCX]

Originally Posted by mryan55

I don't really understand how this is financially viable for investors, but TRUE was down only 2.2% today after the morbid results.

Revenue of US$63M in the quarter yet losses of US$27M in the same quarter? Wow.

TRUE has dropped from about $6.10 to $4.85 in the span of less than one week. I'm guessing the 2.2% drop you referenced was the closing price and the news concerning TRUE's poor performance came after the market was closed.

The 52 week low for TRUE is $4.01 and the 52 week high is $21.00 - I wonder which value it will hit first....

[mryan55]

Originally Posted by XDCX

TRUE has dropped from about $6.10 to $4.85 in the span of less than one week. I'm guessing the 2.2% drop you referenced was the closing price and the news concerning TRUE's poor performance came after the market was closed.

The 52 week low for TRUE is $4.01 and the 52 week high is $21.00 - I wonder which value it will hit first....

I have to say that I don't follow TRUE at all, don't any stock, don't do much research on it. Considering that -- I'm sure that the financials came after the final bell.

Either way, not a sustainable business model.

Also some interesting comments on another Truecar article recently posted to AN earlier today as well: http://www.autonews.com/article/2016...recovery-steps

I think a good way forward for TrueCar would be to stop the per-sale fee setup -- other have tried this before, even in the last five or six years. Just charge per-lead or per-month flat fees... TrueCar is required to do this in some states where there have been legal challenges about whether or not they are a broker.

There we would be less revenue potential or partnership potential with OEMs, but TrueCar does offer some valuable research and I would say that customers may still view the website as a trusted resource.

[XDCX]

Originally Posted by mryan55

I have to say that I don't follow TRUE at all, don't any stock, don't do much research on it. Considering that -- I'm sure that the financials came after the final bell.

Either way, not a sustainable business model.

Also some interesting comments on another Truecar article recently posted to AN earlier today as well: http://www.autonews.com/article/2016...recovery-steps

I think a good way forward for TrueCar would be to stop the per-sale fee setup -- other have tried this before, even in the last five or six years. Just charge per-lead or per-month flat fees... TrueCar is required to do this in some states where there have been legal challenges about whether or not they are a broker.

There we would be less revenue potential or partnership potential with OEMs, but TrueCar does offer some valuable research and I would say that customers may still view the website as a trusted resource.

It will be interesting to see if TRUE changes their business model in the future - going to a fee per lead would address some concerns.

That said, I'm betting that TRUE will still want access to ALL of the sales data from their member stores so they can use the data to calculate transaction prices. Having access to all of the data on the dealership's DMS was the primary deal-breaker that caused AutoNation's Mike Jackson to pull the plug.

[mryan55]

So far the market hasn't been too kind to TRUE since the Q4 2015 earnings announcement. Close today at $4.82, up 11 cents for the day. I'm kind of surprised that the stock has such high volume -- 1.45M average for the last 10 days.

Most analysts are negative on TRUE. The market capitalization of $389.5M still shocks me for a company that does have significant capital tied up in software and advertising, but other than that what is there of value? Negative earnings per share since the IPO...

To put it in perspective, Penske Automotive has a market cap of $3.3B at today's close -- so Penske's billions in brick and mortar investments in 325 franchises have a current market cap only 10 times of TRUE.

[XDCX]

Originally Posted by mryan55

So far the market hasn't been too kind to TRUE since the Q4 2015 earnings announcement. Close today at $4.82, up 11 cents for the day. I'm kind of surprised that the stock has such high volume -- 1.45M average for the last 10 days.

Most analysts are negative on TRUE. The market capitalization of $389.5M still shocks me for a company that does have significant capital tied up in software and advertising, but other than that what is there of value? Negative earnings per share since the IPO...

To put it in perspective, Penske Automotive has a market cap of $3.3B at today's close -- so Penske's billions in brick and mortar investments in 325 franchises have a current market cap only 10 times of TRUE.

I haven't followed TRUE too closely but I do think it's kind of funny when the analysts all turn negative on a stock after a bad earnings report - nothing like closing the gate after the horses have all left the barn.

I just performed a quick review of TRUE and was somewhat surprised to see that USAA had a major holding in the company - the report on Yahoo Finance that I read indicated USAA owned over 16% of the outstanding shares.

I view USAA as a conservative company that carefully manages assets - I'm a bit disappointed to see that they have such a large financial position in a company like TRUE which has questionable prospects. I haven't determined how USAA acquired their shares - I wonder if they're under water or if the shares were given to USAA based on their early partnership with TRUE?

[mryan55]

Today I received a TrueCar invoice in the mail. I got one of first billable leads for someone who called us via a TrueCar call tracking number. With all of the access to the DMS that we provide, they know the exact day the car was sold and the VIN that was purchased.

The best part: it was a repeat customer
The worst part: up until a few years ago, you could at least plead your case to TrueCar and not pay -- no more appeal process for these leads

And we get to pay $300 to TrueCar for the incremental sale, all while they get our customer info and they now know that our transaction price was $1500 below invoice, so they can advertise even better 'deals' to future website visitors.

[XDCX]

Originally Posted by mryan55

Today I received a TrueCar invoice in the mail. I got one of first billable leads for someone who called us via a TrueCar call tracking number.

Thanks for the information. I want to make sure I understand, did the customer first go to the TrueCar website and then contacted your store via a phone number that TrueCar provided?

Additionally, would the person who worked the car deal at your store know that the customer had already contacted TrueCar or is this an example where you get hit with a referral fee after the car deal is done?

[mryan55]

Originally Posted by XDCX

Thanks for the information. I want to make sure I understand, did the customer first go to the TrueCar website and then contacted your store via a phone number that TrueCar provided?

Additionally, would the person who worked the car deal at your store know that the customer had already contacted TrueCar or is this an example where you get hit with a referral fee after the car deal is done?

Correct -- TrueCar provides a tracking number advertised on TrueCar (after login, so someone has to be on TrueCar to contact us via this number).

None of the sales staff have access to log in to TrueCar Dealer Portal, so unless we are properly determining source on the phone up (fat chance) I won't know until a few weeks after the car is sold and bill is sent.