Santa Monica’s TrueCar Inc. got a jump-start last week when the online car-pricing site announced its new chief executive.
News that seasoned online auto industry executive Chip Perry would take over from TrueCar founder Scott Painter drove shares up 25 percent to $8.76 last week, making it one of the biggest gainers on the LABJ Stock Index. (See page 40.)
“It’s really a vote of confidence in Chip,” said TrueCar Chief Financial Officer and interim Chief Operating Officer Michael Guthrie.
Perry spent 16 years helming third-party car-shopping site Autotrader Inc., a subsidiary of Kelley Blue Book owner Cox Automotive in Atlanta, which had $1.5 billion in revenue and 20,000 customer dealers when he left two years ago.
“Perry brings deep industry expertise to TrueCar, having built Autotrader to be the leading U.S. car site,” Debra Schwartz, a Goldman Sachs analyst in New York, wrote in a research note.
“As TrueCar’s relationship with dealers has been volatile historically, and challenging recently, Mr. Perry discussed (in an analyst call) that he is particularly interested in getting dealer buy-in as the industry becomes more transparent,” Schwartz continued, adding that Perry cited opportunities to improve data provided to dealers and the process for which TrueCar receives information.
However, she did point out that TrueCar and Autotrader differ in a few ways, such as the mix of new and used cars they handle, their pricing models and when consumers use them in the purchasing process.
Guthrie said the new chief executive is well-aware that TrueCar is a two-sided marketplace that has to be an effective economic experience for dealers while delivering consumers great value as well.
“As a criticism of TrueCar, we have in our history leaned a little more consumer and a little less toward appreciating the dealer and understanding their challenges,” he acknowledged.
Guthrie said the firm is developing tools to help dealers and that Perry will spend a lot of time visiting dealer customers to get direct feedback about ways TrueCar can help them improve business as more buyers move into digital relationships with the car industry.
Meanwhile, the firm will also study consumer feedback on why the platform resulted in a vehicle purchase at a certified dealer or not.
Along with revealing the new chief executive last week, TrueCar announced that Painter would also relinquish his board seat and chairmanship when he departs in the middle of next month. But he will still remain a significant individual shareholder, with a 2.48 percent stake.
Guthrie sees this as an important moment for TrueCar as leadership shifts from the entrepreneur who founded the firm to an executive with experience scaling up a business.
“We’re really transitioning from a venture-backed startup that is public but still reasonably small to the scaling stage,” Guthrie said of the nearly 11-year-old firm. “In terms of the core business model, much will stay the same.”
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