TrueCar expects that a new subsidiary focused on providing market-based valuations for used cars will entice dealers and help grow business in an ongoing, tight used-vehicle market.
The vehicle listings company rolled out TrueCar Wholesale Solutions (TCWS) nationally at the end of April, after a first quarter in which it posted a 15 percent drop in revenue and rising net losses.
TrueCar is countering this with efforts to rebuild its core business, an ongoing expansion of its TrueCar+ digital sales platform, a focus on converting more traffic into dealer sales and efforts to "lean into" the used-vehicle market, CEO Mike Darrow said May 9 during the company's earnings call.
TrueCar Wholesale Solutions is designed to help generate precise valuation data for consumer-to-dealer sales and remote trade-ins, the company said. It will rely in part on "proprietary algorithms" to produce market-based vehicle valuations and better meet dealer demand, Darrow said.
"The sourcing of used vehicles remains a top demand for our dealers and we believe this program will be a relevant solution for them," he said.
The tool is also meant to provide a backstop on trade-ins through TrueCar+, Darrow said.
Underscoring its commitment to the initiative, TrueCar said in its stockholder letter that it will stop working with rival Cars.com's Accu-Trade appraisal system.
TrueCar+ also continues its expansion from six Southeast states to an additional 10 states over the coming months, Darrow said.
Net losses for the Santa Monica, Calif., company in the first quarter grew to $19.6 million, up from a $12.4 million loss a year earlier and an $18.1 million loss in the fourth quarter. Revenue dropped 15 percent to $37 million but rose slightly from the previous quarter.
TrueCar said its revenue drop stemmed from buyers discouraged by elevated vehicle prices, limited new-vehicle inventory and rising interest rates, which created softer vehicle volume.
The company reported 11,832 dealership customers at the end of the first quarter, 7,961 of which were franchised. Franchised dealer count dipped 4.1 percent from a year ago but rose 0.5 percent from the previous quarter.
Its independent dealer count dropped 5.7 percent year over year and 6.7 percent sequentially.
TrueCar said the results reflect broader marketplace trends in new- and used-vehicle markets. Departing independent dealers in the first quarter were generally smaller dealerships, TrueCar said, with many either going out of business or consolidating into other dealerships.
Pay-per-sale transaction revenue accounted for 21 percent of dealer revenue in the first quarter, a slight improvement from the quarter a year ago and the fourth quarter.
Q1 net loss: $19.6 million, up from a net loss of $12.4 million a year earlier
Q1 revenue: $37 million, down 15 percent from a year earlier
Q1 adjusted EBITDA: $11.3 million loss, worse than a $6.3 million loss a year earlier
Guidance: The company anticipates breakeven or positive adjusted EBITDA in the fourth quarter.
