With a former OEM chief executive officer joining its board and paperwork filed for an initial public offering, activity is buzzing at TrueCar. That IPO paperwork filed with the Securities and Exchange Commission offered a glimpse as to what’s going on underneath the hood of the lead-generation website.
TrueCar indicated the number of common shares to be offered and the price range for the proposed offering have not yet been determined. But according to the registration statement on Form S-1 filed with the SEC, the company is coming off of a year where it generated revenues of $134.0 million and recorded a net loss of $25.1 million.
Of the $134.0 million in revenue, TrueCar noted that 89 percent consisted of transaction revenues with the remaining 11 percent derived primarily from the sale of data and consulting services to the automotive and financial services industries. Transaction revenues primarily consist of fees paid to the by its network of TrueCar Certified Dealers under its pay-for-performance business model where the company generally earn a fee only when a TrueCar user purchases a vehicle from them.
TrueCar mentioned in its SEC filing that its dealer network consists of more than 7,000 dealerships, primarily franchised stores as well as a smaller amount of independent operators.
“We typically charge TrueCar Certified Dealers $299 upon the sale of a new car to a TrueCar user,” company officials said. “In 2013, the overall industry average advertising expense per new car across all forms of media was $616, according to NADA.
“By helping dealers better target their acquisition efforts to in-market consumers using our platform, we believe that dealers can improve their close rates, which results in other operating cost efficiencies such as savings on selling expenses and inventory carrying costs,” they continued.
TrueCar recapped the challenges it has experienced with its dealer network. At the end of 2011 and the beginning of 2012, due to certain regulatory and publicity-related challenges, officials acknowledged many dealers cancelled their agreements with TrueCar, and its franchised dealer count fell from 5,571 on Nov. 30, 2011 to 3,599 on Feb. 28, 2012.
“TrueCar Certified Dealers have no contractual obligation to maintain their relationship with us. Accordingly, these dealers may leave our network at any time or may develop or use other products or services in lieu of ours,” TrueCar officials said in the SEC documents.
“Further, while we believe that our service provides a lower cost, accountable customer acquisition channel, dealers may have difficulty rationalizing their marketing spend across TrueCar and other channels, which potentially has the effect of diluting our dealer value proposition. If we are unable to create and maintain a compelling value proposition for dealers to become and remain TrueCar Certified Dealers, our dealer network would not grow and may begin to decline,” they continued in the filing section that described their risk position.
TrueCar went on to acknowledge that larger dealer groups not choosing to use its services and have a significant impact on its growth possibilities as well as its stock value.
“Although the automobile dealership industry is fragmented, a small number of groups have significant influence over the industry,” TrueCar said. “These groups include state and national dealership associations, state regulators, car manufacturers, consumer groups, individual dealers and consolidated dealer groups. To the extent that these groups believe that automobile dealerships should not partner with us, this belief may become quickly and widely shared by automobile dealerships and we may lose a significant number of dealers in our network.
“A significant number of automobile dealerships are also members of larger dealer groups, and to the extent that a group decides to leave our network, this decision would typically apply to all dealerships within the group,” the company continued.
“We cannot assure you that we will maintain strong relationships with the dealers in our network of TrueCar Certified Dealers or that we will not suffer dealer attrition in the future,” TrueCar officials went on to state in the IPO filing. “We may also have disputes with dealers from time to time, including relating to the collection of fees from them and other matters.
“We may need to modify our products, change pricing or take other actions to address dealer concerns in the future. If a significant number of these automobile dealerships decided to leave our network or change their financial or business relationship with us, then our business, growth, operating results, financial condition and prospects would suffer. Additionally, if we are unable to add dealers to our network, our growth could be impaired,” TrueCar added.
Nonetheless, TrueCar reiterated that it is poised to capitalize the growth potential of rising vehicle sales, referencing some new solutions in the company pipeline.
“In the future, we intend to introduce additional products and services to improve the car-buying and car-ownership experience. For example, we are developing TrueTrade to provide users with an estimated daily market value for their existing cars and a guaranteed trade-in price,” the company said.
“In addition, we are developing TrueLoan and TrueLease to provide users with a more convenient way to finance their cars at TrueCar Certified Dealers,” officials continued. “We are also in the process of launching a number of new services for our dealers designed to enable them to make better informed inventory management and pricing decisions and to close transactions more efficiently.”
With those elements in place, TrueCar decided Friday was a good time to launch the IPO. Goldman, Sachs & Co. and J.P. Morgan Securities will act as the joint book-running managers for the offering.
TrueCar Adds Ex-Hyundai CEO Krafcik to Board
In other company news, TrueCar announced last week that the former top boss at Hyundai Motor America has joined its board of directors.
John Krafcik, former HMA president and chief executive officer, was at the helm of HMA from 2008 to 2013, and will now become a director at TrueCar and serve as a member of the board’s operating committee.
“Very few people are credited with elevating an emerging brand to top-tier status within the automotive industry,” said Scott Painter, founder and CEO of TrueCar.
“John Krafcik is one of those remarkable leaders who has done just that over the last five years. At the heart and soul of his success at Hyundai was the trusted relationship the brand developed with its dealers and customers,” he added.
Krafcik noted: “I believe transparency is a better business model that builds trust between consumers and retailers. I want to help retailers in automotive and other industries build a bridge of trust with consumers, and joining TrueCar lets me get fully immersed in doing exactly that.”
A new product hit the market Tuesday that has the potential to help dealers learn more about their customers and what these buyers want from a dealership.
Customer relationship management platform OneCommand revealed a new survey tool this week.
Dealer Review is a mobile responsive email survey tool, which helps dealers capture customer feedback about their recent sales or service experience.
“Over the years, we’ve had more and more dealers ask us for a tool that helps them gather feedback from their customers in real-time. With our Customer Marketing and Loyalty Automation Platform, it just makes sense to include the Dealer Review service in our product offering since we are already providing follow-up to these customers after each purchase or service transaction,” said Jeff Hart, president and chief executive officer at OneCommand. “OneCommand’s new Dealer Review solution will capture consumer feedback and provide alerts to the dealership before the situation escalates.”
Dealer Review sends out surveys to dealership’s customers that aim to gain responses regarding their visit “to address any issues, work to maintain excellent customer satisfaction, and ensure exceptional scores are obtained on the manufacturer’s survey,” the company explained.
The tool was designed in an effort to help dealers show they are committed to customer satisfaction, which in turn, can increase customer loyalty and retention.
The tool will also serve as a way for dealers to pinpoint trouble areas within the store.
Incentive spending went up in March and will likely rise again as the spring moves forward; that much, at least, appears to be one consensus among some of the monthly forecasts making the rounds.
The implication and degree of that increase is where there are moderately differing viewpoints.
Starting with Cars.com, the company released an analysis released Monday where it pegged average incentive spending for March at $2,714. This would be an 8.1-percent year-year-over lift and a 4.5-percent month-over-month hike.
“Weak first-quarter sales caused inventory levels to swell, and manufacturers have had to be more generous with their incentive spending in order to accelerate sales, as evident by the 8-percent year-over-year increase,” said Jesse Toprak, chief analyst for Cars.com.
“The good news is that consumers continue to prefer well-equipped models, which has helped keep transaction prices up despite the larger incentives,” he continued. “We expect incentive spending to continue to increase into the summer in a controlled manner — not with an all-out incentives war — and ATPs to stay mostly flat.”
Over at Kelley Blue Book, senior analyst Alec Gutierrez was predicting last week that March new-vehicle sales would begin to “bounce back” from two tough months to begin 2014, setting the stage for a stronger spring, both in terms of sales and available incentives.
“Although we aren’t expected to hit 16 million SAAR, indications show that consumers are returning to showrooms in spring,” Gutierrez said.
“The momentum built in March should set the market up for a big month in April. Those consumers that delayed a purchase in January and February will find a modest increase in available incentives, which should help to offset gains in average transaction prices,” he added.
Meanwhile, TrueCar’s analysis released last week called for a 7.9-percent year-over-year increase in incentive spending for March, putting the average spending per unit at about $2,773. This would be a 2.6-percent month-over-month increase.
“The spring thaw has resulted in a slight improvement in vehicle sales, but not nearly the improvement analysts hoped they would see,” said Larry Dominique, president of ALG and executive vice president of TrueCar. “With incentives rising at a rate four-times greater than sales, expect an aggressive final week of selling in March and an equally aggressive April. An incentive-fueled battle is on the horizon.”
Company growth and a quest for an amenity-filled workspace for employees have resulted in the opening of a new headquarters for Haystak Digital Marketing, which offers products and services for the automotive industry.
The company announced completion of the refurbishment of a 15,000-square-foot site in downtown Fort Myers, Fla., in the landmark McCrory Building near the town’s waterfront. The work began in October 2013.
"With the growth that Haystak has experienced, we wanted to provide our team members an outstanding workspace in a vibrant part of town, and make room for our expanding business,” said Julio Gonzalez, Haystak Digital Marketing director of operations. “This historic area is quickly becoming a vital place of business, living and fun for our community, and we're looking forward to being a part of the revitalization of our beautiful downtown and the continued growth of the Fort Myers area."
The refurbishment of the historic building, which was originally constructed in 1936, incorporates the latest technology while retaining the site’s architectural character, such as brick walls, tin ceiling and original heart pine beams.
The new Haystak headquarters also includes more than 10 miles of data cable and employee amenities such as ADA compliant showers, a changing room for infants, golf putting space, video gaming area and two employee lounges.
A grand opening party with refreshments and entertainment is planned for later this spring.
Haystak is part of VinSolutions, which is wholly owned by AutoTrader Group, a subsidiary of Cox Enterprises.
Marketing the right vehicle to the right buyer — minus large ad spends for across-the-board targeting — is the aim of a new offering by Dominion Dealer Solutions.
On Tuesday, the company announced the first of what it calls a “series of progressive and integrated product improvements” meant to assist dealers with their merchandising and pricing actions, by adding real-time unique vehicle differentiators and likely buyer persona data to the Dominion Inventory suite of products.
“Historically, dealers have lacked an effective tool to understand the real-time, value-driven differences that set vehicles apart,” said Jennifer Ryan, director of inventory solutions for Dominion Dealer Solutions.
“Translating these differentiators into actionable pricing, stocking and merchandising arms the dealer with better vehicle-specific information, superior targeted analysis, and improved inventory results.
“The addition of UVDs to Dominion’s Inventory suite helps dealers start with key selling features of their used vehicles immediately and price and merchandise them appropriately,” Ryan said.
These VIN-specific features address two key questions in dealer marketing:
What story should I be telling about this specific vehicle to attract online shoppers?
Who are the likely buyers of this specific vehicle in my local market?
Unique vehicle differentiators including inventory manager, Storybuilder and marketing pricing tools, analyze the key selling features of each vehicle.
Also, the addition of likely buyer persona data within the Dominion Inventory suite creates a tool to help dealers identify the right buyer personas for their used vehicles, by combining demographic data such as estimated household income, age, gender and occupation.
These results are then compared to automotive industry purchase behaviors, yielding insight into segments for VIN-specific messaging from dealers. This information can be integrated with CRM, website and other marketing systems to create a custom consumer experience for each online shopper.
“By matching individual demographics against automotive purchase behavior, dealers no longer have to engage in large advertising spends in order to effectively target every type of buyer for every type of vehicle,” said Greg Polen, senior product manager for Dominion Inventory Solutions.
“Dominion Inventory provides a better way to look at inventory and identify likely prospects so that dealers can segment and target buyers with the right messaging.”
Haystak Digital Marketing shared more details about its all-new website platform — HAYSTAK KORE360 — a platform the company created in-house using leading-edge technology and data from thousands of top performing dealer websites.
The company highlighted on Monday that HAYSTAK KORE360 is built for the ever-changing needs of shoppers who demand instant access to information on a variety of devices. Haystak’s “responsive” technology is geared to adjust the dealership’s website format automatically according to the type of device shoppers use to access the dealership online, making navigation fast and easy whether shoppers use a phone, tablet or desktop computer.
“We had a great initial launch of HAYSTAK KORE360 at the NADA convention in January. It drew a lot of attention and dealers were excited to see a new website platform built from the ground up with the latest technology and features,” Haystak Digital Marketing founder and general manager Duncan Scarry said.
“In addition to the responsive technology, most dealers particularly liked HAYSTAK KORE360's advanced SEO capabilities, behavioral targeting and timed content features, all of which can help lead to significant increases in traffic, leads and sales,” Scarry continued. “In addition to our focus on providing the latest, most powerful technology, we also continue our commitment to offering the best customer service.”
Scarry went on to mention Haystak’s unique, proprietary search engine optimization reporting can combine organic with paid search results to show the “true dollar” value of organic initiatives.
“SEO content is created dynamically, based on prior keyword performance, thus continuously increasing effectiveness,” Scarry said. “Further, Haystak’s SEO reporting tracks competitive data for comparison and insight.”
Furthermore, Haystak’s intelligent behavioral targeting can automatically customize the display on the dealership’s website with the most relevant information for shoppers, based on the content they viewed on other popular automotive websites.
The company said the behavioral display and retargeting tools can help dealers understand what website visitors are looking for from the moment they enter the dealership website, “delivering a truly personalized experience.”
Finally, officials pointed out HAYSTAK KORE360 also can let dealers control the timing of certain content. Content changes can be scheduled to appear and disappear on specific dates.
For example, dealers can schedule limited time offers and other specials, rebates and incentives to be available on the website for specified periods of time, and then automatically removed from the website when they expire. Also, dealers can quickly and easily create and schedule timed landing pages.
HAYSTAK KORE360 also offers award winning account management. All Haystak search team members are Google and Bing certified and available to consult with customers. In addition, Haystak received the Google AdWords Premier SMB Partner Award for Customer Satisfaction in 2012 and 2013.
For more details, visit www.haystak.com.
