In case you haven’t heard the news, there’s a current job opening in automotive that none of my peers will even consider: CEO of TrueCar (NASDAQ: TRUE). Most everyone I’ve spoken with about the role calls it a sure career-ender; a poisonous position that will turn even the most respected leader into an industry pariah. Not to mention the fact that TrueCar is sure to fail anyway, right?
I, of course, disagree. Not only would I gladly take the CEO position if offered, but I would fix what ails TrueCar shareholders and create offerings that dealers would cheer not jeer.
While TrueCar won’t be voted the Most Beloved Automotive Industry Vendor any time soon, there is not only a core business that’s worth saving, there is the potential for the next CEO to create something both rewarding for the shareholders and actually respected among dealers and OEMs.
To achieve this, the next CEO would be wise to follow my 10-Point Plan to Fix TrueCar:
Point 1: Reverse the policy of hiding consumer contact info from dealers. More than anything the TrueCar team has done lately to alienate their remaining dealership fans, this single move has been the worst received. The anger you hear when you speak to dealers about this is real. In fact, it’s reminiscent of TrueCar’s 2012 dealer spat that likely could have shut the company down. In the words of one dealer: “TrueCar can grab all the consumer data they want from my DMS, but they won’t share an email address with the dealer? That not only stinks, it gives me the final reason I need to cancel them.”
Point 2: Focus the leadership. Arguably only the view of an outsider, but it appears to me that TrueCar’s leadership team really likes being a publicly-traded company that is always in the spotlight. While it’s certainly possible to multitask, I believe given their company’s issues, the leadership team should be spending less time (and company money) on outside events (like Thursdays in Santa Monica) and more on working with their best dealers on how to improve the TrueCar offerings.
Point 3: Eliminate the “Not Invented Here” attitude. Again, just an outsider’s view, but the leadership team at TrueCar seems to genuinely believe they have all the answers and that there is no need for ideas from the outside. This is not just an observation about Scott Painter, either. I’ve dealt with half a dozen TrueCar managers and executives over the last six years and I came away from every encounter with a feeling that “our crap doesn’t stink” within the walls of TrueCar. Newsflash: There are lots of smart people with great ideas and cool products that could have helped TrueCar avoid its current hurdles.
Point 4: Change the “Dealers are the Enemy” focus. Despite moves since 2012 that appear to be more dealer-friendly, the fact remains that in order for TrueCar to reach its full potential (on its current track) dealers must suffer. This is because (in the mind of every TrueCar executive/manager I’ve met) “dealers are just middlemen who add unnecessary costs to the car-buying process.” This, from a company paid to be a middleman. Let’s be clear, dealers are middlemen, but they don’t add “unnecessary costs” to the process. While I could write a 4,000-word article detailing this, I’d rather just use one example: Tesla. Tesla employs no “middlemen” dealers, has undeniable pricing transparency and yet the new car gross margins for Tesla are double (about 25%) what they are for the average dealer plus OEM (about 12%). Dealers are not the enemy, and the first vendor to realize this and help dealers navigate this new world of pricing transparency will be the winner.
Point 5: Generate more valid leads at lower costs per transaction. Believe it or not, TrueCar is missing opportunities every single day to drive more valid sales leads for their dealers – and most of these at much lower costs. There is a coolness factor with their marketing that ends up costing TrueCar more per lead than what should be necessary. With just a little more innovative thinking, TrueCar could be driving many more leads without spending any more on marketing.
Point 6: Expand the product set to include more dealer-friendly offerings. This point is sort of a sub-point to Point 3; though certainly there is the opportunity to create these additional offerings in-house. The problem for TrueCar (and all other single-offering vendors) is that the giants are getting bigger. Competition for the dealers’ dollars from the likes of Cox Automotive is becoming fierce. The biggest companies are gobbling up everything they can in order to command even more of the pie. Moreover, many of the giants’ successes are coming at (or will come at) the expense of the single-offering vendors like TrueCar. Because I don’t see a Reynolds or Cox or CDK overpaying for TrueCar any time soon, TrueCar needs to move swiftly to deliver more and better offerings to its dealer base.
Point 7: Launch TrueTrade in a way that is dealer-inclusive. I know the word from TrueCar is that this will be a dealer-friendly offering, but excuse the dealers if they are skeptical. Given TrueCar’s track record, this not only needs to be dealer-friendly, but also must be a transparent roll-out with more than just “dealer input.” Beyond being dealer-inclusive, the other key term in Point 7 is “launch;” as in “launch this thing!” A major issue for many dealers is finding great used cars for their inventory. The vendor that truly assists in this effort will be highly valued by their dealer-clients.
Point 8: Launch TrueLease and TrueLoan in ways that are dealer-inclusive. Less important to the dealer-body than TrueTrade – but likely more important to TrueCar – will be the release of these two finance offerings. If these can be (A) dealer-friendly and (B) help consumers reduce the amount of time they spend in the dealership, these can be TrueHomeRuns for TrueCar and their shareholders.
Point 9: Better Monetize the TrueCar.com Traffic. I get that the website needs to keep trust with consumers, though there is no excuse for the lack of ads on the site or for not offering conquest opportunities to visitors. Given that there must be millions of monthly visitors to TrueCar.com who never even visit a TrueCar dealer, it’s fairly critical for TrueCar to find non-intrusive ways to monetize this traffic.
Point 10: Develop ways to Eliminate Showrooming on TrueCar.com. There’s a dirty little secret that many TrueCar dealers probably don’t know: consumers use your TrueCar pricing to negotiate with your competitors. While you probably think “well, at least I get my share,” it’s important to note that when those non-TrueCar dealers sell a vehicle, they’re not subject to the $299-399 fee from TrueCar. As more and more dealers understand this phenomenon, TrueCar is going to struggle to maintain its dealer counts. If I was listing the priorities for the next TrueCar CEO, this would certainly be among my Top 3.
There you have it; my 10-point plan to fix TrueCar. Whether I’m the CEO who gets to execute his plan or someone else takes over with his/her ideas, one thing is clear: The status quo must radically change in Santa Monica or TrueCar.com will become nothing more than a footnote in the history of automotive retailing.