TrueCar Inc. reported a smaller first-quarter loss Thursday amid steep revenue declines and lagging dealership participation.
The vehicle listings provider narrowed its first-quarter net loss to $8.4 million from $10.7 million in the year-earlier period. Revenue slid 18 percent to $65.1 million, largely due to the loss of USAA Federal Savings Bank vehicle volumes from the termination of the relationship in September 2020.
TrueCar CEO Mike Darrow said Thursday on a call with investors that the company’s dealer churn was better than expected despite inventory issues caused by the industry’s chip shortages.
“The reduced new-car inventory levels, paired with strong natural consumer demand, has retailers closely monitoring demand-generating sales and marketing expenses, which we believe will put pressure on our dealer count,” Darrow said. “We share the widely held view that the chip and inventory shortages will be temporary.”
TrueCar’s franchise dealer count slipped 1.4 percent 10,446 dealerships in the first quarter, while the independent dealer count dropped 2.4 percent to 3,702.
TrueCar reduced sales and marketing expenses in the first quarter. The first quarter of 2020 included a goodwill impairment from “discontinued operations” the company said in a statement.
Shares of TruCar were trading down 4.1 percent to $4.59 Friday afternoon.
Partnerships, investments
TrueCar, of Santa Monica, Calif., is optimistic about its new relationship with Navy Federal Credit Union, which was disclosed in a February regulatory filing and went live during the quarter. It replaces the USAA relationship, which accounted for nearly 30 percent of the vehicles sold to buyers who connect through TrueCar’s network.
Darrow also updated investors on TrueCar’s Deal Builder function, which allows car shoppers to structure their vehicle deal through the tool on the TrueCar site. Since the November launch, 78 percent of TrueCar’s franchise car dealership network has adopted the solution, Darrow said.
TrueCar also announced a partnership with digital retailing provider Roadster this week, wherein customers will be able to finalize their car-buying deals digitally through an integration with the Roadster platform.
The capability is currently available at more than 650 dealers that work with both TrueCar and Roadster, though Darrow added TrueCar is also invested in developing its own internal tool, “in order to support any dealer who doesn’t currently have a digital retailing vendor solution and to support consumers who wish to use our experience.”
“This can be especially important for our smaller franchise and independent dealers who perhaps don’t have the resources to invest in a more comprehensive digital retailing infrastructure.”
