
TrueCar Founder Scott Painter Out as Stock Drops 46% in Four Weeks
NEW YORK ( TheStreet) -- Scott Painter, the serial entrepreneur who founded TrueCar Inc. (TRUE) - Get Report , is leaving as CEO of the digital vehicle-buying platform after an especially tough quarter, saying "it's time for a change." The stock has dropped 46% in the past four weeks.
Painter, 46, will remain chairman, the company said, and help look for a new CEO. John Krafcik, former CEO of Hyundai Motor America's operations, is TrueCar's president.
TrueCar shares have lost 11.6% in the past week after the company provided guidance that its quarterly and annual revenue would fail to reach previously-announced targets and that losses would be more than expected.
The company went public in May of last year at about $9 a share and reached $25 a share prior to the latest collapse. TrueCar has been embroiled in litigation with dealers, shareholders and a trade association.
Painter and the company have been controversial among retail auto dealers, with whom TrueCar acts as a go-between for consumers seeking information about new and used-car pricing. In early July, TrueCar lost AutoNation Inc. (AN) - Get Report, the nation's largest publicly-held dealership group, as a key customer after clashing over the latter's refusal to provide data transactions with customers.
After undertaking a broad national advertising campaign in 2011, TrueCar faced industry resistance and criticism from dealers, who blamed the company for hurting their profit margins by revealing vehicle transaction prices. In response, the company modified its approach.
As younger, digitally-savvy consumers flock to Internet shopping sites, they're increasingly inclined to rely on websites including TrueCar.com and Edmunds.com for information about vehicles, including transaction prices. Retail dealers have watched profit margins fall on vehicle sales - even as they've invested in ancillary businesses such as service, insurance and lending to make up for lost profit.
Retail dealers are wary of being dislodged from their franchise position, just as booksellers and other retailers lost customers and business to online enterprises. Some dealers aim to forestall third-party digital enterprises by creating their own: AutoNation, for example, said it is investing $100 million for its own online platform that eventually will allow customers to buy vehicles from their smartphones or computer screens.
Automakers like General Motors Co. (GM) - Get Report and others also are developing websites that dispense information and refer shoppers to their dealers to continue the sales process. Automakers believe they can greatly reduce the costs of marketing vehicles by expanding digital operations.
For TrueCar to survive it must find a CEO who can win the trust and confidence of retail car dealers. The company may be prospecting among auto industry sales and marketing executives who already maintain warm relations with retailers.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.








