The new CEO of TrueCar (TRUE) - Get Report , Chip Perry, is in a race against time to patch up strained relations with U.S. car dealers, to advance the Santa Monica, Calif.-based company's digital technology and to improve consumers' vehicle-buying experience.
In the first earnings report since Perry's appointment as CEO, TrueCar on Thursday posted a $27.4 million fourth-quarter loss on revenue of $63.6 million. A year earlier, the company lost $9.8 million loss on revenue of $59.3 million.
As Perry pursues these strategic initiatives, big car-dealer groups like AutoNation, several Web sites like Edmunds.com and automakers are investing heavily in their own digital tools to intercept Internet shoppers and facilitate transactions. If dealers and others develop tools first, why would dealers continue to pay TrueCar?
To be successful, Perry told analysts at his first earnings conference call that TrueCar must improve its on-line technology and persuade consumers to use its services for price discovery. The company also must demonstrate to car dealers the value in providing those consumers as prospects for buying new and used vehicles. Dealers pay TrueCar a commission once sales leads turn into transactions.
"Immediately after I took the helm (in late November), I began an active outreach to hear directly from our dealer customers, what they like and don't like about our company," Perry said in the conference call on Thursday. "They have given me an earful of very helpful input, which I really appreciated."
Perry's predecessor, TrueCar co-founder Scott Painter, announced he was stepping down as CEO last August following a tumultuous period of conflict that alienated many dealers and included the loss of AutoNation as a major customer. Dealers provide information about recent sales transactions which is used to give shoppers a picture of how much they might pay for a vehicle.
But many dealers remain wary of TrueCar, fearing that providing price transparency to shoppers creates "a race to the bottom" that erodes profit margins.
On Friday, Perry said he hired Brian Scutta -- whom he described as an "industry veteran" -- to the new position of executive vice president with the responsibility of strengthening relationships and improving services with the 11,000 U.S. dealers that do business with TrueCar. Earlier, Perry told analysts the company will expand its network of sales and service agents that work with dealers.
TrueCar powers car-buying services for affiliate groups such as American Express, Sam's Club, USAA and AARP. Unique visitors to its Web site in the fourth quarter numbered 5.9 million, up from 4.4 million a year earlier. But Perry told analysts the company can do better to convert more of those visitors to vehicle buyers.
For all of 2015, TrueCar was responsible for 750,108 purchases of new and used cars and light trucks in the U.S., up 23% from a year earlier. Average revenue per sale was $324 per vehicle in the fourth quarter.
Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.