UPDATED: 5/1/14 4:44 pm ET - adds details, history
John Krafcik, the former CEO of Hyundai Motor America, has been named president of online shopping site TrueCar.
Krafcik and TrueCar founder Scott Painter disclosed the hiring in an interview with Automotive News today.
The company last month filed its statement for an initial public offering of stock. Participating dealers pay TrueCar $299 when they convert a TrueCar lead into a sale.
Krafcik, a former Ford executive, left Hyundai late last year.
He joined the TrueCar board as a director on April 3. Since then Krafcik has been busy meeting with dealers -- especially the 25 members of the TrueCar Dealer Advisory Board, he said.
By redoubling dealer training, TrueCar can help its 7,500 participating franchises improve sales and prices with TrueCar prospects, Krafcik said.
Painter said he got to know Krafcik years ago during an event for the Hyundai Equus in Monterrey, Calif.
After listening to Painter’s vision to improve transparency in car buying, Krafcik said he stayed in touch with Painter.
Krafcik brings insight into what dealers and manufacturers need from a car-shopping site to sell more cars, Painter said.
Krafcik said he would love to talk about new products that TrueCar intends to roll out in the coming months, but can’t because of a quiet period required as part of the initial public offering.
In the company’s stock registration, TrueCar said it planned to launch TrueTrade, TrueLease and TrueLoan as ancillary products to its vehicle-buying service.
With Krafcik, 52, in charge of day-to-day operations, Painter said he will turn more of his attention to investor and customer relations. He insists, though, that he will remain hands-on in product development.
“I went from 15 direct reports to five,” Painter said.
Painter said Krafcik will keep his TrueCar board seat.
During his five years at the helm of Hyundai Motor Co.’s American arm, Krafcik nearly doubled the company’s U.S. market share. But Hyundai did not extend his contract and he departed at the end of 2013.
In the IPO, TrueCar intends to raise $125 million to finance growth and roll out new products. The number of shares offered and initial share price have not been determined, according to TrueCar’s registration statement.
TrueCar allows consumers to shop for cars online from its participating dealership franchises.
Dealerships compete for sales with guaranteed prices for shoppers. The company was started in 2005 by Painter, who also founded CarsDirect.com.
TrueCar reported a 68 percent jump in revenue in 2013 to $134 million, while its net loss narrowed to $25.1 million from $74.5 million, according to the filing with the Securities and Exchange Commission.
Krafcik’s hiring and the pending IPO mark a remarkable turnaround for TrueCar.
In early 2012 the company nearly went out of business, Painter said. That’s when regulators from multiple states questioned TrueCar’s advertising methods. The regulators also contended that the company’s method of charging dealers only after a car was sold violated laws prohibiting brokering by unlicensed parties.
Also, dealers complained that TrueCar’s bid system lowered transaction prices, hobbling profits.
Painter called the crisis, which happened during his wife’s pregnancy, “a near-death experience” for TrueCar.
Painter engineered a restructuring of the company’s business model. He de-emphasized cutthroat pricing for consumers. He pitched instead a fair price that provided a profit for participating dealers.
The key change was eliminating the ability of competing dealers to see in real time what rivals were bidding to win customers. Instead, bidding was made blind to prevent dealers from racing to the bottom on price and losing money on their new-car deals.
Back in compliance
By mid-2012, TrueCar was back in compliance on all states and gradually coaxing dealers back to the company. During the crisis, participating franchises fell nearly in half to 3,200.
Since its founding, TrueCar users have bought more than 1 million vehicles from participating dealers. Many of those buyers are members of associations and groups, such as USAA and AAA, which offer the TrueCar buying service as part of their offerings.
TrueCar calls those associations affinity partners.