Newly public TrueCar tests trade-in program
Krafcik, left: Program is “many, many months off.” Painter, right: Plenty of room to grow with USAA
With a strong balance sheet and $70 million raised in last week's initial public offering, TrueCar has cash to develop new products, including an online vehicle trade-in service being tested by USAA members, new TrueCar President John Krafcik said.
TrueCar, a car-shopping site that allows consumers to get guaranteed vehicle prices from dealers, alluded to new products on the horizon in its IPO documents, including TrueTrade, TrueLease and TrueLoan.
Krafcik said even the trade-in program being tested is "many, many months off" and will be vetted by dealers and others before it is rolled out widely. USAA, the giant financial and insurance service firm for military staff and veterans, is TrueCar's largest shareholder with a 26 percent stake.
Under the test program, any of USAA's 10 million members can get a wholesale price on their prospective trade-ins and, perhaps, get a sweeter deal from a participating TrueCar dealer willing to bid more. TrueCar eventually wants to guarantee the trade-in price under what would become TrueTrade.
TrueCar has about 7,700 participating dealership franchisees nationally.
TrueCar Executive Vice President Larry Dominique said that thousands of USAA customers have sold their trade-ins during the nine-month test. In most states, dealerships pay TrueCar $299 when they sell a car to a TrueCar user.
USAA is the largest user of TrueCar shopping services. USAA members bought 171,795 vehicles through TrueCar in 2013, or 47 percent of all vehicles sold by TrueCar-participating dealers.
Despite that, TrueCar has plenty of room to grow with USAA, TrueCar CEO Scott Painter said in a CNBC interview on Friday, May 16. USAA members buy 200,000 vehicles a month, with 17,000 of those bought through TrueCar, he said.
TrueCar sold about 7.8 million shares in its IPO last week at $9 per share, substantially less than the $12-$14 per share expected before the offering.
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