In coming weeks, TrueCar will add another executive to its dealer relations team as vice president of major accounts. This executive, whom the company identified as a current employee of a large dealership group, will work closely with the largest dealers in TrueCar's network, the company said.
The two new hires come after Ken Potter, TrueCar's vice president of dealer development, left the company in June to join a used-car trading network called the Appraisal Lane.
Potter, an industry veteran with experience at CarMax Inc. and CarsDirect.com, was brought into TrueCar in early 2012, a tumultuous period that's referred to internally as "The Swirl." At the time, the company was scrambling to mend relations with dealers after regulators in several states started cracking down on alleged advertising violations by TrueCar.
Shortly after Potter's hiring, TrueCar formed a dealer council, which remains in place today. TrueCar has since steadily rebuilt its network, which, by its count, encompasses more than 7,000 dealers.
Potter had only a limited role in policy decisions regarding dealers. Both he and TrueCar said he left of his own accord.
"Ultimately I think my usefulness ran out," Potter told Automotive News. "What I was there to do, I think I accomplished."
Some tensions remain between TrueCar and dealers. Two lawsuits have been filed this year against the company challenging its business practices -- one by dealers outside the TrueCar network, and another by the California New Car Dealers Association. In July, AutoNation, the country's largest new-car retailer, and TrueCar severed ties over disagreements about sharing customer data.
Potter said such disputes are to be expected, given TrueCar's drive to overhaul key aspects of the auto retailing business.
"The system that TrueCar is building is heavily predicated on the dealer using all of the TrueCar tools," Potter said. "I admire their lofty goals of accomplishing all that, but it will be hard to change the industry; this industry certainly changes but it changes over time and not very quickly."
Separately, TrueCar said its second-quarter results shortfall wasn't for a lack of consumers on its site, although TrueCar said it plans to add more affinity partners who can direct their members to its site.
"We had a lot of prospects this quarter," said CFO Michael Guthrie. "We had enough to hit our numbers, we believe; we just didn't close enough. So we have to invest more in the [TrueCar] experience to turn those prospects into unit sales."
He added: "It's both a dealer and an experience issue."
The issues that hurt TrueCar in the quarter, said CEO Scott Painter, did not include the third-quarter split with AutoNation or the lawsuits. Guthrie said the company expects by the end of the year to replace with other dealerships all of the 279 franchises, sold at 226 AutoNation stores, that will no longer do business with TrueCar.
"We don't have a consumer problem. Despite the challenges on the legal front, we don't have a dealer problem," Painter said, noting the rising number of TrueCar dealerships.
After revising its forecasts, TrueCar now says its 2015 revenue will be between $252 million and $258 million, down from $280 million and $290 million in a prior forecast. The company also predicts a second-quarter net loss of $15 million to $15.5 million. In the first quarter, TrueCar's net loss under generally accepted accounting principles widened to $11.6 million from $9.9 million a year earlier.
James B. Treece contributed to this report.
