TrueCar will eliminate more than 30 percent of its work force in a restructuring prompted by the coronavirus pandemic and the wind-down of a key partnership with USAA Federal Savings Bank later this year.
The Santa Monica, Calif., vehicle listings service said Thursday it is cutting 219 positions across all departments, effective July 31. The company had 709 full-time employees as of Dec. 31, according to its most recent annual report. The layoffs are expected to reduce staffing expenses by roughly $35 million annually, the company said.
"It has certainly been the hardest decision I've had to make in my 35-year career," TrueCar CEO Mike Darrow said in a letter to employees Thursday.
"This decision has not just been difficult, it has been painful, and I've struggled with making it," Darrow wrote. "Ultimately, the actions we are taking today are necessary to secure a successful future for this company and for all our partners, investors and clients."
Employees affected by the downsizing will receive 13 weeks of base pay, along with an extra week of pay for every year of service beyond one year, Darrow told employees. The company will cover the cost of COBRA health benefits for all laid off employees for the rest of the year, and will offer career coaching and assistance through 2020.
The job cuts became necessary as a result of the impact of both the end of the USAA relationship and the pandemic, Darrow wrote.
TrueCar in February said the 13-year car-buying partnership with USAA will end Sept. 30. USAA will pay TrueCar a $20 million transition services fee. The partnership generates about 29 percent of the vehicles sold to buyers who connect with dealerships through TrueCar's network, the company said then.
Dealership showrooms across multiple states closed starting in March because of government orders restricting business activity to limit transmission of COVID-19, the respiratory illness caused by the coronavirus. Many retail technology vendors, including TrueCar, offered discounted rates to dealership customers. TrueCar told dealers who don't already use a volume-based billing plan that they could switch to one or have their bills cut in half in April and May. A 25 percent discount will apply in June.
The company said Thursday in a regulatory filing that it anticipates a $9 million restructuring charge in the second quarter related to the downsizing move, mostly tied to employee benefits and severance payments. TrueCar earlier withdrew its 2020 financial guidance due to uncertainty around the pandemic.
TrueCar's stock price rose 7 percent to $2.85 in after-hours trading.
TrueCar is not the first U.S. online vehicle marketplace to reduce staffing during the outbreak. Cambridge, Mass.-based CarGurus in April said it will eliminate 13 percent of its global work force and exit some European markets.