November 23, 2015 — The Banks Report has learned that TrueCar today is naming Chip Perry as its new chief executive officer.
Perry has been president and CEO of RentPath since July of this year. RentPath is the parent company of Rent.com, Apartment Guide, Rentals.com and Lovely.
He takes over the leadership of TrueCar on December 15.
The move should bring some much needed credibility to TrueCar, whose stock price has plummeted in recent months (from more than $24 a share to a low of $4 — but it has started to climb in the last couple of weeks to more than $8 and has settled in around $7.50 today) due to numerous lawsuits from customers and dealers, lackluster second quarter earnings and frayed relationships with their dealer customers which led to the ouster of founder, chairman and CEO Scott Painter in early August. In what is a formality, TrueCar also is announcing Painter is resigning his positions as chairman and member of board of the directors effective December 15.
John Krafcik, its president, also left, resigning in September to lead Google’s autonomous vehicle efforts.(Read more analysis on TrueCar).
Perry is a known quantity for dealers and has a reputation for having a good relationship with them during his years at AutoTrader. Dealers may have grumbled about AutoTrader’s high prices, but Perry spent a lot of time in dealerships and at dealer conferences developing relationships with dealers.
Meanwhile, he should be a welcome choice for investors mainly because of his track record at AutoTrader. Perry started the classified listings company in 1997 with Cox Enterprises and built it from the ground up into a billion dollar entity implementing an aggressive acquisition strategy in 2009 which led to the purchase of several companies, including Kelley Blue Book, vAuto, Homenet and Vin Solutions.
He parted ways with AutoTrader in 2013. Perry has stayed under the radar for the most part, even though his non-compete with AutoTrader ended this past Spring.
Despite the difficult headlines this year, TrueCar’s transition team seems to have steadied the ship. It’s third quarter earnings came in much better than expected with revenue jumping 28% to $72.4 million while transaction revenue was its most in its history at $67.4 million.
Three of the five lawsuits filed earlier in the spring have been resolved. The two remaining lawsuits include the one filed by the California Automobile Dealers Association and the one filed in New York by Bellavia, Blatt & Crossett on behalf of dealers not currently clients of TrueCar.
TrueCar also had an impressive showing in the J.D. Power’s 2015 Automotive Mobile Site Study recently. It scored much higher in several categories than the mobile sites of other third party companies. (Several sites, such as Cars.com, AutoTrader and Kelley Blue Book scored below average in the study. The industry clearly has work to do on the mobile side).
Add to that victory, TrueCar’s recent partnership with Sam’s Club should generate additional revenue for the company (although, we hear it is an overly generous deal for Sam’s Club). Investors, though, shouldn’t expect too much from this deal for the first year or two. But Sam’s Club, we hear, is committed to making it a success following the success its competitor Costco has had with its car buying program, generating 400,000 sales last year.
Perry will have his hands full, though. TrueCar will likely never live up to Painter’s vision of transforming how cars are bought and sold (Painter did oversell his vision to investors — TrueCar was never going to do what he promised). Yet, many dealers consider it a necessary tool in their customer acquisition efforts today — many view it as a defensive tool along with being necessary to obtain manufacturer incentive money.
Still, dealer relations have been decimated for the second time in the company’s short history. A nasty and public breakup this summer with its biggest dealer customer, AutoNation rattled investor confidence in the management team — hence, Painter’s ouster.
Perry will have to shore up dealers’ trust in the firm. The team has already been hard at work, though, working to change dealers’ perceptions, so Perry may be walking into a situation where much of the work in that area is underway. Don’t be surprised if AutoNation returns as a customer in the near future.
Meanwhile, dealers that TBR has talked have responded favorably to the possibility that Perry would be named as CEO.
Perry will have strong opinions about how to “fix” TrueCar — including making some bold acquisitions. He’ll know exactly where to attack competitors, and he’ll likely have a better feel than what Painter had for how to leverage TrueCar’s vast amount of data. He’ll probably spend several months on the road meeting with dealers getting feedback while sharing his vision for his new endeavor.
He’s the right guy for the job, the only question is, can he turn the ship around? Time will tell…
For more analysis regarding TrueCar: Can TrueCar Rebound?