TrueCar CEO talks strategy behind native smartphone app: 'I believe that search is dead'

TrueCar recorded another profitable quarter since going private in January, added two more credit union partners, and is preparing to shift how it reaches customers.

Driving the news: The financial news, continued business drive, and a stated commitment to full FTC compliance each played into the company's turnaround, according to a release.

As for the credit unions:

TrueCar added State Employees' Credit Union (SECU), saying it’s the second-largest credit union in the U.S. with more than $60 billion in assets, and Affinity Federal Credit Union, which has $4.35 billion in assets, it said, as partners, bringing its total credit union network to more than 80.
Members using TrueCar's auto-buying program save up to about 9% off MSRP, depending on the vehicle and incentives.
Also, credit union-referred customers convert at about 20%, compared to a 2-3% industry average for typical leads, the company said.

Digging deeper: "There's three phases to how we looked at TrueCar when we bought the business," CEO Scott Painter told CDG News.

Phase one, he said, was discipline. Phase two and phase three covered a deeper product shift and scaling, respectively.

On the discipline piece, TrueCar cut its workforce from just under 400 to just over 200. It also stopped what Painter called "investing in unprofitable growth just to feed dealers more leads."
For phase two, underway now, the company is working to move away from a lead-generation, browser-based model and toward what Painter calls an "order" business built around a native smartphone app rather than a website.
Phase three (scaling) is still ahead.

“What I don't want to do, though, is scale the business and go big with our affinity partners and really 10x the volume on the front end until I have the engine done," Painter explained.

What he means: Back to phase two, Painter shared that he traced the whole "leads vs. orders" distinction back to his TrueCar 1.0 days, remembering a story at a dealership near a military base in Seattle with an unusually high close rate.

He asked the salesperson running internet sales how he did it.

"He just said, 'OK, so when the orders come in, I just go ahead and gas up the car. I call the person to make the appointment to bring the car over to him,'" Painter recalled.

In other words, the salesperson was treating those "leads" as orders. (He actually thought they were orders, not leads, we should note.)

Painter called that shift in mindset "probably the single biggest paradigm shift in perspective that the auto retail sales groups need to understand."

Here are his thoughts on the old model vs. where he wants it to go:

The average dealer has to call 75 to 100 leads just to find out whether a customer is really in market.
TrueCar's close rate on customers who've already used the platform to evaluate incentives, financing, and trade-in value before seeing a dealer is about 4%-5% today.
Painter wants that number at 40-50%, and eventually closer to 100%.
TrueCar has already nearly tripled its shopper-to-prospect conversion ratio under the new approach.

The company now moves about 350,000 people a year through its network on new car purchases, a number Painter wants at 2 to 3 million within the next couple of years.

There's an app for that: Or, at least in TrueCar's case, there will be. Painter aims to move the company away from its "dot-com" roots entirely and build around a native smartphone app instead.

"We're going to be really burning the boats at some point here in the not too distant future, where we really force our consumers to install the app," Painter said.

The app unlocks things a website can't, Painter noted, listing categories such as geolocation, identity verification, and the ability to approve a shopper for financing in real time rather than a generic pre-approval.
Painter wants to combine shopping with financing from the start, noting that 94% of consumers finance their vehicle rather than paying cash.

Adding to the logistics of it all: "I believe that search is dead," Painter said. "Consumers do not need four million answers to a question alphabetically or price ranked or color ranked or any of that."

Instead, he wants TrueCar's data kept behind what he calls a "walled garden" inside the app, not published on the open web. He thinks an open, VIN-based listings database "is also going to be the Trojan horse that allows AI to try to optimize against dealers as a group."

Zooming out: Painter also talked about industry headwinds, such as FTC compliance issues and tariffs. He tied the timing to the agency's ongoing push on advertising transparency.

"It couldn't have been a bigger, more aligned effort with what TrueCar is really all about," Painter said, adding that confusion at the dealership is just as harmful as a bad deal.
“If a customer doesn't know what MSRP is, they don't know what an advertised price is,” Painter said. “They don't know what to believe. Then they are lost, and they are looking, and they are very much not ready to buy a car.”

Dealers on the platform have spent the last six to eight months working to be "fully compliant, not just with the FTC, but what's going on in California and all of these other things."

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On tariffs: The near-term consumer impact has been muted so far, Painter says, as automakers lean on incentives and discounts to hold the line on price.

Still, he expects longer-term effects on manufacturing and profitability, in some states more than others.

"It is definitely going to hit states like Michigan harder than other parts of the country.”

He also shared early signs of a broader consumer shift already showing up in TrueCar's shopping data: Buyers moving from new to used, from large vehicles to smaller ones, and from premium to mainstream trims, with hybrid search interest up threefold on the platform.
Painter described TrueCar's own shopper data as 'a canary in the mine' for those trends.

Bottom line: Painter said the biggest takeaway is that all of this is meant to serve dealers by helping them become genuinely more profitable, not just moving more cars.

"This is not about discounting to sell more cars,” Painter said. “This is about using data and science, helping consumers to have a better experience, but also to help dealers to be more profitable. And that is really, really a big idea."

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