Can you speak to digitization and automation in the automotive industry?
We believe the automotive industry is woefully behind other verticals in establishing modern-day digital marketplace interaction for consumers. Looking outside the auto industry, you have companies like Expedia and others in travel, Amazon in consumer goods, and Uber which has built great technology to connect a two-sided marketplace of supply and demand. This is exactly what TrueCar aims to do as we believe the biggest immediate need for the automotive industry is to create an efficient, transparent, easy-to-use marketplace where a consumer can digitally shop for a vehicle according to their needs, in their own time, in the flexibility of their home, and go from discovery to delivery. We are building out a product, TrueCar+, where you can go from searching, building a consideration set, narrowing it down to vehicles that interest you, and then actually calculating a real payment for the vehicle and getting a cash value for a trade. We have built a technology that allows the consumer to fill out a credit application and go directly to the bank for lending approval. We believe the next big step for the automotive industry is to catch up to other verticals where digital commerce has become part of the everyday life of people.
What differentiates TrueCar from its competitors?
The TrueCar brand was started around transparency and fairness of pricing. We not only show the consumer all the prices, but we give them a relative context to the marketplace so that they know how to think about that price. Once a customer has narrowed their choice down to a particular vehicle, we can then build a deal for that car. Bringing digital commerce to the vehicle industry is greatly beneficial for consumers as it gives them the information required to make an informed decision and saves them time in the sense that they do not have to spend hours in dealerships.
How is TrueCar leveraging technology and data to improve the experience for the customer?
TrueCar puts in tremendous effort to take significant amounts of data and make it usable for consumers as part of their shopping process, especially around pricing and comparing vehicles. Technology is ever-advancing and thus flexibility in technology is critical. We completely rebuilt our tech stack a few years ago, which allows us to now introduce products to the marketplace in real-time, and then when consumers use our technologies, we can iterate it, see where consumers may be struggling, and improve it.
We are always looking to acquire companies that have capabilities that will complement our platform. For example, we bought Digital Motors which had a particular lending capability that now allows the consumer to fill out a loan application on our site, which is then sent directly to the banks.
There are also exciting things developing regarding AI, and through machine learning and technology, significant amounts of data can be made usable for consumers where they can interact and get timely answers back as AI sorts through a big database. TrueCar is looking at tools in the AI space to help consumers on their auto-buying journey.
What challenges do you foresee the industry would have to overcome to continue to be successful?
In the short term, the biggest challenge not only TrueCar but the whole automotive industry is going to face is affordability. We are still in an extremely supply-constrained marketplace and in short supply, prices remain high.
The average new vehicle selling price in March was over US$45,000 - that is up 6% year over year. 42% of the vehicles sold above MSRP. The average finance rate was 6.9% as interest rates go up, and that is up 49% year over year. We have high prices and rising interest rates which means affordability is going to be an issue for the average consumer. Consumers think about automotive purchases, not in the price of the car, but in the three-digit payment they can afford each month. We believe the key is to build technology that helps consumers find vehicles that will fit into what they can afford in a monthly payment.
In the longer term, electrification of fleets is a big priority and OEMs are spending significant time and effort in building interesting vehicles that will meet consumers’ needs. However, consumers still have questions about how to make the transition to electric vehicles. The focus is moving off of range and more to the infrastructure required to charge. The industry will have to help consumers make the move which might be a challenge.
Many young people nowadays do not want to have a car as much as people 30 years ago did; how do you see the consumer market evolving?
The younger generation from 16-30 is indeed much less interested in owning a car due to all the rideshare and transport options available. I do, however, believe that as this generation gets older, takes on jobs, and starts families, the need to have a vehicle of their own is going to increase. People are coming to the market later than they normally would, but there comes a time when their needs have evolved in such a way that they eventually do come to market.
What are TrueCar’s objectives and vision for the future?
I would like TrueCar to be known as the company which brought a truly modern-day digital commerce experience to the automotive industry. The younger generations are buying everything online and we want to provide them with an online platform to find, finance, and purchase a vehicle.
