John Krafcik, former chief of Hyundai’s U.S. unit, cites TrueCar’s overhaul of its business model during a crisis as one reason he accepted a board of directorship at the automotive-pricing website company that plans a public stock offering.
“TrueCar went through a really difficult time, and I thought it was remarkable the way they handled it, admitted mistakes and made the necessary adjustments,” Krafcik tells WardsAuto.
The company provides sales leads to dealers and pricing information to consumers. It filed a U.S. Securities and Exchange Commission statement today as a prelude to a prospective initial public offering.
TrueCar Executive Vice President Larry Dominique tells WardsAuto he’s “super excited” about Krafcik becoming a board member, but adds it is unrelated to TrueCar’s IPO bid.
Selling public stock “will give us more working capital and allow us to work harder to bring out new products,” he says, declining to discuss specifics of the potential IPO Goldman, Sachs will manage.
Krafcik led Hyundai Motor America to record sales and boosted the automaker's U.S. market share more than 50% during his 5-year tenure as CEO and president.
But Hyundai didn’t renew his contract, which expired Dec. 31. The South Korean automaker experienced a lackluster 2013 sales year in the U.S.
TrueCar on its website gives consumers comparative and local-marketplace pricing information, and Krafcik says he’s a believer in such transparency as well as dealer profitability.
“TrueCar has tools that let car buyers get a fair price and help dealers price their inventories,” he says. “It is a benefit to both consumers and dealers.”
He adds, “I want to help retailers in automotive and other industries build a bridge of trust with consumers, and joining TrueCar lets me get fully immersed in doing exactly that.”
TrueCar appears to have made a full recovery from troubled times of a few years ago when critics, including many dealers, accused it of taking pricing transparency to an extreme and consequently hurting dealer margins. It led to a groundswell of opposition.
TrueCar acknowledges it created a race-to-the-bottom business model that since has been revised. Changes include thwarting hard-playing consumers from misusing pricing information by pitting dealers against dealers.
Other business-model changes discourage internecine price-slashing. Before, many hypercompetitive dealers used TrueCar to offer ridiculously low prices.
When that happened, other dealers pushed back. Many stopped buying TrueCar leads. The company went from a peak of 5,700 dealer clients to 3,107 in 2012.
TrueCar says it currently has 7,500 certified dealers who are committed to “negotiation-free savings” and recently reached a milestone by selling 1 million vehicles through TrueCar leads. The company says those accounted for 2% of U.S. auto sales last year.
TrueCar CEO Scott Painter says Krafcik is a good fit.
“Very few people are credited with elevating an emerging brand to top-tier status within the automotive industry,” Painter says. “John Krafcik is one of those remarkable leaders who has done just that over the last five years. At the heart and soul of his success at Hyundai was the trusted relationship the brand developed with its dealers and customers.”
Krafcik also serves on TrueCar’s operating committee. As such, he has been meeting with dealers.
He also has done automotive and technology consulting work in the past three months. “I’ve never been busier since leaving Hyundai,” he says.
