Company: TRUE
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0001327318-25-000016
Chunk: 229

Company: TrueCar, Inc.
Filing Date: 2025-05-06
Form: 10-Q
Item: Part I, Item 8
Chunk 229
---
 dependent on our ability to manage dealer subscription rates.

If we are unable to convince subscription-based dealers of our value proposition, we could be unable to maintain or increase dealer subscription rates even if our unit volume increases. Similarly, if our unit volume declines and we are not able to appropriately manage the subscription rates of affected dealers, those dealers could insist on lower subscription rates or terminate their participation in our dealer network. Any of these and other similar subscription-related eventualities could have a material adverse effect on our business, growth, financial condition, results of operations and cash flows. In addition, in the past we have opted to provide subscription dealers with discounts in response to volatility in our monetization rates, including during the coronavirus pandemic. In the future, we expect to continue to adjust individual dealers’ subscription rates in an effort to bring their monetization rates in line with historical levels. If we do not successfully balance the need to maintain dealer relationships with appropriate subscription adjustments with the need to maintain our revenues, our business, operating results and financial condition could be negatively affected.

Finally, we strive to grow and optimize the geographic coverage of dealers in our network of TrueCar Certified Dealers and to improve the representation of high-volume brands in our network to increase the number of transactions between our users and dealers. Some automotive brands consistently achieve higher than average sales volume per dealer. As a consequence, dealers representing those brands make a disproportionately greater contribution to our unit volume. Our ability to grow and to optimize the geographic coverage of dealers in our network of TrueCar Certified Dealers, increase the number of dealers representing high-volume brands and grow the overall number of dealers in our network is an important factor in growing our business.

Beginning in early 2020, we experienced the loss of a significant number of both franchise and independent dealers in our network, including as a result of the coronavirus pandemic, inventory shortages and the termination of our affinity partnership with USAA. Although the number of franchise dealers in our network increased in 2023 and 2024, we continued to lose independent dealers due, in part, to the number of independent dealers that have been acquired in industry consolidations or have gone out of business as price volatility and higher interest rates on inventory held by dealers has increased financial pressures. As a result, we may be unable to maintain or grow the number of dealers in our network, in a geographically optimized manner or at all, or increase the proportion of dealers in our network representing high volume brands. If we continue to experience a protracted decline in our dealer count, or experience a similar