Company: TRUE
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0001327318-25-000016
Chunk: 78

Company: TrueCar, Inc.
Filing Date: 2025-05-06
Form: 10-Q
Item: Part II, Item 1A
Chunk 78
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Item 1A. Risk Factors

Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this report, including our condensed consolidated financial statements and related notes, and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making an investment in our common stock. If any of the following risks is realized, our business, financial condition, operating results and prospects could be materially and adversely affected. In that event, the trading price of our common stock could decline and you could lose part or all of your investment. Additional risks and uncertainties not presently known to us or not believed by us to be material could also impact us.

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Risks Related to Our Business and Industry

Our business is subject to risks related to the larger automotive ecosystem, including tariffs, inventory and global supply chain challenges, labor and other factors.

Our business is sensitive to adverse macroeconomic conditions affecting automobile dealers, manufacturers, their suppliers and the market for automobiles in the United States. Current U.S. government trade policy includes the imposition of tariffs on certain foreign goods, including passenger vehicles, light trucks and certain automobile parts. Although the full impact of these tariffs remains unclear, tariffs may increase the cost of importing or manufacturing automobiles or automobiles parts and could result in lower inventory levels, place negative pressure on automotive supply chains, and increase costs to dealers and consumers, all of which can negatively impact our business, results of operations and prospects. 

In the past, reductions in inventory have had negative impacts on our business and results. For example, starting in 2020, the automotive industry experienced a decline in inventory supply due to disruptions related to the coronavirus pandemic that resulted in shortages of critical parts, such as automotive semiconductor chips. Despite improvements in inventory levels beginning in the latter half of 2022 that led to inventory supply in the fourth quarter of 2024 at the highest levels since June 2020, industry-wide levels still have not reached pre-pandemic levels and certain manufacturers have experienced slower recoveries in inventory levels than others. In light of newly announced tariffs on automobiles and automobiles parts, we cannot guarantee that inventory supply will ever return to historic levels. The limited supply of inventory also led to an increase in wholesale auction prices and the prices that dealers charge consumers for automobiles.

Reduced inventory and increased prices have had, and may have in the future, whether as the result of tariffs or otherwise, several negative effects on our