TrueCar's Q1 2025: Navigating Contradictions in AI Strategy, OEM Spending, and Revenue Models

AI and product enhancements, OEM incentive ad spending, dealer revenue split between subscriptions and pay-per-sale, TC+ progress and monetization, impact of CDK hack on revenue are the key contradictions discussed in TrueCar's latest 2025Q1 earnings call.



Strong Revenue Growth Amidst Volatility:
- TrueCar, Inc. reported total revenue of $44.8 million for Q1 2025, growing by $3.8 million, or 9.2% year-over-year.
- The growth was driven by increased new unit sales volumes, which saw a significant increase of 23% year-over-year, outpacing the industry's 6.8% growth in new vehicle retail sales.

TC+ Product Development and Expansion:
- TrueCar continues to make progress with its TC+ product, with roughly a third of pilot dealer group sales driven by online transactions.
- The product aims to fundamentally change the car buying experience, and integration with major DMS providers like CDK and Tekion is underway to fully automate deal documentation and desking activities.

Adaptation to Tariff Uncertainty:
- TrueCar anticipates potential impacts from automotive sector tariffs but expects demand to remain stable in the short term as dealers sell through pre-tariff inventory.
- The company is positioning itself to adapt to potential changes in supply and pricing, focusing on supporting both OEMs and dealers in their customer acquisition and incentive strategies.

Effective Marketing and Cost Management:
- TrueCar's restructured performance marketing campaigns have resulted in a lowest cost per sale since 2022, enhancing efficiency and driving unit sales growth for dealer partners.
- The company is maintaining flexibility in its cost structure to manage cash flow effectively, regardless of the scenario that prevails over the next several quarters.