nav
Business Operations Business Models

How Does TrueCar Make Money (Business and Revenue Model)

The TrueCar business model

How Does TrueCar Make Money?
Here’s what you should know:
  • What is TrueCar, and how does TrueCar work?
  • How does TrueCar make money?
  • Car Dealer Revenue
  • OEM Incentives Revenue
  • Other Revenue
  • TrueCar’s Subsidiaries, Acquisitions, and Exits
  • TrueCar’s profit and revenue
  • What is the TrueCar business and revenue model?
  • TrueCar’s funding and market cap

How does TrueCar make money if it’s free to use? Here is a full, in-depth, breakdown of their three (3) revenue streams and the different products and services they offer, as well as the TrueCar business model, their profit and revenue, and how TrueCar works.

What is TrueCar, and how does TrueCar work?

TrueCar is a vehicle pricing and information website used for buying new and used cars.

Founded in 2005 by Scott Painter and Tom Taira, TrueCar began trading on the NASDAQ on May 16, 2014, under the ticker symbol “TRUE”.

Since that time, TrueCar now has more than 16,500 TrueCar Certified Dealers with nearly 1 million used vehicles listed on the platform.

How TrueCar works is: Once a user is on the website, they can shop for a vehicle based on TrueCar’s data and insights to see what others paid for any vehicle, new or used, in their area and receive upfront quotes from over 16,500 TrueCar Certified Dealers on the platform.

Some of TrueCar’s competitors include Carfax, Kelley Blue Book, Edmunds, and other vehicle pricing and information websites.

TrueCar App in Apple App Store | TrueCar Business Model | How Does TrueCar Make Money?
Source: Apple App Store | TrueCar

How does TrueCar make money?

According to TrueCar’s FAQ Page, the company partners with over 16,500 car dealers nationwide. So how does TrueCar make money off of all those partnering dealers?

Below is a breakdown of how much money TrueCar makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 3 ways of how TrueCar makes money (in 2021):

TrueCar has a revenue model that makes money in three (3) ways – car dealerships, OEM incentives, and other revenue.

#1. Car Dealer Revenue

TrueCar makes the bulk of its money through services they offer car dealers on the platform.

According to pages 62 and 63 of TrueCar’s 2020 Form 10-K, their dealer revenue comes from a number of services they offer to dealer customers. They are TrueCar’s Auto Buying Program, TrueCar Trade, DealerScience, and add-on products. Which was, collectivly $252.9 million or 90.7% of TrueCar’s total revenue in 2020.

  • Auto Buying Program: These are fees paid by TrueCar Certified Dealer customers to TrueCar in three ways: a per-vehicle basis, a per-introduction basis, or a subscription.
  • TrueCar Trade: Dealers pay a monthly subscription fee that vary depending on the level of Trade services selected.
  • DealerScience: Another monthly subscription service paid by dealers that gives them access to the DealerScience products.
  • Add-On Products: TrueCar offers two additional add-on products, Sponsored Listings and TrueCar Reach, that dealers can add to their existing TrueCar subscription at additional costs.
TrueCar Dealer Portal | TrueCar Business Model | How Does TrueCar Make Money?
Source: TrueCar

Note: 90.7% of TrueCar’s total revenue came from car dealer revenue in 2020.

#2. OEM Incentives Revenue

In addition to car dealer revenue, TrueCar also makes some of its money from OEM incentives. Which resulted in an additional $16.8 million of TrueCar’s total revenue in 2020.

TrueCar makes money from this by, according to page 63 of TrueCar’s 2020 Form 10-K, “fees paid by automobile manufacturers, or OEMs, to promote the sale of their vehicles through the offering of additional consumer incentives to members of [TrueCar’s] affinity group marketing partners. These OEMs pay [TrueCar] a subscription or per vehicle fee for promotion of the incentive.”

TrueCar Business Model | How Does TrueCar Make Money?
Source: TrueCar

Note: TrueCar is free for consumers because TrueCar makes all its money from the car dealerships on the platform.

#3. Other Revenue

TrueCar makes the remaining share of its money from “Other Revenue” as the company describes it. Which makes up just $8.9 million of TrueCar’s total revenue.

TrueCar’s Subsidiaries, Acquisitions, and Exits

To date, TrueCar, Inc. has made a total of 5 acquisitions, 1 investment, and 1 lead investment.

Acquisitions
Source: Crunchbase

TrueCar’s profit and revenue

In 2020, TrueCar reported $278.7 million in revenue.

Note: Because TrueCar, Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of TrueCar’s publicly released financial reports, including annual reports, through TrueCar’s investor section on their website.

What is the TrueCar business and revenue model?

TrueCar makes money through a few revenue models that they combine within their company, they are:

  • Fee-for-service (FFS) business model
  • Subscription based business model
  • Advertising based business model
  • B2B2C (partnerships) business model
  • Mergers & acquisitions (M&A) business model

TrueCar’s funding and market cap

According to TrueCar’s Crunchbase profile, TrueCar has raised $340.4 million over 8 rounds and has a market cap of $398.17 million as of October 2021.