SANTA MONICA, Calif. –
Late on Thursday, TrueCar initiated a workforce reduction impacting 219 positions, accounting for more than 30% of the organization.
According to a news release, TrueCar explained the action came as a result of two circumstances impacting the company. First, the company made the move in anticipation of the termination of its partnership with USAA Federal Savings Bank later this year.
TrueCar then noted the timing and scope of the reduction were accelerated by the impact of COVID-19.
As part of the workforce reduction, the company expects to reduce annual expenses related to headcount, excluding stock-based compensation, by approximately $35 million.
Back in February, TrueCar announced that it entered into a short-term agreement to extend its partnership with USAA Federal Savings Bank to continue to power the USAA Car Buying Service through Sept. 30.
That February announcement also mentioned that USAA FSB will pay a $20 million transition services fee to TrueCar.
“USAA has made clear to us that it has decided to stop providing a car buying service to its members later this year in an effort to simplify its business and focus on its core product offerings after a reassessment of its strategic direction, and that this decision was unrelated to the performance of our program or product offerings,” TrueCar president and chief executive officer Mike Darrow said.
In parallel with the workforce reduction, TrueCar also made changes with the intention of better aligning its organizational structure with its strategic priorities. Notable changes include:
1. Formation of new consumer group composed of product, consumer acquisition, consumer marketing and affinity partner teams. This consolidation will encourage cross-functional collaboration and alignment in pursuit of a best-in-class consumer experience.
2. Formation of a new solutions group composed of dealer sales and service, OEM sales and service and ALG. This consolidation will simplify and unify the company’s go-to-market approach.
TrueCar added that Thursday’s announcement does not change the financial commentary management provided on the first-quarter earnings call in early May.