By: David Undercoffler

Painter exits as comeback stalls. Painter: Takes responsibility

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It had the makings of a Greek tragedy.

Scott Painter, the founder of TrueCar who had spent more than a decade trying to change the way consumers buy cars, announced last week that he would step down as CEO by year end.

The end came swiftly, but the reasons were clear: a plunging stock price, a batch of dealer lawsuits, a falling-out with the nation's top auto retailer and an earnings surprise that jolted investors.

In his wake, Painter leaves an industry that's embracing greater price transparency, fueled by data and technology. Manufacturers and dealers alike are moving to emulate TrueCar's online price negotiation service with aggressive use of digital tools.

But the comeback Painter sought to engineer at TrueCar after a dealer revolt and near meltdown in 2012 now looks incomplete, and the company faces the burden of reinventing itself yet again.

Contrite statements

A normally brash Painter sounded contrite last week, accepting responsibility for lackluster financial results and persistently tense relations with dealers.

"I recognize that, as the founder of TrueCar, I have had a sometimes strained relationship with the very dealer community we exist to serve," he said on a conference call with investment analysts. "In addition, I do not believe that I have always communicated our value proposition to investors as effectively as I could have. Those things are on me."

The search for a successor lies in the hands of Christopher Claus, a TrueCar director and a former executive at United Services Automobile Association, an affinity group that provides financial services to military families.

As TrueCar's biggest shareholder -- with an 18 percent stake -- and its largest source of consumer leads, USAA will play an important role in determining where the company goes from here.

'Absolutely crucial' partnership

The partnership with USAA is "absolutely crucial" to TrueCar's business model, said Ken Potter, former vice president of dealer development who left TrueCar in June.

For now, the company is mum on who might be tapped as CEO. One possible candidate is John Krafcik, a respected industry veteran and former head of Hyundai Motor America, who became TrueCar's president just ahead of its May 2014 public stock offering.

Painter's announcement came as TrueCar reported a $14.7 million net loss for the second quarter, slightly narrower than a year earlier but wider than initial forecasts.

Although those results were a key factor in Painter's departure, some cracks had begun to appear weeks earlier, when TrueCar and AutoNation broke off ties in a public spat.

Who dumped whom

Just who dumped whom depends on whom you ask. TrueCar said it wanted out because AutoNation was underreporting sales generated by TrueCar leads -- costing TrueCar revenue. AutoNation says it refused to cave to TrueCar's demands for access to customer transaction data -- something TrueCar said all its other dealers provide.

Yet both Asbury Automotive Group and Penske Automotive Group have said they don't provide TrueCar with data either, and sources close to other large dealership groups say their contracts with TrueCar have no such requirement.

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