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Friday, 07 August 2020 21:22

J.D. Power to Acquire ALG From TrueCar

Written by Auto Remarketing staff

Index

J.D. Power’s analytical horsepower is about to get much stronger.

Late Aug. 6, TrueCar announced it has entered into an agreement with J.D. Power to sell its ALG subsidiary for $135 million. According to TrueCar’s news release, the total consideration includes an upfront cash payment of $112.5 million at closing and total deferred payments of up to $22.5 million based on certain financial results.

 

The company said the transaction was unanimously approved by TrueCar’s board of directors and is expected to close by the end of this year. The company also said the closing is subject to customary closing conditions as well as regulatory review and approval.

 

ALG is an industry authority on automotive residual value projections in both the U.S. and Canada, and the acquisition is expected to augment offerings from the data and analytics division of J.D. Power.

 

“We believe ALG will bring complementary strengths and value to J.D. Power and its clients,” J.D. Power President and CEO Dave Habiger said in its own news release. “For more than 50 years, ALG has been a trusted data provider to the automotive industry delivering accurate and reliable residual value forecasts.

 

“Adding that component to our extensive data assets, valuation expertise and analytic tools will enable us to provide even more value to our clients. We are excited to welcome the ALG team to J.D. Power,” Habinger continued.

 

The companies emphasized that residual values are the foundation of vehicle leasing and are used across multiple segments of the automotive industry.

 

Almost one-third of new vehicles sold each year are leased, typically for a three-year term, according to J.D. Power, which pointed out that at any point in time, the value of vehicles in outstanding lease portfolios is estimated at $500 billion.

 

The companies reiterated that accurately predicting the value of vehicles at the end of the lease term is an essential activity for vehicle manufacturers and finance companies.

 

J.D. Power acknowledged countless variables affect the actual residual value of a vehicle over a multi-year lease term. Examples include mileage, quality/reliability, options and feature sets, weather and the macroeconomic environment.


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