How much more damage will Remarketing do to Tesla sales before they figure it out?!?

[u00mem9]

The issue is that in Q3 2016, they were very negotiable because they faced some existential challenges...and hundreds of cars just like yours were sold for $30k+ off MSRP. That sucks for buyers who paid full price, because it crushed resale values AND will crush them even more in 2 years when all those cars come back from lease terms.

Now, unfortunately for TSLA Pilot, they have successfully completed another round of raising capital, and really don't need the sale. My suggestion it to hang tight...they may get desperate again if AP2 growing pains persist.

 

[TSLA Pilot]

Applicable regardless of the funding round. At the end of the day, Tesla exists to transition the planet to sustainable transport. That means making more, and selling more, Teslas. (And preferably more of the higher margin models as well.)

The current protocol literally insults their best customers, ("How much wrap do you have? What does it cover?") the ones that spend thousands to wrap their Teslas in PPF to retain the factory paint finish in pristine condition, and WE ARE PENALIZED FOR DOING SO.

The other series of remarkably stupid CPO sales errors is listed on the previous pages, but suffice it to say, it's a lose/lose transaction to deal with Tesla when trading a Tesla and trying to buy a new one.

Many have gone on at length to explain how to right the ship here.

The only question is:

IS ANYONE AT TESLA READING THIS THREAD?

How much more damage will Tesla Remarketing do?

 

[FlatSix911]

 

[TSLA Pilot]

Hey FlatSix911, you missed this on the previous page, so let's try again.

Let's assume you're not a 12-year old sitting on your father's computer, so may we please have an adult response (for a change)?

If you have nothing to add, then please save us all the waste of our lives having to pass through your remarkably childish posts.

Thank you.

Ah, so discussing ways to sell more Teslas, reward customer loyalty, and change some of the remarkably stupid choices that Tesla is making, is "feeding the troll?"

Really?

Please: How about if you try to find some logic in Tesla's thinking here because I'm sure as heck not seeing it. On the contrary, the current plan results in "lose/lose" outcomes which is about as dumb as it gets . . . .

 

[whitex]

Hey @TSLA Pilot ,

So many people on this thread are trying to explain this to you, but you keep missing the point. Tesla is a business, not a charity. Yes they could move a ton of new Model S and X if they sold them at $35K each, but they would go bankrupt along the way. So deliveries would be up, and your stock would tank. Your comments also indicate you have no clue whatsoever as to what it takes to resell a car, or are willing to even hear people tell you. Why do they strip the coating you put on? So they don't have to warranty it, answer questions about it, and therefore train all sales and techs staff to know about your wrap, how to care for it, how to fix it, etc. I know it hurts your feelings, but from a business point of view it makes total sense. There are so many costs associated with selling a car, including actually keeping it, paying interest on the value, keeping it clean, letting people test drive, and last but not least taking a change that the car will not sell soon and by virtue of just time passing the car will devalue while on the lot. This risk is especially high on excpensive (>$100K) cars as people who buy those are looking for deep discounts over new or else they just buy new.

If you really, truly believe you have a better way, start your own business reselling used Tesla's. Take your TSLA stock and invest it in inventory, sales people, etc and cash in on your wisdom. Start by selling your car, and there you may actually get some value from your wrap. Btw, small used car dealers also sometimes don't strip tint or wraps, but they state up front they have no idea about it and don't warranty it in any way shape or form.

 

[Electroman]

Tesla is a business, not a charity.

Point noted. But also Tesla is a company that thinks and acts outside the box, and not a slave to conventional wisdom. Just like how Tesla is pouring money into expansion without looking for short term gains, you can easily think of this as another way of building their marketshare and eco system, all of which have a catalytic multiplier effect in bringing in more sales and new customers.

Rewarding loyalty is nothing new.

Everything Tesla has done now, one could always argue the other way. No dealers? what a stupid idea to spend on inventory, sales agents and real estate, when they can easily offload all those expenses to dealers. Have your own chargers? There is absolutely no return on investment. Have you not seen multitude of EV charging companies gone belly up or make no money at all. Look at Blink and Chargepoint. Barely surviving. Tesla is not a charity to give away electricity for free after pouring millions on the infrastructure.

I am not willing to buy that they are production constrained for 'S' or 'X' in 2017.

 

[whitex]

Point noted. But also Tesla is a company that thinks and acts outside the box, and not a slave to conventional wisdom. Just like how Tesla is pouring money into expansion without looking for short term gains, you can easily think of this as another way of building their marketshare and eco system, all of which have a catalytic multiplier effect in bringing in more sales and new customers.

Rewarding loyalty is nothing new.

Everything Tesla has done now, one could always argue the other way. No dealers? what a stupid idea to spend on inventory, sales agents and real estate, when they can easily offload all those expenses to dealers. Have your own chargers? There is absolutely no return on investment. Have you not seen multitude of EV charging companies gone belly up or make no money at all. Look at Blink and Chargepoint. Barely surviving. Tesla is not a charity to give away electricity for free after pouring millions on the infrastructure.

I am not willing to buy that they are production constrained for 'S' or 'X' in 2017.

There is "thinking out of the box" and then there is "desperate stupidity". And yes, it is possible for a company to even give away some product for free for promotional reasons, but in this case Tesla doesn't see $18K worth of benefit to give it to the OP. They are figure they can spend it elsewhere to further their business more than he would for 18 grand. As to your other points:
1. Investing profits or even more into expansion is not an unusual business approach. It has proven successful for many companies (lookup how much YouTube was losing per month before google acquired them).
2. Charging infrastructure is one Tesla's biggest competitive advantages. EV's and useful charging is a chicken-and-egg problem that is hard to solve independently (lookup history of color TV and RCA if interested in these type of problems). Note that Tesla is only solving long distance charging so it is a different problem than Blink or Chargepoint are addressing (and they are facing the "not enough EV's yet" problem). Tesla solved the everyday charging by providing large enough battery. Lastly, the supercharger network is not free. If you look up the early years, it was a $2000 option, which later became non-optional. An average Tesla owner will never get anywhere near $2000 of free electricity from supercharger (let's see, I bought 3 Tesla so far, so paid in $6K, got about $200 of free electricity in over 3 years, and $199 of it was a coast-to-coast trip which is super rare - I'd need mother 29 such trips to break even, more if I added interest on the $6K). I bet that if Blink or CharePoint got $2,000 per customer they signed on, they'd be doing better than just surviving. Oh, and supercharging is no longer free, a move to curb local charging IMO, but it makes it not free, so the $2K is just for infrastructure for maintenance.

 

[carter_seattle]

Tesla delivers a record number of vehicles during the first quarter 2017: ~25,000

 

[Mike M]

Tesla delivers a record number of vehicles during the first quarter 2017: ~25,000

Glad to see this @carter_seattle

What is even better is they made the record with the production shut down for retooling.

 

[carter_seattle]

 

[deonb]

Tesla delivers a record number of vehicles during the first quarter 2017: ~25,000

Poor TSLA Pilot - that's got to hurt.

 

[St Charles]

Poor TSLA Pilot - that's got to hurt.

I immediately thought of this thread when I saw the news.

 

[carter_seattle]

 

[abasile]

Although I haven't decided whether I like the idea of Tesla providing trade-in incentives, I can appreciate the arguments being made by TSLA Pilot, and I fail to see any benefit in taunting him or accusing him of being a troll. It does make sense that, even for a high-growth business like Tesla, cultivating repeat business ought to be a high priority.

With a well-run remarketing program and improved margins on pre-owned cars, it ought to be possible for Tesla to increase their trade-in offers somewhat. At one point, perhaps a couple of years ago, Tesla's statements seemed to indicate that they wanted to "own" the market for used Tesla vehicles. This would make a great deal of sense because, as weak as Tesla's pre-owned program is, I've found that a great many car dealers that happen to have Tesla vehicles in inventory are quite clueless about selling them. Further, new car sales only represent a fraction of retail car sales.

Further, it's in Tesla's interest that all Tesla buyers have the best possible experience with their cars, whether they've purchased new or used. And it's best to keep older, functional EVs on the road, thus displacing as many ICE cars as possible. I'll admit that I have a vested interest here, as I've recently gotten back to working on a website to facilitate sales of used EVs.

 

[carter_seattle]

A question was raised many moons ago:

"How much more damage will Remarketing do to Tesla sales before they figure it out?!?"​

We now have an answer: None. Zero. No damage at all. Record sales. Record stock price.

I think that's what bothered me about this entire thread. Not the idea that Tesla could do better, of course they can do better. Every company can do better. It's why people bother to work at startups and young companies in the first place, because the opportunities for improvement are everywhere, and growth is the reward.

No, the problem was the tone of the title and initial post. That Tesla was prioritizing their limited resources in the wrong way, that the OP new better, and that they would soon suffer real and sizable damage to their sales goals. Which, as we now know, is completely and utterly false.

​

 

[whitex]

With a well-run remarketing program and improved margins on pre-owned cars, it ought to be possible for Tesla to increase their trade-in offers somewhat.

There are only 3 ways to increase margins on pre-owned cars, pay less for trade-ins, sell them for more money, or reduce you resell costs (which includes insurance against depreciation). You are suggesting that they increase how much they give for trade-ins, the used car market is what sets the price of the pre-owned car, so the only way to increase the margin is to decrease marketing/resele costs. Are you saying Tesla spends too much on their CPO program, and that there is room for them to spend so much less that they could offer folks like the OP another 20% on trade-in? How much do you think they spend and where do you see them cut that spending to the tune of 18K per car (just to break even, more if they want to make bigger margins)?

 

[abasile]

I agree that the tone of some posts here, including the initial post and some of the responses, has been over the top. But I also feel that Tesla should make significant improvements to its pre-owned program. It's understandable that the primary focus has been new car sales, and this is indeed what's propelled the growth in the stock price. However, Tesla is now a large company, and capable of doing multiple things well - remarketing is something that they need to start really doing well.

By the way, we purchased a pre-owned Model S last year, and we were happy with the experience. However, I knew exactly what to ask for, the purchase occurred near the end of Q3 when Tesla was highly motivated to show a profit, and there was no financing involved. As a result, I was able to pick up the vehicle within one week of putting down a deposit, and it happened to be in great condition.

There are only 3 ways to increase margins on pre-owned cars, pay less for trade-ins, sell them for more money, or reduce you resell costs (which includes insurance against depreciation). You are suggesting that they increase how much they give for trade-ins, the used car market is what sets the price of the pre-owned car, so the only way to increase the margin is to decrease marketing/resele costs.

I am suggesting that Tesla has the potential to increase margins on pre-owned cars as follows:
1. Sell cars for more money by selling them to retail buyers, rather than to auctions and re-sellers at wholesale prices.
2. Sell cars for more money, and reduce resale costs, by minimizing the amount of time they sit on back lots, where they depreciate, occupy real estate, and require insurance. We've read reports here of Tesla holding onto large volumes of wholesale inventory.

Here's what I think Tesla needs to do to make this happen:
1. Provide a better search engine for pre-owned vehicles, which would include actual photos and condition reports, more details, and more listings.
2. Provide public, retail listings of virtually all vehicles, not just the ones that are cleanest and/or have fewer odometer miles. At the same time, Tesla currently provides a very generous warranty on all pre-owned cars sold at retail - perhaps this could be reduced to a 12 month / 12,000 mile warranty on older cars. They could also delete free Supercharging from such cars.
3. Pre-condition used cars so that they can be purchased and driven off the lot immediately. This would increase expenses in the short run, but would ultimately not cost any more, as they'll eventually have to be conditioned anyway, if they're to be sold at retail.

Are you saying Tesla spends too much on their CPO program, and that there is room for them to spend so much less that they could offer folks like the OP another 20% on trade-in? How much do you think they spend and where do you see them cut that spending to the tune of 18K per car (just to break even, more if they want to make bigger margins)?

As detailed above, it's not a matter of Tesla spending too much; it's a matter of better managing what they have.

With a successful pre-owned program, would it be realistic for Tesla to offer as much as another 20% at trade-in? I don't know. Maybe not for higher-end trade-ins like the OP's. But even 10% more, if do-able, would be pretty significant.

Anecdotally, we have a friend who recently upgraded to a newer Model S. Instead of taking Tesla's trade-in offer of about $32K on their old Model S, they sold it to a private party for close to $40K. Their car was in immaculate condition, with little or no need of conditioning. It seems likely that Tesla ought to have been able to sell the car for a higher price, say $44K, particularly if they included at least a few months of bumper-to-bumper warranty coverage. So, in that scenario, could Tesla have paid as much as $32K + 20% = $38K for the trade-in? Probably so, if they were able to turn right around and re-sell it. However, even an offer of $36K from Tesla might have been enough to keep our friend from bothering with a private sale.

Would a better pre-owned program cannibalize sales of new vehicles? Hard to say. Either way, it would help increase EV adoption by making it easier for more people to buy EVs.

 

[Electroman]

I agree that the tone of some posts here, including the initial post and some of the responses, has been over the top. But I also feel that Tesla should make significant improvements to its pre-owned program. It's understandable that the primary focus has been new car sales, and this is indeed what's propelled the growth in the stock price. However, Tesla is now a large company, and capable of doing multiple things well - remarketing is something that they need to start really doing well.

By the way, we purchased a pre-owned Model S last year, and we were happy with the experience. However, I knew exactly what to ask for, the purchase occurred near the end of Q3 when Tesla was highly motivated to show a profit, and there was no financing involved. As a result, I was able to pick up the vehicle within one week of putting down a deposit, and it happened to be in great condition.


I am suggesting that Tesla has the potential to increase margins on pre-owned cars as follows:
1. Sell cars for more money by selling them to retail buyers, rather than to auctions and re-sellers at wholesale prices.
2. Sell cars for more money, and reduce resale costs, by minimizing the amount of time they sit on back lots, where they depreciate, occupy real estate, and require insurance. We've read reports here of Tesla holding onto large volumes of wholesale inventory.

Here's what I think Tesla needs to do to make this happen:
1. Provide a better search engine for pre-owned vehicles, which would include actual photos and condition reports, more details, and more listings.
2. Provide public, retail listings of virtually all vehicles, not just the ones that are cleanest and/or have fewer odometer miles. At the same time, Tesla currently provides a very generous warranty on all pre-owned cars sold at retail - perhaps this could be reduced to a 12 month / 12,000 mile warranty on older cars. They could also delete free Supercharging from such cars.
3. Pre-condition used cars so that they can be purchased and driven off the lot immediately. This would increase expenses in the short run, but would ultimately not cost any more, as they'll eventually have to be conditioned anyway, if they're to be sold at retail.


As detailed above, it's not a matter of Tesla spending too much; it's a matter of better managing what they have.

With a successful pre-owned program, would it be realistic for Tesla to offer as much as another 20% at trade-in? I don't know. Maybe not for higher-end trade-ins like the OP's. But even 10% more, if do-able, would be pretty significant.

Anecdotally, we have a friend who recently upgraded to a newer Model S. Instead of taking Tesla's trade-in offer of about $32K on their old Model S, they sold it to a private party for close to $40K. Their car was in immaculate condition, with little or no need of conditioning. It seems likely that Tesla ought to have been able to sell the car for a higher price, say $44K, particularly if they included at least a few months of bumper-to-bumper warranty coverage. So, in that scenario, could Tesla have paid as much as $32K + 20% = $38K for the trade-in? Probably so, if they were able to turn right around and re-sell it. However, even an offer of $36K from Tesla might have been enough to keep our friend from bothering with a private sale.

Would a better pre-owned program cannibalize sales of new vehicles? Hard to say. Either way, it would help increase EV adoption by making it easier for more people to buy EVs.

Measured and reasoned response..

Used care prices get a downward pressure primarily because Tesla low-balls their offer. So often sellers sell them at a few $K more than Tesla offers to do a quick sale. If Tesla offers 10-15% more then used car prices in general will go up. This is beneficial to everyone.

 

[St Charles]

Measured and reasoned response..

Used care prices get a downward pressure primarily because Tesla low-balls their offer. So often sellers sell them at a few $K more than Tesla offers to do a quick sale. If Tesla offers 10-15% more then used car prices in general will go up. This is beneficial to everyone.

This only works to a point. A used Tesla still has to compete with used Audi/BMW/Merc and whatnot. I would argue that we are probably already there and I certainly don't or wouldn't expect Tesla to offer more simply because we all wish our cars were worth more.

Arguing trade in value really poor position. it's short sighted and selfish. Claiming that offering more to a potential buyer is an innovative approach is ignorant. Every dealer does this already.

If you truly want to disrupt the CPO business model then maybe Tesla would help facilitate a private sale from one buyer to another. As part of the transaction, Tesla could offer the benefits of their CPO program at the time of purchase as an add on similar to how the current extended service plan does. They could offer all benefits such as reconditioning and warranty all up or even offer items a-la-carte. The current owner simply holds on to the car until a potential buyer is found. This cuts almost all the inventory and depreciation overhead while still having a large pool of cars to offer to used car buyers. The seller would get a larger price for the sale and the used buyer could add or remove options as they wished. Once the used sale is complete, the new buyer could then place their order for a new vehicle as they saw fit.

Or the new buyer can accept the offer from Tesla or any other car buying service immediately to speed up the process.

 

[whitex]

I agree that the tone of some posts here, including the initial post and some of the responses, has been over the top. But I also feel that Tesla should make significant improvements to its pre-owned program. It's understandable that the primary focus has been new car sales, and this is indeed what's propelled the growth in the stock price. However, Tesla is now a large company, and capable of doing multiple things well - remarketing is something that they need to start really doing well.

By the way, we purchased a pre-owned Model S last year, and we were happy with the experience. However, I knew exactly what to ask for, the purchase occurred near the end of Q3 when Tesla was highly motivated to show a profit, and there was no financing involved. As a result, I was able to pick up the vehicle within one week of putting down a deposit, and it happened to be in great condition.


I am suggesting that Tesla has the potential to increase margins on pre-owned cars as follows:
1. Sell cars for more money by selling them to retail buyers, rather than to auctions and re-sellers at wholesale prices.
2. Sell cars for more money, and reduce resale costs, by minimizing the amount of time they sit on back lots, where they depreciate, occupy real estate, and require insurance. We've read reports here of Tesla holding onto large volumes of wholesale inventory.

Here's what I think Tesla needs to do to make this happen:
1. Provide a better search engine for pre-owned vehicles, which would include actual photos and condition reports, more details, and more listings.
2. Provide public, retail listings of virtually all vehicles, not just the ones that are cleanest and/or have fewer odometer miles. At the same time, Tesla currently provides a very generous warranty on all pre-owned cars sold at retail - perhaps this could be reduced to a 12 month / 12,000 mile warranty on older cars. They could also delete free Supercharging from such cars.
3. Pre-condition used cars so that they can be purchased and driven off the lot immediately. This would increase expenses in the short run, but would ultimately not cost any more, as they'll eventually have to be conditioned anyway, if they're to be sold at retail.


As detailed above, it's not a matter of Tesla spending too much; it's a matter of better managing what they have.

With a successful pre-owned program, would it be realistic for Tesla to offer as much as another 20% at trade-in? I don't know. Maybe not for higher-end trade-ins like the OP's. But even 10% more, if do-able, would be pretty significant.

Anecdotally, we have a friend who recently upgraded to a newer Model S. Instead of taking Tesla's trade-in offer of about $32K on their old Model S, they sold it to a private party for close to $40K. Their car was in immaculate condition, with little or no need of conditioning. It seems likely that Tesla ought to have been able to sell the car for a higher price, say $44K, particularly if they included at least a few months of bumper-to-bumper warranty coverage. So, in that scenario, could Tesla have paid as much as $32K + 20% = $38K for the trade-in? Probably so, if they were able to turn right around and re-sell it. However, even an offer of $36K from Tesla might have been enough to keep our friend from bothering with a private sale.

Would a better pre-owned program cannibalize sales of new vehicles? Hard to say. Either way, it would help increase EV adoption by making it easier for more people to buy EVs.

Can Tesla CPO be better, absolutely. Will be be cheaper, not likely - I suspect that the poor current state of things is a result of Tesla not spending much on the program (e.g. they don't bother reconditioning the car until it's sold, or they wait for weeks to get cheap shipping, or they don't have dedicated people to answer questions). So, if they did more, their cost of resale would likely go up, not down, therefore margins would go down. As far as selling retail vs. wholesale, do you really think they wholesale by choice, and they choose not to make money on CPO's? I suspect that the cars that hit wholesale are ones that have been sitting for a while and Tesla doesn't think they can sell them retail, so they let them go at wholesale without making any money. All the things you are suggesting (except less warranty), like pre-conditioning a car whether sold or not, better marketing, faster turnarounds are going to increase cost of selling, not decrease. None of those things will cause the value of the car to go up, so unless you are suggesting they LOWER the margin but make it in volume, your argument doesn't hold up, especially if you want Tesla to pay more for trade-ins (further margin reduction).

So, while I feel for the OP, I think Tesla is doing what they think is best, and they seem to be doing well with that. I've been there, had tried to trade in a Tesla before, and while it annoyed me a lot that the offer was so low, I get it's their choice to make and live with. I sold my car privately for that reason. The only complain I have on Tesla trade-in deals is that they don't offer courtesy trade-ins, i.e. if I find a dealer who is willing to pay more for my car, Tesla take in my trade and sell it to the dealer at 0 or minimal fee, while allowing me the full trade-in credit (and therefore sales tax credit). The other suggestion to them would be to find a way to value Tesla trade-ins into the future (until the time they can produce and deliver the new car, or at least let me walk away from the deal without losing the deposit should they not be willing to honor the trade-in value quoted when I place the order) - other car dealers (Toyota and Porsche) have done it for me before, valued my trade as much as 9 months in advance, with some mileage limitations of course.