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

[TSLA Pilot]

December 2016, so just a couple of months ago

Wow.

Will mention this to my OA and see if they'll "fix" my trade in value.

Maybe someone at Tesla Remarketing was on their game that day!

 

[stopcrazypp]

But that's the rub: it SHOULD be an owner incentive program. Getting Tesla owners on an iPhone-like replacement cycle would do wonders for Tesla's cash flow via additional new car sales, in addition to a host of other benefits previously noted.

Imagine how great it would be to pull off the M3 launch withOUT another stock dilution.

Plus, the current system has a remarkably large percentage of traded in Teslas sent off to used car megastores such as TexasDirectAuto.com so if their plan was to avoid that, well, they've likely failed . . . .

I cringe at how little they are likely getting for Teslas at wholesale dealer auctions. That's the true waste of funds, which should be directed toward owners looking to upgrade (not to mention the 100% waste on the sales tax credits in those states where it applies due to short-changed Tesla owners selling via private party).

There is a huge amount of low hanging fruit here; Tesla CPO could be a game changer for Tesla. Let's hope they see the world of possibilities here.

You missed my main point, which is that using the CPO program in this manner does not necessarily generate new sales, as the CPOs displace sales of new Teslas.

Tesla is still in the growth stage and with little to no competition. This is a stage where owner incentive programs has the least value. Owner incentive programs make sense when you have a saturated market and lots of competition, such that keeping existing customers is critical. Rather what Tesla needs to do now is expand their consumer base rapidly.

 

[brkaus]

BMW does this... I was very pleased at what they offered on my M3 trade in while looking for a new BMW. It was about $5k more than I could get anywhere else and much higher than I expected.

Then a funny thing happened... I went to a different dealer w/o the trade and could purchase the new car for $5k less.

Of course, this is why you never mention the trade in until you have a new car price set.

 

[Canuck]

Is it any surprise sales are down this quarter after the deep slashing of prices of inventory and CPO vehicles at the end of the prior quarter? Elon even had to tweet "stop that" so as to keep the fixed price model.

But the OP is right. If they offered him a higher trade-in value, sales would not be down 10%. They'd be down 9.99999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999%

 

[lolachampcar]

The funny thing about it is that a MS owner who is miffed about the trade number can return to their previous brand (VAG, MB, BMW, etc) and they will gladly provide a higher trade number as they have room to maneuver on the retail number of the car they are moving along with incentive to get the particular customer back in the fold. Tesla has left the door wide open not that they seem to care one way or the other.

None of this matters..... All Tesla has to do is deliver Model 3 without loosing too much S/X production so as not to take a huge stock hit. The master plan really does not care about the previous product so long as the next iteration step is achieved.

 

[carter_seattle]

That's the problem with irresponsible extrapolation--you end up jumping to conclusions and posting comments based on bad assumptions.

That is a succinct description of exactly what you did in your original post. You are ultimately trying to make 2 arguments based on mostly your personal experience on some disputed data points:

1) Tesla's CPO product is terrible
2) Tesla is failing to maximize sales of new cars, and you know better.

I think point #2 requires a tremendous amount of hubris. I will trust that the people running Tesla know better than you. You honestly sound like the lazy tech journalists that think they know how to fix Twitter.

I personally dispute point #1. My experience with the CPO process was fine. Yes, like all products, it can be iterated on and improved. But I find no evidence in these forums or anywhere else that the CPO process is so badly broken that it's harming the company.

 

[FlatSix911]

i didn't read every one of your 46 dissertations in this thread, but i read enough to know it all stemmed from you being miffed about their trade-in offer. the rest just seems like rationalization of your indignation.

Don't bother reading all 46 posts from TSLA Pilot, they are all just a restatement of his original flawed logic.
It's now time for this thread to come to a merciful end

 

[carter_seattle]

It's now time for this thread to come to a merciful end

Awwww, come on. I'm loving this thread. It's our version of "who's on first", just less funny.

 

[CmdrThor]

Don't bother reading all 46 posts from TSLA Pilot, they are all just a restatement of his original flawed logic.
It's now time for this thread to come to a merciful end

I only needed 1 post to know this thread was garbage.

 

[Pdub2015]

Sad thread makes me sad; reminds me of that old saying about arguing on the internet...

Hang in there TSLA Pilot, I don't blame you for giving up on this one.

 

[Electroman]

I didn't read all posts here, but OP is making a simple argument.

Tesla has a two options:

- offer a fair value for OP's car with zero profit and make $20K on selling a new Tesla.

- give a low ball offer on OP's car in the hope of making some profit on the CPO and lose the potential new sale and make no money in the end.

I think the choice is easy here. What's so complicated?

 

[carter_seattle]

The OP's contention is that Tesla is trying to profit by lowballing trade in offers instead of attracting upgrades by current owners. However if you read the Q4 update letter you'll find that the gross margin for Service and Other revenue declined from 5% in Q3 to -11% in Q4. While Tesla highlighted the buildup of service resources as contributing to this, if CPO sales were very profitable the margins would not have declined so dramatically.

@mkjayakumar What's "complicated" is that the OP's assertions about "fair value", "profit", "lowball offer" are flimsy and are neither based of facts nor shared by the majority of his peers in this thread.

 

[AnxietyRanger]

Personally, I find the argument that "the company knows best" an appeal to authority fallacy of sort. I dismiss such as meaningless, there certainly is enough corporate history in the world and regarding Tesla as well, to know that the company certainly does not always know best. As an example, sometimes a company may be trapped in departmental power and budget struggles, rather than a plan of purpose. At times it takes an outsider to point this out.

That said, I am not unsympathetic to the argument that raising trade-in valuations would not offer significant improvements to the profits. I find that a reasonable thesis. I would just prefer people come to that conclusion through their own analysis, not simply out of reverence to Tesla.

 

[Electroman]

There is a secondary benefit to giving a higher price to owners for their used cars - it raises the used car market boat.

Imagine if Tesla increases the prices of buy back by 5%, and that reduces the pool of used cars available in the open market for any potential buyer. Which in turn makes their CPO atttactive, and their CPO inventory would churn out quicker. And that puts a positive pressure on new car sales too.

Win-win

 

[lolachampcar]

Actually, Tesla drove the used values down when they started the CPO program. Mkj is correct in that Tesla is too inefficient to make any money offering what was, at the time, fair wholesale for the trades. In fairness, there is an argument to be made that the additional cars coming on the market with the Ds shipping (from existing owner trades) would have adjusted the market downward some anyway.

This is simple and will sort itself out. Those that care will vote with their wallet. There is either enough on the Tesla side of the scale for owners to take the number or they will sell elsewhere and may even buy elsewhere. Again, if you believe the mission statement, this whole issue likely means nothing. Tesla is not trying to be a good car company; they are trying to spur the BeV market.

 

[stopcrazypp]

I didn't read all posts here, but OP is making a simple argument.

Tesla has a two options:

- offer a fair value for OP's car with zero profit and make $20K on selling a new Tesla.

- give a low ball offer on OP's car in the hope of making some profit on the CPO and lose the potential new sale and make no money in the end.

I think the choice is easy here. What's so complicated?

Nope, that's not the right characterization of the situation, it's more like this:

- Offer a zero or likely negative profit (which is not "fair" to Tesla) value for OP's car. Sell a car to OP, but the CPO may also displace a sale of a new one (esp. given the relatively low miles, young age). Tesla may end up losing money depending on what new Tesla that CPO displaces.

- Offer a lower than zero profit value for the trade-in (but not necessarily low ball when compared to similar trade-in offers). If OP disagrees, Tesla makes a net zero, but then it also prevents the car from hitting the CPO or used fleet (OP did not have plans to sell car other than to upgrade it for a new Tesla, if there was a good deal to be had). If OP agreed to sell anyways, then Tesla had maximized the value they got out of the sale.

 

[TSLA Pilot]

Sad thread makes me sad; reminds me of that old saying about arguing on the internet...

Hang in there TSLA Pilot, I don't blame you for giving up on this one.

Thanks Pdub.

The Signal-to-Noise ratio on the thread started going down when too many chimed in with having read much of the thread, or worse, just skimming it for a superficial understanding, but then feeling as though they could add something based on next-to-zero knowledge of the larger issue.

And then there are those whose minds are made up and who can't be bothered with facts

Appreciate your kind words nonetheless!

 

[timk225]

TL: DR most of it.

I can understand the OP's frustration. I have a similar situation with a car myself, that I am selling off to have cash ready for my upcoming Model 3.

2011 Dodge Challenger R/T Classic GREEN WITH ENVY

Can't afford a Ludicrous S? Consider this! It's almost as fast and a whole lot cheaper!

It's in great shape, and has a low production, one year only color, already priced below market rate, but no matter what, people still want to try and get a better price. I could offer this car for sale for a quarter, and someone would try to jew me down to 20 cents on it.

I never liked selling my cars, it is very frustrating and you never get what you think you should get for it.

 

[St Charles]

I played with KBB and Edmunds and they both came back at about 95k on my pre refresh P90DL. Like you, I have every option except rear facing seats. Having bought and sold many cars in my life, this is about what I would expect from a dealer trade in. I'm not saying that either of these two sites are an authority on used car pricing but they do trend near what a dealer would normally offer in trade. If Tesla were to offer me 100k I would feel pretty good about it.

I'm sure this isn't your point.

Should Tesla offer me more than dealer trade? maybe even the same price in trade as they would sell the vehicle for? I don't know any other business that would accept a loss on both ends of the deal in the name of increasing sales volume. The mission is to bring sustainable transportation to everyone. But the company is publicly traded and shareholder value is #1. This means they need to have a path to profitability and this probably doesn't include eating the cost of the CPO program.

There is no doubt that Tesla could benefit from a better business process. The CPO program is no exception. But Tesla never set out to fix the used car business. It seems that they have a CPO business only because they need to. It also seems unlikely that they will solve the problem unless they spin off CPO or partner with a company like CarMax. Neither seem like something that will happen.

The best thing you could probably do is sell the car yourself. this puts your car directly into the hands of a new owner and you get to determine the value (mostly). In this way, you are directly helping the mission and not trying to put the onus on the manufacturer to solve all problems for you.

 

[FlatSix911]

The plain truth ... hope the original poster reads this

Should Tesla offer me more than dealer trade? maybe even the same price in trade as they would sell the vehicle for?
I don't know any other business that would accept a loss on both ends of the deal in the name of increasing sales volume.
The mission is to bring sustainable transportation to everyone. But the company is publicly traded and shareholder value is #1.
This means they need to have a path to profitability and this probably doesn't include eating the cost of the CPO program.

The best thing you could probably do is sell the car yourself. this puts your car directly into the hands of a new owner and you get to determine the value (mostly). In this way, you are directly helping the mission and not trying to put the onus on the manufacturer to solve all problems for you.