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

[whitex]

If you truly want to disrupt the CPO business model then maybe Tesla would help facilitate a private sale from one buyer to another.

LOL, they don't even facilitate courtesy trade-ins to other licensed dealers who want to pay more for the trade-in - tried it and Tesla said no (even though they implied at the time I was putting an order in that it's possible, but then I was told the sales person had wrong information). They know that in states with sales tax credit on trade-ins, like WA, it only makes sense to sell privately if the private sale is more than 10% higher (10% is the tax rate in WA), so they make offers accordingly.

Btw, I bought 3 Tesla's so far, and each time I got a clear impression that they really would rather not deal with trade-ins at all. They'd prefer if this was like an iPhone, you just get a new one and throw the old one away. Unfortunately for them, most car buyers at their price range have a trade-in, so they are forced to deal with it. The trade-in experience at Tesla is the worse part of the buying experience, IMO, though to their credit I will say that it has improved between 2013 and 2016 - if you're willing to accept "whatever the low end of auction value will be for your car at the time your new car arrives", then the experience is quite painless as compared to few years ago. I still don't agree with the OP that they should loose money on the transaction though, just make it better by facilitating trade-throughs or even, as you suggested, consignment like sales model.

 

[St Charles]

LOL, they don't even facilitate courtesy trade-ins to other licensed dealers who want to pay more for the trade-in - tried it and Tesla said no (even though they implied at the time I was putting an order in that it's possible, but then I was told the sales person had wrong information). They know that in states with sales tax credit on trade-ins, like WA, it only makes sense to sell privately if the private sale is more than 10% higher (10% is the tax rate in WA), so they make offers accordingly.

Btw, I bought 3 Tesla's so far, and each time I got a clear impression that they really would rather not deal with trade-ins at all. They'd prefer if this was like an iPhone, you just get a new one and throw the old one away. Unfortunately for them, most car buyers at their price range have a trade-in, so they are forced to deal with it. The trade-in experience at Tesla is the worse part of the buying experience, IMO, though to their credit I will say that it has improved between 2013 and 2016 - if you're willing to accept "whatever the low end of auction value will be for your car at the time your new car arrives", then the experience is quite painless as compared to few years ago. I still don't agree with the OP that they should loose money on the transaction though, just make it better by facilitating trade-throughs or even, as you suggested, consignment like sales model.

Yeah, I totally agree with you. Tesla clearly does not want to deal with used cars and seems content to do the minimum possible to move along the sale of a new Tesla. This is on par with just about any dealership trade-in experience. What I think the OP is not digesting is that the market sets the price for a used car. Not the seller and certainly not the dealership or manufacturer. Depreciation is a real thing and there is no way around it.

 

[abasile]

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).

I agree that dedicating more employees to the pre-owned program would increase Tesla's costs.

However, I'm assuming that selling more used cars at retail, and not at wholesale, would more than make up for this. Selling cars more quickly, besides improving customer satisfaction, would also lower costs in the long run. With sufficient staffing, Tesla could provide more consistent follow-up to would-be buyers, answering their questions and encouraging them to place deposits on cars (in a non-pushy manner of course).

The starting point would be a better vehicle search engine with more information. This just needs to at least match what the most reputable used car dealers are already doing online, and should not be especially costly.

Tesla could, in the beginning, pre-condition only the vehicles that they are extremely likely to sell at retail. As the program gains traction, a larger fraction of their used vehicles could be pre-conditioned.

Trade-in offers could remain as they are for now. My understanding is that Tesla has no shortage of used cars on their hands right now, thanks to the many owners who've already upgraded to newer cars. Longer term, with a more efficient process in place, it would be great to see increases in those offers.

Here, Tesla has the opportunity to provide the best possible brand experience to buyers who, while not purchasing new vehicles, are buying their very first Tesla vehicles.

 

[St Charles]

This, of course, assumes that there are buyers for a very expensive used niche vehicle.

 

[TSLA Pilot]

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.

Goodness, sooooo many errors in your analysis that I don't know where to start. Let's just address the part above.

You have missed the boat, entirely. It has nothing to do with "hurt feelings."

My solutions all involve marketing the cars BETTER (with pictures even--you know, to show what the six-figure car someone is looking at actually looks like for real), to the right markets.

All you've done is read one or two posts and jumped to some remarkable conclusions, like most here.

In fact, you wrote:

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.

And ALL of these are improved if the vehicles are marketed better and sell faster . . . as I stated in many, many posts.

As for the Paint Protection Film, you obviously didn't read the "waiver/release" inputs that solve that problem.

I'll not respond to your silly comments as that's a waste of everyone's time.

 

[TSLA Pilot]

This, of course, assumes that there are buyers for a very expensive used niche vehicle.

Previously addressed--there ARE buyers if Tesla helps them find the value in the CPO program. As stated, where are the programs to move CPO cars into:

Sierra Club/Greenpeace/350.org type membership groups?
Power/utility employee groups?
Tesla Employees--they should mostly driving their own product (and for years now)?

And many more . . . .

For now, they have NO search engine, and they threat their own customers as garbage with trade in values that cause their own OA's to cringe when they see someone pull up in a Tesla.

Dumb, dumb, dumb to keep getting to a "lose/lose" solution when "win/win" is only a few brain cells away.

 

[St Charles]

LOL. We're still doing this?


Go away, no one cares that you didn't get what you wanted.

 

[TSLA Pilot]

Yeah, I totally agree with you. Tesla clearly does not want to deal with used cars and seems content to do the minimum possible to move along the sale of a new Tesla. This is on par with just about any dealership trade-in experience. What I think the OP is not digesting is that the market sets the price for a used car. Not the seller and certainly not the dealership or manufacturer. Depreciation is a real thing and there is no way around it.

Actually, you too have missed the point.

FULLY CONCUR that "depreciation is a real thing" but the hit that Tesla owners take, AT TESLA, is such an embarrassment that even Tesla's OA's don't like it when buyers show up in a Tesla.

That is flat out, crazy, stupid.

Tesla should OWN the used Tesla market. Period.

Tesla actually makes many of the "wear" items on the trim (scuff plates, B-pillar trim, etc.) and can certainly buy new tires and wheels at the lowest cost on the planet. Tesla.com should be the "GO TO" place for all used Tesla, not used car wholesalers that don't know a Tesla from a Leaf from a Yugo . . . . Yet there is no apparent outreach for the millions of potential buyers that think a Tesla MS is out of their reach, to include Tesla's own employees, nearly all of whom should be driving Teslas as well.

Every Tesla owner should be getting a trade in purchase offer with a visit to a service center. If there aren't visits within a year, one should be emailed or "hard copy" mailed. The overarching goal: sell more new, high-margin Teslas; send more ICE cars to be recycled. Tesla should be reaching out to every Tesla owner, offering the most of any prospective buyer, and not treating used Teslas like unwanted garbage . . . .

There are 11 pages on this thread of "win/win" solutions to increase the value proposition and the sales prices of used Teslas (and reduce the time they sit and depreciate further); I'd just as soon not rehash them.

 

[St Charles]

There are 11 pages of one person whining about the realities of trade in value and a bunch of people laughing.

 

[Electroman]

There are 11 pages of one person whining about the realities of trade in value and a bunch of people laughing.

No I don't think so. He is making a very valid point, with the notion that Tesla at its current state is a different manufacturer from all others, dealing with issues that are quite different from other established folks. So playing the used car game differently from everyone else is a trick Tesla has failed to employ.

Most of the folks in here who think this is a bad idea, think so wearing the hat of traditional used car/CPO lifecycle ICE manufacturers play.

For example: I take my 50k miles Lexus to any Toyota dealer or body/repair shop to spruce it up, fix issues and sell it at a bit more than market rate premium. With an 'S' you simply are totally dependent on Tesla. And that heavy dependency on Tesla is what they should capitalize to vitalize up the CPO market - which in turn impacts positively on the larger used car market.

 

[jschwefel]

As for the OP and the 10% QoQ reduction in Model S sales, this concerned me also, but when you balance it against the rise in Model X sales and the % Tesla has of the large luxury car market (~30% and still growing), we shouldn't be too surprised at this. Now that we have the Q1 numbers, it would appear Tesla does not have an issue with demand in this space.

I also agree with the OP that Tesla could do more to incentivize owners to "trade up" by offering better trade-in values. Yes, someone can always sell the car out right, but that's a hassle and a burden for most folks. It's obvious that customer loyalty and trust are very important to Tesla, so I think in time they will get there with the CPO program.

 

[whitex]

In fact, you wrote:

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.

And ALL of these are improved if the vehicles are marketed better and sell faster . . . as I stated in many, many posts.

Really, parking a car and not cleaning it, not taking pictures of it, until there is an interested buyer, cost less than paying someone to clean it, take pictures, keep it clean, etc? I see by "improved" costs you mean "increased" costs. So yes, I agree, all these costs can be increased. I guess this applies to the rest of the costs (since you said "ALL") too, like interest rate, yes it can be increased. Etc, etc.

As for the Paint Protection Film, you obviously didn't read the "waiver/release" inputs that solve that problem.

Your approach is very naive. Waivers are not get-out-jail-free cards. Customers claim they haven't read them, they sue. Even if you prevail in the end, you have legal costs and pissed off customer who goes around forums slamming Tesla. What's the upside for Tesla? And the upside to the guy trading it in is only save the cost that Tesla would put to remove the tint or film, since if Tesla sells it with a waver of "we have no clue what it is nor do we know what to do with it (how to care for it, etc)" then they cannot charge any money for it. It could actually be a detractor since Tesla would probably also add to the waiver that they don't warranty the paint under whatever coating is on it.

Actually, you too have missed the point.
FULLY CONCUR that "depreciation is a real thing" but the hit that Tesla owners take, AT TESLA, is such an embarrassment that even Tesla's OA's don't like it when buyers show up in a Tesla.
That is flat out, crazy, stupid.
Tesla should OWN the used Tesla market. Period.

LOL, have you seen prices of used Tesla's outside of Tesla? 2016 Model X 90D, leather, wood, 6 seats, etc 7900miles - $82K. Or check ebay.
I know you think somehow magically Tesla will override market forces, but tha's just your opinion unsupported by any proof.

My solutions all involve marketing the cars BETTER (with pictures even--you know, to show what the six-figure car someone is looking at actually looks like for real), to the right markets.

Nobody here says that their CPO marketing cannot be better. Of course it can be since it's hands off today, HOWEVER, the question is whether this is where Tesla should be investing their money. They have limited resources, and by using them elsewhere they are doing quite well.

I really think you really should put your money where you mouth is, take your claimed 7 digit investment in Tesla and start a business reselling their used cars. The absolutely will work with you, see Used Model S from Vroom.com? (btw, these guys do clean up, take pictures and all, but notice their prices are lower than Tesla CPO, even on cars with 3K miles where the CPO warranty doesn't really matter). Come on, show us how your ideas make more money

I'll not respond to your silly comments as that's a waste of everyone's time.

I think you finally hit on a point we can all agree on. Respond once you're offering people higher trade-ins for their Tesla cars than Tesla does.

 

[AnxietyRanger]

I really think you really should put your money where you mouth is, take your claimed 7 digit investment in Tesla and start a business reselling their used cars. The absolutely will work with you, see Used Model S from Vroom.com? (btw, these guys do clean up, take pictures and all, but notice their prices are lower than Tesla CPO, even on cars with 3K miles where the CPO warranty doesn't really matter). Come on, show us how your ideas make more money.

But that's just the thing.

The comparison isn't what a third-party can sell at - or what Tesla sells their CPO's at to buyers (latter being completely irrelevant as it is not directly related to what they compensate their trade-in sellers with).

The comparison is: at what trade-in compensation to owners of used Teslas, can Tesla entice the optimal amount of new-car sales to those owners. New-car sales being their main profit-center, of course.

The argument here has been that if Tesla would improve their trade-in offer, they would sell more new cars and make more profit overall, even while that would mean diminished profit on the trade-ins themselves.

The business model of a third-party used cars dealership has nothing to do with the argument in this thread, because they do not sell new Teslas.

 

[whitex]

But that's just the thing.

The comparison isn't what a third-party can sell at - or what Tesla sells their CPO's at to buyers (latter being completely irrelevant as it is not directly related to what they compensate their trade-in sellers with).

The comparison is: at what trade-in compensation to owners of used Teslas, can Tesla entice the optimal amount of new-car sales to those owners. New-car sales being their main profit-center, of course.

The argument here has been that if Tesla would improve their trade-in offer, they would sell more new cars and make more profit overall, even while that would mean diminished profit on the trade-ins themselves.

The business model of a third-party used cars dealership has nothing to do with the argument in this thread, because they do not sell new Teslas.

So what you are saying is Tesla should subsidize owners upgrading to a new Tesla by giving them more than market value on their trade-in in order to sell more new cars. In this case the OP wanted $10K. So my question is, why limit the $10K incentive to only people who trade in Tesla's? Wouldn't you think they'd sell even more new cars if they offer $10K cashback to anyone? Heck, if you wanted to limit, it would make sense to limit it to people who don't have a Tesla trade-in, since every Tesla trade-in increases the used Tesla supply and therefore applies downward pressure on the used Tesla prices (which coincidentally lowers the trade-in market value, and devalues Tesla CPO inventory).

 

[AnxietyRanger]

So what you are saying is Tesla should subsidize owners upgrading to a new Tesla by giving them more than market value on their trade-in in order to sell more new cars. In this case the OP wanted $10K. So my question is, why limit the $10K incentive to only people who trade in Tesla's? Wouldn't you think they'd sell even more new cars if they offer $10K cashback to anyone? Heck, if you wanted to limit, it would make sense to limit it to people who don't have a Tesla trade-in, since every Tesla trade-in increases the used Tesla supply and therefore applies downward pressure on the used Tesla prices (which coincidentally lowers the trade-in market value, and devalues Tesla CPO inventory).

No, that is not what *I* am saying.

I was clarfying the argument @TSLA Pilot made. His argument was that current trade-in value is too low compared to what it could be and that it hurts new car sales at Tesla to existing owners. It was not about subsidizing either, as I saw it, but merely that Tesla could afford to lessen their profits from used car sales (it won't turn into subsidizing until it goes to losses).

@TSLA Pilot 's point was about the optimal level of trade-in value to optimize Tesla's overall profits. He feels the trade-in value is too low for that at the moment and leads to more lost profits in new car sales than used car sales can compensate for.

Feel free to argue that point, I merely directed you at the actual claim in this thread, which had nothing to do with making third-part Tesla sales profitable.

 

[St Charles]

*Owner wants more $$ for his trade-in, News at 11:00*

What's surprising is that this troll thread has lasted 12 pages.

 

[X Fan]

Tesla's best case GP for OP's used car is 18%. Prep and other service/sales costs will take this down much lower.

Dear OP: not many businesses can survive with a teens GP.....what business are you in?

 

[TSLA Pilot]

So what you are saying is Tesla should subsidize owners upgrading to a new Tesla by giving them more than market value on their trade-in in order to sell more new cars. In this case the OP wanted $10K. So my question is, why limit the $10K incentive to only people who trade in Tesla's? Wouldn't you think they'd sell even more new cars if they offer $10K cashback to anyone? Heck, if you wanted to limit, it would make sense to limit it to people who don't have a Tesla trade-in, since every Tesla trade-in increases the used Tesla supply and therefore applies downward pressure on the used Tesla prices (which coincidentally lowers the trade-in market value, and devalues Tesla CPO inventory).

Good heavens, WhiteX, you're too much.

The problem with jumping in half way through a thread is that you've missed half the damn thread and you start pontificating based on bad assumptions.

The whole idea here is to sell more new, high-margin Teslas. That's where the cash flow is.

Making OA's happy when a Tesla pulls up is our goal, rather than want to run and hide because they have to insult Tesla owners with low trade in values. Why do they have to insult us with low trade in values? Because Tesla's CPO program is about as broken as it can be. Pathetic, really, with many examples already posted. Then Tesla ends up dumping them to Vroom.com, and a host of other non-optimal channels, rather than selling them via Tesla.com.

I can't fix anything outside of Tesla as the whole "fix" connects to the new Tesla sale; IT MUST because that's where the margin is, especially on P100D which do NOT cost twice as much to make (or warranty) as, say, an MS 60 . . . . The fix also gets CPO Teslas sold via a host of other channels, to buyers that should already be in a Tesla but thought they couldn't afford one (such as, perhaps, nearly all of Tesla's own employees, power company employees, anyone else disgusted with the current US president--which is more than 50% of the voters, BTW, Sierra Club members, etc.)

I'm sorry these many concepts here, and others, escaped you, but please avoid extrapolating on limited knowledge.

Thank you.

 

[TSLA Pilot]

*Owner wants more $$ for his trade-in, News at 11:00*

What's surprising is that this troll thread has lasted 12 pages.

Not quite St. Charles. What's surprising is how posters like you jump in and make assumptions without bothering to read and UNDERSTAND the issue in question.

Here's a tip: Start at the first post and read it. Then read it again, but slowly, so that you can understand it.

Then you might have a friggin' clue as to what this thread is really about which is enhancing Tesla's mission of replacing fossil fuel burning ICE ground transport with BEV's, preferably Teslas.

Right now, Tesla is harming their mission with a CPO program that couldn't be much worse than it already is. It's called a "lose/lose" outcome as no one wins.

There are twelve pages of ideas on how to fix it, but posts like yours just dilute the Signal/Noise ratio and aren't appreciated. So how about standing down and letting the adults in the room try to help Tesla fix the odd (and fortunately rare) stupidity that is today's Tesla CPO?

Thanks.

 

[St Charles]

pontificating based on bad assumptions

Pretty much sums up the entire thread...