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Move over Carvana? Tesla’s used car business is ‘as big as publicly traded used car retailers’

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Jimmy Douglas, director of sales and delivery operations at Tesla, said this success is all despite a lack of Super Bowl commercials and ridiculous props to attract customers.



Tesla claims its used car business is “as big as some publicly traded used car retailers,” and it is expanding fast.

Many factors separate Tesla’s business from other automakers, and its direct-sale model is one of the biggest – and probably the one that other automakers are most jealous of.
Tesla operates all of its stores, service, and delivery centers. It doesn’t use the third-party franchise dealership model.
This has a tremendous and obvious impact on its distribution and service organization, but it also has a lesser-known impact on how it manages used cars.

Operating its own dealership gives the automaker strong control over its used vehicles as owners upgrade or vehicles come off leases.
Tesla’s used car business is now so big that Jimmy Douglas, director of sales and delivery operations at Tesla, claims it is “as big as some publicly traded used car retailers”:
Most people don’t realize that Tesla runs its own vertically-integrated, nationwide online used car retailer. It’s as big as some publicly traded used car retailers you’ve definitely heard of, despite no Super Bowl commercials or wacky waving inflatable arm flailing tube men
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The executive is likely comparing it to companies like Carvana and AutoNation, which are worth between $4 and $6 billion.

It is impossible to confirm if Tesla’s secondary car business is worth that from public filings since the automaker files the business under “service and other” in its revenue report.

However, that line item is going up fast. It’s up more than 50% over the last year to $1.4 billion in revenue last quarter.

Tesla’s used car business would have an annual run rate of over $1 billion if it’s about 20% of that line item.
Douglas made a comment promoting a new job listing posted by Alex Liebl, manager of Tesla’s Used Car Quality, as the team is expanding.

The executive added about Tesla’s used car team:
They are distributed across North America, ensuring every used Tesla meets our quality standards, so we can delight every customer at the point of delivery. Since Tesla doesn’t advertise, delighted used car customers are our version of Super Bowl commercials.
While Tesla doesn’t advertise its used cars, it has the advantage of having great control over the inventory.
Electrek
 

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Don't worry, the upcoming serious recession is going to take care of all of that.
Pretty much. The remarketing business goes both ways. In strange times like the past 2 years, with skyrocketing used car values, excess profits are flowing and people are popping champagne bottles. During normal times, companies are just trying to mitigate losses and get rid of cars as quickly as possible. During very bad times, like what I think we'll see in the next few quarters, companies try to unload inventory at fire sale prices and suffer huge losses.

Tesla has an advantage for sure with their direct sales model and free advertising (like a constant stream of articles from Electrek such as the one referenced in this thread), but that advantage could also disappear one day if the direct sales model gets opened up to the rest of the industry and/or TSLA suffers a serious reputational issue and loses its luster.
 

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I wonder, with the continued supply-side shortages not yet having caught up to demand, are used cars lingering on lots really as much of a fire-sale type scenario as new cars? Typically, you fire-sale new cars to make room for inventory that's being pumped out by the factories. On the other hand, used cars only come in as often as the used car manager is bringing them in, so incoming stream is more tightly controlled. I think you will see dealer trade offers/wholesale on used cars dropping dramatically, but used retail prices will lag somewhat behind, if at all.
 
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