Tesla Partners With Auction Companies To Manage Used Car Market

Published on November 27th, 2018 |
by Steve Hanley

November 27th, 2018 by Steve Hanley

Car auctions move billions of dollars a year and are essential to the US automobile industry, yet operate out of the public eye. Every week, tens of thousands of used cars get redistributed from dealers and leasing companies to wholesalers and other dealers. The auctions are not open to the public, so very few people know about them, but they provide a means of turning cars in inventory into cash for sellers, and they provide a steady supply of fresh inventory for used car dealers.

Until now, Tesla has been managing its own used car inventory, but as sales of new cars ramp up, there are more Teslas being traded in. As much as Tesla likes to be a vertically integrated company that controls every aspect of its business, established auction houses like Adessa and Manheim are very good at what they do, and so Tesla has contracted with them to help manage its burgeoning supply of used cars, according to CNBC.

The majority of cars that go through the auction process are off-lease vehicles — something that Tesla is starting to have a lot of as leases from 2016 and earlier are just starting to mature. To handle the influx of more used cars — some of which may be trade-ins from other manufacturers or repossessions — Tesla now has postings on Glassdoor for used vehicle quality specialists, a remarketing manager, and used vehicle sales advisors. The company is targeting a “30-day or less turn-rate in the sale of pre-owned inventory.”

Many people have a negative attitude toward cars purchased from auction houses, but in truth, the supply of off-lease cars is the lifeblood of the used car industry. They are typically 2 to 3 model years old with between 30,000 and 50,000 miles on them. They are professionally reconditioned by the auction staff and often cannot be told from new. If you think all 300 used cars in inventory down at your local dealer are local trade-ins, you don’t understand how the used car business in America works.

Because Teslas will now be available at major auctions, that means they will soon start showing up on dealer lots alongside other cars in the used car inventory, meaning people interested in buying a used Tesla will have more options and possibly somewhat lower prices.

The secret to the used car business is turning the inventory. Many of the top used car retailers set 30 days as the maximum time a car can remain on the books. After that, it goes back up for auction. The theory is that it is better to lose a little money now if the proceeds can be reinvested in fresh inventory that will sell quickly and generate a profit later.

When your children ask you for career advice, tell them to become an auctioneer. Those who make it are typically some of the wealthiest people in the community. They get paid a fee by sellers to include their cars in the auction and another fee by buyers when the car sells. Most operate finance companies that loan buyers the money to purchase the cars. They operate inspection and reconditioning services that generate income as well.

Forget being a lawyer or a doctor or even a Wall Street trader. Being an auctioneer is where it’s at. You own nothing and have little overhead. No one dies or goes to jail if you make a mistake. It’s the perfect business for anyone who wants to make a lot of money with minimal headaches.

And it’s addicting. Once a week, the cars start rolling across the auction block at 9:00 am at a rate of 2 per minute until well into the afternoon. The bigger auctions have up to 15 lines running simultaneously and sell as many as 1,500 cars in a day. It’s insane, and crazy good fun. Way better than playing video games in your mom’s basement.

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About the Author

Steve Hanley Steve writes about the interface between technology and sustainability from his home in Rhode Island and anywhere else the Singularity may take him. His muse is Charles Kuralt — "I see the road ahead is turning. I wonder what's around the bend?"

You can follow him on Google + and on Twitter.