Nearly 70% Of CarMax’s Tesla Inventory Disappeared In Three Days

The sudden Tesla price drops have had the seemingly intended impact on Tesla’s inventory, with cheaper cars and government incentives colliding to move a lot of the cars. If that’s not your vibe, I also have the dullest story in the history of dull stories because David is quite excited about it. That, and some other stuff.

The Great Tesla Sell-Off Continues

First, there was the great sell-off in Tesla stock, with the company losing 64 percent of its value in the last year (based on the current stock price, which I Googled about two minutes ago.) Then came the Inflation Reduction Act, with a quirk that meant new Teslas suddenly could qualify for the full $7,500 tax credit until the end of March.

The problem? New Teslas were mostly too expensive. Then came Tesla’s big price drop last week, putting the Model 3 and Y into contention for the tax break in certain trims.

Did it work? The TeslaData website tracks Tesla inventory and, going back to October, you can see a big spike in the inventory above followed by a big drop. It doesn’t require a lot of shrewd analysis to see that lowering prices helps to move inventory.

But what of used cars? Used cars also qualify for incentives but they’ve got to be below $25k and sold by a dealer, so that rules out most used Teslas for sale right now. Here’s an interesting tweet:

UPDATE: Carmax sold 57% of its ENTIRE Tesla inventory in the past 24 hours ???? https://t.co/msjHMjJADi

— CarDealershipGuy (@GuyDealership) January 15, 2023

As I believe I’ve expressed before, I have some skepticism about @CarDealershipGuy, and not just because he pays for a blue checkmark and tweets bullshit memes. His analysis is mostly just tweeting out whatever bits of data he sees and reacting in these big pronouncements to get social engagement, but he hasn’t Milkshake Duck’d yet and he does find some interesting stuff so let’s roll with it.

So, above he pointed out that CarMax had 696 Teslas in stock on January 13th. Two days later, that inventory dropped to 301 Teslas. As of this morning, when I checked, there were about 210 (you can check for yourself here). That’s a drop of a little over 69% in a few days.

What’s happening? For one, CarMax is heavily discounting Teslas. In searching around it seems a little uneven, but here’s a good example:

It’s not easy to tell on CarMax’s website when they discount a car, but Edmunds tracks it for you. and they show this Tesla Model Y in Lafayette dropping from $55,998 on January 13th (pre price-drop) to $44,998 in a day. $11,000! Overnight! That’s a big drop considering the car was only discounted $2,000 over the course of the prior month. If you look around you’ll see a lot of similar price drops.

It seems like CarMax has decided it’s better to drop inventory as fast as possible rather than let the cars sit there overpriced. The presumption is that these cars have been sold, but I don’t have any proof of that. It’s also possible that CarMax is pulling these cars from inventory and is wholesaling them. Either way, they aren’t listed for sale anymore.

Carvana is also dropping prices (here’s a Model Y with a $9,000 price drop), but their inventory stands at least 700 cars as of this morning. It might be harder for Carvana to part with cars given that they were driving up prices dramatically. Given all the problems Carvana has had lately, it’ll be interesting to watch how much they can afford to write-down cars compared to CarMax.

According to Cars.com, more than 7,500 used Tesla Model 3s are listed for sale (primarily by dealers) in the United States, with more than half of them listed above $40,000. That means you can get a new Tesla for cheaper than a used Tesla. Even adjusted for trims, there are 368 base model Tesla Model 3s listed above that number. This Model 3 might be the most overpriced Tesla in America.

If you’re aiming to buy a Tesla, it seems like times are good. If you’re selling them, they are, uh, less good. The impact this has on residual values is gonna be fun to watch.

Palate Cleanser: Automotive Heat Exchanger Market Worth $34.3 Billion By 2027

Did you know that David was a powertrain engineer focused specifically on vehicle cooling? He was! So he sent me report from MarketsandMarkets that has the headline: “Automotive Heat Exchanger Market Worth $34.3 Billion By 2027.” You can download the PDF here. Do not actually download it, unless you are a powertrain engineer or related to that industry in some way.

Anyway, here’s the important graf for you if you care about tube fins:

Tube Fin segment is expected to hold the largest share in the Automotive Heat Exchanger Market during the forecast period

The tube fin heat exchanger typically has tubes with fins attached to the outside. In this type of heat exchanger, the heat transfer rate is greater due to the liquid flowing through the inside of the tubes for heat transfer and the additional heat transfer surface area due to the finned tube. Tube fins are the most widely used heat exchangers in the automotive domain. This type of heat exchanger is used in car radiators and condensers and evaporator coils of HVAC systems. The increasing adoption of HVAC systems in developing countries is driving the market for tube fin heat exchangers. In November 2020, Dana Incorporated announced that the new 2021 Land Rover Defender featured Danas latest Spicer AdvanTEK axles, typically designed to deliver improved performance and superior power density. The Defender also features several Dana technologies for engine and thermal management, including gaskets, thermal acoustical protective shielding, and engine oil coolers to support optimum engine performance.

I am not excited about this, but David is. Good for David.

The 84-Month Car Loan Is Becoming More Popular

Palette cleansed, back to car sales. According to credit bureau Experian, 19% of new vehicle debt and 11% of used car loans were freakin’ 84-month auto loans in Q3 of last year. If you’re bad at math, that’s seven years!

Here’s the scoop from an Automotive News report on Experian’s findings:

In the third quarter of 2018, only 11 percent of new-vehicle borrowers and 4.1 percent of used-vehicle borrowers were on the hook for 84 months, according to Experian. By the third quarter of 2022, 19 percent of new-vehicle debt and 11 percent of used-vehicle loans ran seven years.

People can find themselves in situations where they have bad credit or little savings and need a car, which leads them to do whatever they can to find the lowest monthly payment possible even if it means spending a lot of money in interest. But, compound this with car values that were insanely high over the last few years, and you’ll end up with people unable to sell or trade in a car that’s worth way, way less than what they’d expected and owe (putting them underwater). The article touches on this:

Nonprime consumers were more likely to pay 84-month loans than 72-month loans, according to Open Lending, which recently announced it had begun to underwrite insurance on seven-year car debt.

“It’s all payment driven,” Matt Roe, chief revenue officer of Open Lending, told Automotive News in September.

I’m curious if someone in the last year took out an 84-month loan on a Tesla Model Y…

Palate Cleaners Two: Here’s A One-Off Ferrari Roma For China

Unless it was wild I’m not sure we’d write up a bespoke, “Tailor Made” (i.e. official Ferrari personalized) Ferrari Roma as its own story. That is not what we do around here, usually. Still, this tie-up between Chinese designer Jiang Qiong’er and Ferrari produced a car that doesn’t look half-bad even if it’s extremely subtle.

From the press release (which you can read at NetCarShow):

Jiang Qiong’er, who has developed an international reputation, is much sought after for her work with its roots in the subtlety, beauty and heritage of Chinese culture. Her design vision and distinctive insights, together with her deep understanding of traditional Chinese culture, mirror the aspiration of Ferrari to craft a special Roma for commemorating the special occasion. Together, Ferrari and Qiong’er took inspiration from classic Chinese aesthetics and fused concepts and expertise to achieve a synthesis of Italian design philosophy and Chinoiserie Chic.

Neat!

The Flush

What’s the longest loan you’ve ever taken out on a car?

• Even CarMax’s CEO Thinks Used Car Prices Are Too High

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• Mercedes To Challenge Tesla’s Supercharger Network

• Here’s What You Need To Know About Tom Zhu, Tesla’s New ‘Number 2’

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Photos: Carmax, Edmunds, Hydro, Ferrari, Mazda