A year ago, we told you about the opportunity that former Tesla CIO Jay Vijayan was chasing. His plan? To pull car dealers into the 21st century with a snazzy end-to-end automative SaaS platform like the one he helped develop inside Tesla. Customers could use it to order a car to their precise specifications; dealers could use it to see in real time to understand their inventory and seamlessly check in customers for service appointment; OEMs could use it to see exactly which of their parts were where, relative to said dealerships.
The list of ways the software would produce savings for both dealers and OEMs (and perhaps, eventually, customers) went on and on, as Vijayan explained it. Apparently, his company, Tekion, is gaining meaningful traction, too. According to Vijayan, the company’s revenue has grown threefold over the last year, the number of states where dealers are using Tekion’s software has grown to 39 from 28, its employee base has grown from 470 employees in both Bangalore, India and San Carlos, Calif., to roughly 1350, and the company just began working with its first dealership in Canada as part of a plan to become an international outfit.
Accordingly, the company is today announcing $250 million in Series D financing that bumps its valuation a year ago from $1 billion to $3.5 billion today, and its total funding from $185 million to $435 million. Alkeon Capital and Durable Capital co-led the round. Other investors include Hyundai Motor Company, several dealer groups across the U.S., and earlier backers Advent International and Index Ventures.
Interestingly, the global chip shortage and other parts-supply disruptions that drove down new vehicles sales down a whopping 26% last month, is only having a positive impact on Tekion, and a recent piece in Morning Brew suggests why.
When the outlet talked with the president of an automotive group in Columbus, Ohio, he said that because inventory is scarce, a sale that would have taken four hours to make before the chip shortage now closes in 52 minutes. That scarcity is also driving profits through the roof, with buyers paying more for both new and used inventory, and auto retailers benefiting from lower operating costs with less inventor.
Courtesy of tech from Tekion and some of its legacy competitors, retailers are presumably also able to operate faster when it comes to servicing the consumers who are waiting out the shortage and hoping to make their cars last longer.
In fact, a dealership in Fort Lauderdale, Fla., tells Morning Brew that its profits jumped 197% in Q1 2021 compared to Q1 2020.
“The supply is less but the demand is strong, so everyone is making a lot of money,” Vijayan tells TechCrunch. “The dealers, the OEMs — they’re making a good amount of margin.”
Tekion, he adds, has been “very strong through that growth,” but Vijayan anticipates that next year will be even better when inventory begins to catch up to demand.
“I believe sometime next year there will be some level of correction in the market and that our technology platform will help both dealers and OEMs navigate the correction much more smoothly because the platform will continue to learn and evolve to provide insights on where they should focus their business.”
In the meantime, Tekion’s growth appears to largely organic. Though the automotive world is known for spending lavishly on marketing and for aggressive sales tactics, just 17 of Tekion’s employees work in sales. “We don’t spend any money in marketing, or it’s very negligible. [We’re growing through] word of mouth.”
A deal struck back in March with General Motors — which is an early investor in Tekion, as is BMW and the Nissan-Renault-Mitsubishi Alliance — is also surely helping.
Though each franchise is invited to opt in, or out, GM dealers now are beginning to use Tekion’s white-labeled dealer management software to make it easier for customers to purchase an Chevy, Cadillac, Buick or GMC brand electric vehicle. And the platform reportedly operates similar to — but much better than — GM’s existing Shop. Click. Drive. program, which allows users to search for certain GM vehicles at dealerships near them and complete a portion of the transaction over the internet.
At least, in conversation earlier this year with Automotive News, a vice president of Chevrolet described the software as akin to GM’s internal program “on steroids” and a “game changer.”
Source Link Tekion, the automotive retail platform headed by a former Tesla CIO, just tripled in value
