Dealer sells Teslas and customized trucks to fight margin squeeze

Tesla doesn't have dealers, but at least one Texas dealer is getting known for having Teslas.

The upstart all-electric brand is a key component of the growing — and high-margin — used-vehicle business at Lewisville Autoplex, the showpiece Mitsubishi store northwest of Dallas.

Like many dealers coping with compressed new-vehicle margins, the Baum family has turned to used vehicles for volume growth with better profits. And it's found particular success with lifted or customized trucks as well as Teslas.

It started with good, old customer service.

In 2013, a friend of David Baum Jr., the general manager and third-generation auto dealer, wanted to buy a Tesla Model S. The pricey sedan had been on the market for only about a year, but Baum said he would try.

"I went out and bought him a Model S, and I was so impressed with the car," Baum said in an interview. "This car — by far — is the best vehicle I've ever driven myself. And so from there, I said, 'We're going to start stocking these.' "

While the California-based automaker chooses to sell its new EVs directly to consumers, Texas law prohibits company-owned stores. So buying Teslas in the state can be a hassle, said Baum, 35.

"But there's still huge demand for them," he said. "I see them all over the road, all over Dallas. So we're carrying late-model Teslas, 1- to 2-year-old Model S, Model X and the Model 3."

Baum said the average Tesla stays on his lot for only eight days. Supply comes from auctions of off-lease cars and loaner vehicles. "The demand is there, we just can't keep them on the lot," he said. "I think it's a great value for someone not to have to pay advertised price on a new one."

To support the used-vehicle specialty, the store has six Tesla electric charging stations: two in the front for customers, two in the service drive and two in the vehicle-delivery area.

The Baum family's store off I-35 was the first U.S. dealership to complete Mitsubishi's new Dealer Visual Identity Program with all the bells and whistles — at a cost of $13.5 million. Brand dealers and executives have come from all over the world to see the ground-up facility.

But in the current retail market, it needs to do more than invest in the rebirth of the Mitsubishi brand.

Lewisville Autoplex does sell more-commonplace used autos, such as Ford Explorers and Toyota Camrys, but those are only about a quarter of the inventory. Another quarter are exotics or less-common vehicles such as Teslas, and half are customized vehicles such as lifted Jeeps and pickups, Baum said.

"Our average sales price on a used car is now $43,000. In comparison, our new-car average sales price is $25,000," he said. "The margins on our lifted vehicles and custom trucks are a lot better. It definitely keeps us going. At the same time, we're building those trucks in-house, so that's money to the dealership as well. Service, parts and sales all benefit."

The dealership is averaging about 50 new-car sales a month compared with about 110 used vehicles, Baum said. Since inaugurating the new facility in June, used sales have risen from about 90 units per month. And the year has started strong, with used sales up 38 percent year-over-year for the best January in the company's history.

Baum sold cars part time while he was in college and joined his father and uncle Doug full time after he graduated from Texas Christian University in 2005. He immediately started looking for new ways to sell cars. The dealership created an eBay Motors store and later expanded into exotic cars and lifted trucks, using Instagram to generate leads and create a national following.

"I started noticing that anytime we took a good trade, let's say a Corvette, a GT500 Mustang, things like that, these were selling — and selling all across the country, not just in our backyard," Baum said. That led to a stand-alone used operation with the Autoplex name, which was merged back into the Mitsubishi store when the new facility opened last year.

Exotic cars listed on the dealership's website include a 2015 Lamborghini Aventador at $299,995 and a 2019 Porsche 911 GT3 RS at $226,480. There also was a first-generation Acura NSX supercar in red and the new generation in white.

The Autoplex offers free delivery within 500 miles and has a 4.8-star rating on Google, which gives shoppers confidence and opens up the market to nearby states, including parts of Kansas, Missouri, Arkansas and Louisiana, Baum said.

And while the dealership isn't the only one in Texas to offer lifted trucks, it does offer custom configurations. Part of the 12-bay service center is dedicated to lifting vehicles for sale on the lot, building 10 to 12 a month. Plus, customers can have their own vehicles modified. One recent job cost $16,000, Baum said.

As with the foray into exotics, the expansion into lifted trucks was born after an interesting trade.

"We traded for a lifted GMC Denali truck in 2012, and that was our first lifted truck. I remember, because everybody was obsessed with that truck," Baum said.

It lasted only one day on the lot.

"So we started buying lifted trucks. And then we started building lifted trucks at other shops around town that did the custom work. But we were outsourcing all that work," he said. "Then I realized, we should be building these trucks in-house, helping our service and parts department."

Each year, Lewisville Autoplex is represented at the SEMA aftermarket show with four or five custom builds, partnering with parts companies.

Of the 100 or so used pickups and Jeeps on the dealer website last month, a dozen highly modified examples were priced at more than $80,000. The priciest was a 2020 Ford F-350 Platinum crew cab with 60 miles on the odometer at $97,901 with a long list of custom modifications, including a 6-inch Full Throttle Suspension Lift Kit.

"We really developed our name through our Instagram page — we have almost 20,000 followers," Baum said. "We started it to try and sell a car. Instead it turned into everybody messaging us: 'Where do I get these wheels? What size lift is that? How much would it cost to do that to my truck?' So it's created a huge following for our store nationwide."