Tekion Triples Valuation - Automotive Retail Platform

Tekion Secures $250 Million in Series D Funding

One year ago, the ambitions of Jay Vijayan, formerly Tesla’s CIO, were highlighted. His objective involved modernizing car dealerships through a comprehensive automotive SaaS platform, mirroring a system he previously helped create at Tesla.

This platform would empower customers to customize vehicle orders to their exact preferences. Simultaneously, dealerships could gain real-time visibility into their stock and efficiently manage service appointments. Automotive manufacturers (OEMs) would benefit from precise tracking of parts distribution across their dealer network.

Significant Growth and Expansion

Since its inception, Tekion, Vijayan’s Pleasanton, California-based company, has demonstrated considerable progress. Revenue has reportedly tripled in the past year.

The software’s adoption has expanded from 28 to 39 states, and the company has initiated operations with its first Canadian dealership, signaling a move towards international expansion.

Reflecting this growth, Tekion has announced a $250 million Series D funding round. This investment elevates the company’s valuation from $1 billion to $3.5 billion, bringing total funding to $435 million, up from $185 million.

The round was co-led by Alkeon Capital and Durable Capital, with participation from Hyundai Motor Company, various U.S. dealer groups, and existing investors including Advent International, Index Ventures, and FM Capital.

Impact of Supply Chain Disruptions

Interestingly, the ongoing global chip shortage and related supply chain issues, which caused a substantial 26% decrease in new vehicle sales last month, are proving beneficial for Tekion.

Recent reports suggest that dealerships are closing sales more quickly due to limited inventory. A dealership in Columbus, Ohio, noted a reduction in sales time from four hours to just 52 minutes.

This scarcity is also driving increased profitability, with higher prices for both new and used vehicles, and reduced operating costs due to lower inventory levels. For example, a Fort Lauderdale, Florida dealership experienced a 197% profit increase in Q1 2021 compared to Q1 2020.

Enhanced Service Capabilities

Retailers are also likely benefiting from faster service operations, facilitated by technologies like Tekion’s, as consumers postpone vehicle replacements and prioritize maintaining their existing cars.

“Demand remains strong despite the reduced supply, resulting in substantial profits for both dealers and OEMs,” Vijayan explained to TechCrunch.

He anticipates even stronger growth next year as inventory levels are expected to normalize. Tekion is well-positioned to assist both dealers and manufacturers in navigating this market correction.

Organic Growth and Strategic Partnerships

“Our platform will continue to learn and evolve, providing valuable insights to guide their business strategies,” Vijayan added.

Tekion’s growth, with operations in California and Bangalore, India, has been primarily organic. Despite the automotive industry’s typical reliance on extensive marketing and aggressive sales tactics, only 17 of Tekion’s 1,350 employees are dedicated to sales.

“We prioritize word-of-mouth referrals and minimize spending on marketing,” Vijayan stated.

A partnership established in March with General Motors – an early Tekion investor, alongside BMW and the Nissan-Renault-Mitsubishi Alliance – is also contributing to the company’s success.

GM dealerships are increasingly adopting Tekion’s white-labeled dealer management software to streamline the purchase process for Chevrolet, Cadillac, Buick, and GMC electric vehicles.

Superior Platform Performance

The platform functions similarly to GM’s existing Shop. Click. Drive. program, enabling online vehicle searches and partial transaction completion.

However, it offers significant improvements. According to a Chevrolet VP in Automotive News, Tekion’s software is akin to GM’s internal program “on steroids,” indicating a substantial enhancement in functionality and performance.