Are you thinking of tapping into the car dealership business? Well, kudos to you because it is hundreds of billion-dollar industry. However, there are some things that you need to know before opening your first dealership. Also, why you need to have a vehicle transport service provider on your side for this business to be successful. This guide is going to discuss all of this, so stick till the end.
5 Steps to Starting a Car Dealership Business:
New vs. Used?
Before you step into the sea of the dealership, one question you need to ask is; do I want to primarily sell new or used cars? This will set your whole business’s structure because, with new cars, the investment can be a lot higher, but the profit will be higher.
With used cars, you won’t need to shell out big bucks to get started, but the profit margin will be lower; used cars might give you an average of $800-$1000 profit per sale.
Formulate a Business Plan:
Once you decide between a used or new car, you need to establish a business plan, which will tell you a full picture of the expenses, marketing, HR, and investment etc. and work as a roadmap for you to follow.
Start by asking yourself, will you be selling a single brand or multiple brands? Research different types of costs like employee salaries, car costs, licensing costs, operational costs, car transport costs and so on. You can hire someone who is well-versed in business plan making to do this for you.
Dealing with Legalities:
Before you start parking cars in your lot, there are a few legalities you need to take care of. The first one is the dealership license. This will allow you to sell an unlimited number of cars every year. Then you will need a surety bond, which will protect you from defaulted contracts with the vendor, wholesalers, and car suppliers.
Lastly, an insurance policy will protect you and your business from property damages and inventory loss, and more.
Selling Cars and Handling Inventory:
You might be a car enthusiast, but, you need to hone your selling skill when it comes to selling something. Know each and every car you want to sell from the inside out to help people understand what they are getting for their money.
Hiring a few sharp salesmen can help you better close the deals and potentially increase your profits.
Stay Within the Bounds of Law:
Your dealership needs to abide by Federal Used Car Laws, Consumer Rights and Safety Laws and Lemon Laws for used car dealerships, which include providing full disclosure to all mechanical issues in your cars to the customers.
There are different laws and requirements that you need to follow to ensure the legal operation of your car dealership business.
Importance of Vehicle Transport for Car Dealership:
This is something that you need to know about because auto shipping is going to be a big part of your business, and a big chunk of your expenses will be dedicated to car shipping. You will have to hire a professional auto transport company or keep on a retainer basis to ensure the following:
- Restocking lots for inventory replenishment on time
- Preparing year-end closeout sales
- Moving cars to tradeshows and back
- Facilitating trades with other dealerships
- Shipping out cars to domestic customers or exporting to overseas ones
You alone cannot do all of this as moving cars require careful planning and handling that only a professional auto shipping company can do.
For More Information About Cost To Ship A Car