The car dealership business remains one of the most profitable there is and one you can start on a moderate budget too. The level of risk is not very high either. If you understand your market and its needs, choose the right niche, and get great deals from your suppliers, then there’s a strong chance that you’ll be successful. This doesn’t mean that this is a bulletproof business model, however. Here are a few tips on starting a car dealership business properly.
Study Your Market
The very first thing you have to do is start looking at your market and see if you can gauge what kind of vehicles people need. If you’re in a rural area with lots of families, then it would make more sense to sell trucks, utility vehicles, or family vehicles. If you live in a mid to high-income urban area, then luxury vehicles could make sense. And, if you’re in a mid-tier city, then regular used vehicles could work.
You should also check the competition in the area. Make sure that the niche you’re targeting is not too saturated and consider where your competitors are located so you can find underserved areas.
Look Beyond Your Local Market
Another thing you should do is look at how you could extend your range by selling cars online. You could do this either through your own web portal or through a service like eBay Motors.
All you’d need then is to partner up with a car delivery service like Acertus, that would bring the vehicles to your buyers. Services like these can ship cars across the country at a very affordable price.
Being able to sell cars remotely could significantly increase your sales, so start looking at the option right now.
Learn the Rules and Regulations and Register
The car dealer business is moderately regulated and you’ll need to learn about things like title transfers and some of the rules set forth by the FTC governing used car dealerships. One of the rules is that you have to include a buyer’s guide with any vehicle that you sell. You also have to allow buyers to inspect vehicles before they buy.
Once you understand all of these rules, you can officially register your business. Starting as an LLC is usually the best choice, but you could decide to incorporate if you want to be able to bring partners in easily later.
Find Cars and Start Selling
Once everything is set up and you have a location, you can start building an inventory. Here, we suggest that you start small. A small inventory of twelve cars would be more than enough to get you started if they’re the right type, and this will limit your initial investment and risk.
You can either get your cars from independent sellers, wholesalers, dealerships, or auctions. Brokers can also help. The more options you have, the better deals you’ll get, so consider all avenues.
This is all you need to know if you want to start a car dealership business. It’s a great business to be in, but it can be competitive, so start by looking at your local landscape and choose the right angle to approach the business.