Considering Starting A Used Car Dealership
- Thread starter hi.imandrew
- Start date
Kronic
Registered Member
- Apr 11, 2010
- 74
- 21
For starting out, I would suggest working on commission sales. This saves you from having to buy the car. You have them sign a contract that gives you permission to sell the car, and that you will get say 10% of the final price. You then mark up the car 30% or so from their absolute bottom dollar. This gives you a range to work with so you can lower your price to the buyer. They are thinking they're getting a better deal. And of course the higher you sell the vehicle, the more money you make. How to find people to list on commission? Any vehicle sitting on the side of the road, talk to them. Put up a sign or banner saying that you put vehicles on your lot on commission.
For any vehicles you bring in, make sure to fully detail them. It make seem like an annoyance, but it will bring up the value of the vehicle for sure. I worked at two different car dealerships and my family owned an RV dealership for 10 years. A good waxing, full vacuum and even shampoo, tire shine, polished rims, clean windows and dash, and a clean smell really helps. We once bought a mini van for $250. The van was TRASHED inside. The family had many small kids so the seats and carpet had candy and drink spills all over. You couldnt sit in it without gagging from the mold. It took one full afternoon of hard scrubbing to clean that interior, with some hard chemicals. Two weeks later we sold the van for $1200. All it needed was a good cleaning.
There is money in it, but you have to make sure you buy the right vehicles. Research your market. You want to move vehicles, not sit on them. If you can afford to sit on vehicles later on, and have a good location, you can make some money with that too. There is one local dealership that is WAY over priced. But they manage to move vehicles. They sell less in a month, but its priced high enough that they still profit more than any of the other local dealerships do.
If it works out for you, look into small investments on vehicles that will up the price. Can you upgrade the speakers for $50? Can you upgrade the stock AM/FM with a cd player? Look for OEM parts that will be compatible. Can you upgrade the stock steel rims to aluminum rims? Can you find a set of used stock rims from another vehicle that will fit? Look at local junk yards and craigslist for good deals. You need to make your vehicles better than anyone elses. I also highly highly suggest downloading the Factory Service Manuals for any vehicles you are working on. You can download them for free if you know what you are doing. DO NOT waste your money on the Haynes or Chiltons manuals. (If you need 70s-90s Nissan FSMs, let me know. Always willing to help out a NICO)
One point of interest, depending on how much you can sit on products and how mechanically inclined you are, is to part out vehicles. I parted out a 92 Camry this summer. I had $150 in the car, sold the motor alone for $500. Car scrapped out at $200. Tires and wheels sold for another $100. I still have the tranny for scrap, all the lighting, and the seats. With price for gas for hauling, i still profited $650 and have parts left over. If you buy your vehicles right and have time to sit on it, you can make a lot of money parting them out. Check local scrap prices, laws of the state/county, and rules at the local yard before hauling anything in.
There is money to be made in automotive, but its not as easy as it used to be. There is a lot of money to be made from scrapping too, but it is hard work. Dont expect to get rich from it, but the scrapping can be a nice chunk of spare change if you save up all your copper, aluminum, batteries, and cats. I do the scrapping for my exercise, cause the gym aint my style. If anyone is interested in scrap ideas, hit me up. Would love to discuss more on it or foreign vehicles.
For any vehicles you bring in, make sure to fully detail them. It make seem like an annoyance, but it will bring up the value of the vehicle for sure. I worked at two different car dealerships and my family owned an RV dealership for 10 years. A good waxing, full vacuum and even shampoo, tire shine, polished rims, clean windows and dash, and a clean smell really helps. We once bought a mini van for $250. The van was TRASHED inside. The family had many small kids so the seats and carpet had candy and drink spills all over. You couldnt sit in it without gagging from the mold. It took one full afternoon of hard scrubbing to clean that interior, with some hard chemicals. Two weeks later we sold the van for $1200. All it needed was a good cleaning.
There is money in it, but you have to make sure you buy the right vehicles. Research your market. You want to move vehicles, not sit on them. If you can afford to sit on vehicles later on, and have a good location, you can make some money with that too. There is one local dealership that is WAY over priced. But they manage to move vehicles. They sell less in a month, but its priced high enough that they still profit more than any of the other local dealerships do.
If it works out for you, look into small investments on vehicles that will up the price. Can you upgrade the speakers for $50? Can you upgrade the stock AM/FM with a cd player? Look for OEM parts that will be compatible. Can you upgrade the stock steel rims to aluminum rims? Can you find a set of used stock rims from another vehicle that will fit? Look at local junk yards and craigslist for good deals. You need to make your vehicles better than anyone elses. I also highly highly suggest downloading the Factory Service Manuals for any vehicles you are working on. You can download them for free if you know what you are doing. DO NOT waste your money on the Haynes or Chiltons manuals. (If you need 70s-90s Nissan FSMs, let me know. Always willing to help out a NICO)
One point of interest, depending on how much you can sit on products and how mechanically inclined you are, is to part out vehicles. I parted out a 92 Camry this summer. I had $150 in the car, sold the motor alone for $500. Car scrapped out at $200. Tires and wheels sold for another $100. I still have the tranny for scrap, all the lighting, and the seats. With price for gas for hauling, i still profited $650 and have parts left over. If you buy your vehicles right and have time to sit on it, you can make a lot of money parting them out. Check local scrap prices, laws of the state/county, and rules at the local yard before hauling anything in.
There is money to be made in automotive, but its not as easy as it used to be. There is a lot of money to be made from scrapping too, but it is hard work. Dont expect to get rich from it, but the scrapping can be a nice chunk of spare change if you save up all your copper, aluminum, batteries, and cats. I do the scrapping for my exercise, cause the gym aint my style. If anyone is interested in scrap ideas, hit me up. Would love to discuss more on it or foreign vehicles.
Last edited:
debo_season
Registered Member
- Oct 18, 2010
- 53
- 5
debo_season
Registered Member
- Oct 18, 2010
- 53
- 5
You ain't lying..It's extremely stressful. I closed my doors last year in May, I left with 18 cars, 20 inhouse finance deals, and ran away fast! I live off that for several months and invested in IM and here I am, still going at it.
To be honest, the business sucks right now. You must have A1 credit to get floorplans, lines of credit or you need plenty of cash!
Oh, don't let me forget good finance companies too. Not the crooks like Credit Acceptance and the likes that pay you $1000 upfront with back end money you never receive!
Good luck to the guy going into the car business. Your gonna need it!
To be honest, the business sucks right now. You must have A1 credit to get floorplans, lines of credit or you need plenty of cash!
Oh, don't let me forget good finance companies too. Not the crooks like Credit Acceptance and the likes that pay you $1000 upfront with back end money you never receive!
Good luck to the guy going into the car business. Your gonna need it!
ibmethatswhoib
Elite Member
- Feb 17, 2011
- 1,567
- 1,171
What a nightmare it is, I was a vendor for over 20 dealerships. Most people are misrable and barely trying to make it. Very stressful for a lot but if you have the right mind state you could probably do good.
KraftyKyle
Elite Member
- Aug 13, 2008
- 3,669
- 6,911
I would advise you not to start this up. It's going to be more work initially then it's worth. If you're willing to stick to it for 5+ years, that's when you'll start to see some profit.
HiggsBoson
Registered Member
- Jun 24, 2011
- 99
- 26
I know people on all corners and have owned 50cars and sold around 30. This years sales peaked out around tax return season but may also have a good run here at the end of July for larger new vehicles. I agree with the consensus....never buy junk. Ive made over 3k on a car and lost 2200 on the same car but it was junk. New paint jobs will do wonders for sales.
angelas111
Elite Member
- Jan 4, 2009
- 1,648
- 1,052
the worst thing you can do is any floor plans. i see many dealers fail because they get behind with the floor plan. if you cannot pay cash for the cars then don't buy them.
Roundhouse
Regular Member
- Sep 22, 2009
- 405
- 213
Can you let me know where I can get my hands on the factor service manuals? PM if needed. MUCH appreciated.
Thanks
angelas111
Elite Member
- Jan 4, 2009
- 1,648
- 1,052
look up alldata on demonoid. that is what you need. it will take a long time to download and beware of viruses.
str8thustler
Power Member
- Dec 3, 2008
- 730
- 265
Used cars are a tough business right now. I know a few guys who have their own lots and have been in business for years. New car dealerships are offering great deals on new cars and used car dealers are paying top dollar for used cars to be resold for far less profit then you used to be able to make. Right now its a tough gig. A lot of people cant even afford to shell out the cash for a good used car so they go get a payment.
trushafty38
Regular Member
- Jul 24, 2009
- 211
- 101
just finished working for a car dealership. They sold used cars they bought at auction and were closing 10 sales a month and they have total revenue exceeding 1.2 million and they have only been in business two years.
They are the bank and they buy warrenty to cover trans and engine while they have their loans (max 3 years) no more than $300 a month (usually biweekly payments).
They litterally have like three places they get leads from . They buy some online, advertise in this local auto paper and bam 1.2 million (rev not profit)
They are the bank and they buy warrenty to cover trans and engine while they have their loans (max 3 years) no more than $300 a month (usually biweekly payments).
They litterally have like three places they get leads from . They buy some online, advertise in this local auto paper and bam 1.2 million (rev not profit)
fuzzy_corleone
Regular Member
- May 11, 2011
- 299
- 211
This maybe a dumb suggestion but why not hold your own auto auction? Buy high demand used vehicles, fix them up a bit, and hold a public auction. If the bidding is competitive then you walk away with alot of money (atleast 1.5-3x the value of the car's real value).
I'm very surprised you want to open up a retail business. Any retail business is highly dependent on not just marketing, but needs good people in operations, accounting, and having a good team of people.
In BHW, I thought our emphasis was to focus on the marketing parts of businesses, like getting more people to the dealership, or making their phones ring, etc etc.
In BHW, I thought our emphasis was to focus on the marketing parts of businesses, like getting more people to the dealership, or making their phones ring, etc etc.