You’ve been working as an auto-mechanic for one of the auto-repair shops in Ohio for several years. The owner of the shop trusts you. You’re part of the reason why there is always a steady stream of customers. You engage your customers and go out of your way to solve all kinds of car problems, from doing repairs to identifying parts suppliers, like suspension spring manufacturers or disc brake suppliers. You’ve also facilitated the sale of cars that you’ve worked on.
You realize that you also have a knack for selling. People talk to you because you listen to them. One customer suggested that with your skills as well as your contacts, you could open a used car dealership. You like the idea, and maybe it’s time to set up your business.
Here are some tips on how to set up your used car dealership:
An Overview of the Used Car Dealership in America
As of July 2019, the used car dealership in the USA made $118 billion in revenue. The annual growth rate for the past five years is at 3.7%. A good economy contributed to the upward trend in the used car dealership, with many consumers relying on the extra income to purchase used vehicles.
The number of businesses is still quite robust, with more than 141,200 across America.
Setting Up Your Business
There are no shortcuts to success. You need to think through your decision, make a solid business plan, and create a vision of where you want to be in the future in the business. Here are a few critical areas that you need to focus on.
- Select a prime location. You need a space where you can park your used vehicles. Will you be buying a lot, or will you be leasing a property? Regardless of your choice, make sure that you find a good location. Are there businesses in the area that is related to the used car business, like an auto repair shop or an auto parts company? Is the place highly visible to potential customers? These are just some of the factors you need to consider when deciding on the location.
- Sourcing your used cars. You need to be aware of where events like auctions and trade shows are happening. You need to track rental companies that lease fleets of vehicles. These rental companies sell their units in bulk to dealerships, instead of selling them directly to the public. Create an organized database of sources of used cars to have a sizeable and respectable inventory.
- Street cred and niche. Will you be the go-to guy for well-maintained Japanese or Korean brands used car? Or will you be focusing on vintage American brands? You must find your niche, at least during the initial stages, and then grow the business from there.
- Cost to start. The low end of the scale to begin a used car dealership is around $100,000. This could also go beyond $200,000. Each state has a different rate depending on the type of dealership that you will be opening. Business registration could cost you anywhere between $50 to more than $300. Again, this is dependent on the state that you are in. To lease a property, start your budget at around $8,000 per month.
These are some of the primary considerations that you need to study well. There are also legislations that you need to be fully aware of. Work with a legal expert as well as an accountant to immediately set you on the right path.
