How To Start A Used Car Dealership Business
The used car Dealership market has shown significant growth in the past few years, and the demand for used cars has increased due to the prevailing economic crisis.
According to data by Statista, the total sales for used vehicles have increased twofold compared to new car sales in the US for a reference period. Moreover, the data also showed that the number of new cars sold did not exceed the number of used vehicles sold for the same reference period.
Since COVID-19 has hit the world, people have started avoiding public and mass transportation like trains, busses, and even cabs, for that matter. Not only this, the economy of all the countries has been seen to derail.
Thus, most consumers prefer to buy used cars to save their money in these uncertain times. According to Edmunds stats, a brand new car is simply a terrible investment as the cost is high, and its value decreases to 19% as soon as you drive it on the road.
If you take all of the facts into consideration, it’s evident that the used car dealerships can turn out to be a big profit business. Thus if you have a genuine interest in automobiles and are thinking of investing some money to start your own business, then opening a used car dealership is a great way to get started.
But, you should know that you can’t simply step out, invest in a few used cars and start your dealership overnight. There are a few basic things you’ll have to evaluate for your dealership to run successfully. Keep on reading to know the basics of starting a used car dealership.
5 Tips To Start A Used Car Dealership Business
Create a Business Plan
Every business needs an effective business plan, especially intricate ones like a used car dealership. A good business plan will help in channelizing your actions and secures your finances beforehand. Determining things like how much revenue you need to support yourself and the total cost included is vital to get your business going. Your ultimate goal, at this point, is to find out if or not your used car dealership is feasible over the long run.
Market Research
Now that you have a business plan, the next thing you need to do is thorough market research. Before investing in used cars, find out what kinds of cars are selling well in your town and also at what price.
You can choose to be niche specific, i.e. if you want to sell a specific car make or model, you know. Keep your customers in mind and think about who you wish to sell to, i.e. if you wish to target a specific audience. Find out where they buy used cars from, for what price, and how long it typically takes to finish the formalities. You can then accordingly set your prices which will help in drawing the audience towards your dealership.
Setup a Used Car Inventory
The most important entity of starting a used car dealership business is determining where you’ll source your used cars to set up your inventory.
For this, you must create an effective network through which you can source used cars. There are several ways to buy used cars that include different online car selling websites and auction sites. You can also visit auction houses to buy used cars at an affordable rate.
You can also source vehicles by staying in touch with mechanics, car repair shop owners, and independent car owners willing to sell their cars.
Finding the Proper Location
If you want your used car dealership to turn out into a profitable business, make sure you invest your time finding the correct location.
Depending upon your budget, choose a commercial location with enough space to set up your office and a showroom for displaying cars to the customers.
Do some research and determine the demand for used cars in the location you’re planning to start your business. Shortlist a few locations and look for competing used car dealerships within 5 to 10 miles.
Consider the following points while you look for a perfect location for your dealership:
* Accessibility
* Demographics
* Existing used car dealerships in the location
* Local laws of the region or state
* Safety, space, and security
* The budget of people residing nearby
Effective Marketing Strategy
Potential customers should know about your dealership way before setting your foot out and opening the doors for them.
Invest in a good marketing strategy, both online and offline, before the launch of your dealership.
With effective marketing, you can create awareness, attract more buyers and eventually sell more. Here are a few things that will help in promoting your used car dealership business:
* Create accounts on Social media platforms like Facebook and Instagram to promote your inventory.
* Create a Website to display your inventory. You can also create easy-to-use contact us page and lead generation form with this used car dealership WordPress theme.
* Create a unique logo and business cards, and brochure to send to potential buyers.
Final Thoughts
Hopefully, this post has provided you with the basics you need to start a used car dealership business successfully, from planning to the inventory set up. For consistent growth of your business, make sure you revise your business plan and marketing strategies based on the market conditions.
