car dealership

Starting a Car Dealership: A Guide

For an entrepreneurial car lover, running a dealership could be a dream come true. With a solid business plan, the right sales strategy, and some hard work, a car dealership can become a highly profitable business. Of course, as with any new business venture, it is not a decision to be taken lightly. Running a business requires commitment and determination, as well as a significant upfront investment. If running a car dealership sounds like the ideal path for you, you need to be sure you are prepared for what lies ahead. This guide introduces the key steps to follow when starting a car dealership.

Do your market research

You need to find out what types of cars are popular in your chosen area, how much other dealers are charging, and whether there is an opportunity to fill a gap in the market. For example, if there are several dealerships offering the same makes of car or catering to a specific budget, there may be demand for an alternative dealership.

Find a location

Your location needs to be easily accessible and in a high-traffic area where it will be seen by lots of potential customers. You may not be able to afford much space at the moment, but the location is more important as you can always expand or move to a slightly larger lot in the same area at a later date.

Get up to speed on the laws and regulations

Each state has differing legislation when it comes to selling used cars, so be sure to do all your research to avoid legal problems down the line. The Federal Trade Commission has a used car rule that states that dealers must include a buyer’s guide for each vehicle and that buyers must be allowed to inspect the vehicle before purchasing.

Think about suppliers and services

You are likely to need to work alongside other companies like a car valet service and/or an auto shipping company like Acertus which also offers comprehensive title and registration services. If you want to maximize your revenue, consider including a servicing department in your dealership to bring in an additional revenue stream. Of course, to do this, you will need to employ skilled mechanics and buy specialist equipment.

Register the business

Before you can start trading, you will need a license from the DMV in your state, as well as a business license and a dealer’s license. Of course, the requirements will vary depending on your state and local regulations, so be sure to speak to someone in an official capacity.

Start building your inventory

To run a dealership, you need cars to sell. If you are starting a franchise with a manufacturer, this will be more straightforward, but selling used cars will require more legwork. Attend plenty of local vehicle auctions, or you might be able to find cars to purchase for a good price on social media. You will need to start slowly, but eventually, you will need a strategy for buying cars that keeps your lot stocked.

Get your business online

Modern buyers will do a lot of their own research and comparisons before they even arrive at a dealership, so it is essential you have an online presence. This means having a website that is easy to use and optimized for search engines to increase the likelihood that you will appear in search results. You might also want to establish a social media presence where you can engage with potential and current customers in a more personable way and list your vehicles on marketplace websites.