Opening a car dealership requires buying vehicles wholesale and pricing up the vehicle to sell in retail. Car dealers often directly contract with car manufacturers in order to sell new vehicles, while used car dealers buy cars at wholesale prices through public car auctions. Car dealers have the option of operating exclusively online, but many choose to keep a physical showroom to display vehicles in a retail setting.
Car dealerships are ideal for auto enthusiasts looking to become entrepreneurs with a flexible work schedule. Sales managers and car salesmen can excel as car dealers and have the perfect background for opening their own car dealership. With that in mind, here are some things to keep in mind when opening and running a car dealership.
Make a business plan
In order to become a successful entrepreneur, you’ll need a clear and concise plan for opening your car dealership. Start by considering the initial costs, which typically include a surety bond and proper licensing. Prospective car dealers can file for a surety bond with their state’s DMV, which will allow them to sell vehicles in the respective state.
Depending on the type of dealership you’re looking to run, you may want to purchase multiple bonds. Make sure to research different types of bonds, including DMV bonds, used car dealer bonds, and wholesale car dealer bonds.
Next, consider who your target market will be. Car dealers often run advertisements for local customers, but the majority of business is generated through referrals. Customers should have good to fair credit in order to qualify for a vehicle loan.
Look into sourcing your vehicles from online auctions. Finding auction cars for sale online can help you secure a large amount of inventory at a
Before opening a business, you’ll need to secure an on-site location. First-time business owners may consider renting a low-cost location to use as a public retail display. On the other hand, if you’re looking to build a location to match your needs, enlist the services of a commercial construction management team.
Build your business
You’ll need to choose a good name for your business and decide what kind of dealership you’re interested in opening. When choosing a name, be sure to ensure that your business name is unique and that the name is also available as a web domain. Securing a web domain will make it easy for potential customers to find your business on the web, as well as your contact information and location.
Once your business starts to expand, you’ll need to build a team of salespeople, accountants, and service technicians. Most car dealerships struggle to stay successful as a one-man operation, especially when their business starts to grow and bring in new customers. To ensure that you’ll be able to keep up with new business, aim to hire a team of professionals as soon as possible.
Promote your dealership
In order to attract new customers, some dealers hold tent sales. Tent sales are typically conducted off-site and provide special deals to drive business. Since every state has different rules and regulations concerning tent sales, it’s important to conduct research beforehand.
Car dealerships typically rely on returning customers, so focusing on the referral business and retaining customers through exceptional customer service is crucial. Consider offering special deals to customers, like dealer financing or promotions on services. Some car dealerships even go beyond sales to offer customers a one-of-a-kind experience, like providing a play area for children while the parents shop.
Opening a car business requires the proper planning and execution in order to be successful. It’s important to remember that opening a car dealership also requires establishing your business as a legal entity, as well as meeting state and local licensing requirements.