starting a car dealership

[Emubiker]

Good morning all. I have been searching for what road I should be taking for my first "proper" venture - following small business ventures whilst at university, and I am beginning to narrow my view down. I am now considering a car dealership. Business plans aside,
What do I actually need to be able to trade in the motor industry - licences etc, and where can I obtain them from?

All thoughts welcomed.

[Emubiker]

Sorry should have given a bit more background. Whilst studying at uni, I was also breaking, as well as selling auction bought cars on a small scale (most of these were actually cars I had intended to break but were just too good and it was easier to just sell as they were. I made more than enough for a "full time" student and part time racer.

I am actually working for a very large, well known Scottish franchise.

I don't plan to start up straight away, I am still gaining experience, but I would like to be as clued up as I can beforehand. I will be hoping to set up shop about Feb 2013 (so just over a year away).

I have also seen that there are different licences depending on what country you are in. (Scotland) apparently you require less down south than you do up here.

[Emubiker]

daemon said:

For clarification, are you planning on setting up an all singing all dancing dealership - forecourt, showroom, repairs, etc? If so, this will cost you a fortune to do and also require a vast amount of cash.

Or do you mean a sole trader with a used car lot?

If you elaborate on what you actually mean, then we could advise on the steps necessary to get there?

I was thinking along the line of a small (ish) used car lot. Circa ex-petrol station size. Out sourcing warranty and using other local contacts for servicing and the odd bit of paintwork for prepping of cars for sale.

I am thinking circa £50,000 in start-up costs (including approx. 10 used cars for stock (to begin with), insurances and licences, initial marketing and market research for my location. Rent and rates I am not too sure about yet as I’m just beginning to find out what I need.

[Emubiker]

13 DJP said:

You will need:

a) Trade insurance (including accompanied test drives, try Tradex)

b) Trade Plates (Apply at DVLA local office, you will need an interview)

c) An HPi on-line account

d) An aftersales warranty company (unless you do it yourself, try Warranty Direct)

e) A BCA account

f) A trailer

g) A good valeter (or contact)

h) A good mechanic (or contact)

g) A winning smile, more money than you think, the patience of an angel and balls the size of a house

Best of luck mate, if you enjoy it, you`ll have a ball

Thank you very much for that, Most of which I knew about already and have had a look into, but there are always "unknown unknowns" in business, as I have already found with previous ventures, hence why I have asked.

What is a "BCA Account"? This seems to stand for a few abbreviations. I have the contacts through other ventures and racing (sponsors etc. whom I have become friendly with). I currently have access to a heavy duty trailer, but also have a beavertail van (which I found to be cheaper when I was breaking cars as I didn't need the towing licence, but this can be taken if I start collecting/transporting 2 cars at a time. I have also been looking into warranties today, but struggled to find short term ones; most were covering a year or more, at different levels of cover.

I have been enjoying my job so far, still learning and making a few small mistakes, but enjoying it none the less.

[Emubiker]

Chicarito said:

BCA = British Car Auctions.

And be careful with a beavertail - I assume you're on a modern day 3.5t limited licence, so you'd have to find a particularly light beavertail truck and be very careful about the weights of the cars you put on the back. Something like a Passat or A4 would probably put you over the limit.

I also believe you'd need a tacho for it, too.

Yes I was very particular with the weight of the beavertail, was mainly used for transporting the race car for meets and shells to scrap, but can only load 1300 kg on it, so no big cars on that.

I think that before I become start full operation, and while I am testing the water a bit more, I will be solely internet based, but with the aim to have a small showroom type soon after.

Thanks again for all the help.

[Emubiker]

daemon said:

I think given the phenominal overheads and hassles with running a forecourt you might find its easier, and considerably cheaper to stay internet based.

Also, rather than have the massive cost of a lorry / 4x4 capable of towing a trailer why would you not simply get yourself a set of trade plates? I've a guy i pay £6 an hour to do runs for me - hes semi retired - far more cost effective than having a dedicated vehicle.

Plus, as i said earlier, are you going to employ someone to stand on the forecourt and sell for you, as otherwise there wont be anyone there half the time?

Well the van I already have, and won't be getting rid of any time soon as I will still need it for the race car (or start using a trailer). I plan on getting a set of trade plates also for test drives anyway. Also I'd have thought it easier to just pick cars up from the auction and take them away sameday. And seeing as it will just be me to start with, I wont have someone to takeme to the auction for me to then drive back in whatever I buy, and pay for the other person to drive whatever we arrived in.

[Emubiker]

V8mate said:

You should investigate the cost-effectiveness of having the auction house deliver. Various factors can sometimes make it good value.

That is something I hadn't considered, mainly because I hadn't realised that they would/might.

[Emubiker]

Age that I am (22) and having studied business at uni, I really do understand the importance of good IT. I don't have too much spare time at the moment, but I have been looking around at others' websites to try and pull the good from the bad and decide what I think will make a good website. I am not, however, all that clued up on the actual designing of websites - and so this will need to be outsourced, but the costs seem all over the place. For a bespoke site with, as you say, all the bells and whistles I can see this being expensive and requiring maintenance, but the re-produced time after time websites, all look the same (which could be good as well as bad) but also don't look as professional. Again something to look into.

It does seem that time available before set-up is going to be one of my major issues. I know I will need to leave my job to start on my own. But it would be senseless to do so without having done my research properly. This I really don't get much time for as 12 hour days don't leave much for sleeping and extra brain activity.

Thanks again all

[Emubiker]

Out of interest, those of you with your own businesses and websites: Do you gain anything from having an insurance/finance link on your website in direct terms - i.e. every person who registers an interest you gain £x? Or is it more for customer convenience?

[Emubiker]

n_const said:

At 22 (the same age as me) are you sure your ready to leave a wage paying job ? Ive been in the motor trade for 6 years straight out of school not in a major plc but in an independent dealership and have learned so much more by being dropped in at the deepend. IMO at a plc you are trained as a salesman to be a robot you have to ask your sales manager for everything and if you think on your feet and it doesnt turn out right your in the s*** and may get fired ! 1 years experience and you want to start your own business ? Not trying to put a downer on you but you didnt even know what BCA was !

Most dealer websites look the same because there built by someone at autotrader and link straight there.

Edited by n_const on Monday 7th November 11:50

Its the salesman part that I am after though, I have always worked for myself in various businesses since I was 16 (bar a short period as a waiter and 2 nights a week doing Tesco night shifts), the "steady wage" is something that is new to me, and to be honest, even doing as well as I am so far within the dealership, not as much as I know I can make for myself. So yes, my own business is the way forward, sepecially before I become a "robot". Up here I have never heard of anyone calling it BCA, we (and other dealers that I know of use "Central car auctions" and it is just reffered to as such.

[Emubiker]

Update:

I am going to the auctions next month to get a feel for the environment etc I have been looking at all the additional costs involved (as a private individual at this point) and I do not understand what the "Buyer's Indemnity" is actually for. Surely if a car has outstanding finance a quick HPI check would show this, instead of paying an extra £100+ to check. Or is it to somehow write off anything outstanding? Is it always payable?

Thanks in advance.

[Emubiker]

Are the fees really that different between trade and private? I'm still working out all the costs at the moment, Its my day off so have some time (for once)

[Emubiker]

Jerry Can said:

as a slight tangent, why do you want to buy/set up a car retail business, I would have thought there is less risk and probably more money to be made from buying an independent workshop, some of those guys make a decent wedge.

In an ideal world, that was my plan when I was younger, but I went to university to study business instead of serving an apprenticeship. Now that means that I am not a proffessional mechanic, which would make setting up my own workshop would be less profitable at this stage as I wouldn't be able to help with many jobs and thus be paying others from the very start.

[Emubiker]

Jerry Can said:

you need to spend less time at the fubar, rocks, and touching up the cornton slappers, and more time developing your spannering skills.

there are several workshops going for sale, you buy the business and that includes the techs, all you have to do is manage, and lend a hand when necessary. your only real concern would be whether you can determine if they have done the job right and whether a student can manage a team of grizzly mechanics.

Local then are you, I've got plenty of skills ta managing the race team (very small) and making sure they do their job right, cos if they don't its my life on the line. Be a different story going in to an already established place though. But haven't thrown the idea right out the water just yet.