Sourcing cars in the motor trader

[sasha320]

Hi, I have done a great deal of research into all the considerations for buying and selling premium sports cars e.g., 911, AMG etc. and becoming a trader.

Pretty much all aspects of running such a business appear to be surmountable and subject to working sensibly and working hard; as well as carefully building relationships in the trade, car dealing seems quite enjoyable too.

The ONLY thing I am unable to 'crack' is where to source the cars.

Main dealers aren't interested in passing on trade-ins to anything but the most established traders, auction prices aren't competitive and so I can't identify where small time premium traders source low mileage, well kept cars that prep easily and well.

Not looking for anyone to give away their secrets, but in very general terms where do small premium traders source their cars?

[sasha320]

cashmax said:

Every single trader will tell you that sourcing stock is the single biggest challenge to success. It is also the largest barrier to entry. They can almost always shift much more than they can get their hands on.

Auctions are for selling nowadays, not buying. They attract retail buyers who often get carried away, paying over book for many cars.

Dealerships are about relationships, with the auction houses making it impossibly easy for them to channel everything down that route. With space being a premium, the auction houses will guarantee a book price and any trade buyers will have to better that. Either way, not many dealers take a PX that isn't already sold anymore.

To be successful in todays market, you need to have some kind of niche which either allows you to command a premium on the way out, allowing you to pay a premium on the way in. Normally, this will be a particular make and model of car (i.e. 911) or a strategy that supports it such as export or trade to trade.

To start a retail trade business in todays market from scratch is a tall order.

Thank you for elaborating.

Really useful summary of the realities of the market - confirming that a small scale retail trade business is a non-starter for a new business.

I'm now turning my attention to export and will report back on early findings and probably ask again for any insights.

Thanks for all replied.

[sasha320]

Thanks. This is all starting to make a great deal more sense. Finance is the key. Basically consumers have become so demanding that all the realistic margin gets absorbed into sourcing, prepping and discounting the car and the profit comes from the interest on the finance - some of which goes to the finance provider and some of which goes to the retailer.

In which case, what are the economics of the finance deals?

I assume the asset to be financed needs to be tidy and risk free, so nearly new and / or within manufacturer's warranty so PCP type finance can be reliably put on it? Actually forget it, although a low interest economic environment makes cars more affordable I bet the margins are still slim to the extent that the only competitive finance comes from big players.

I've always wondered why PCP in premium garages selling 3 to 5 year old cars was prohibitive.

[sasha320]

veevee said:

I'd say nearly all the deals are going to be here, below the radar of the big players, and too expensive or specialist for the smaller/more traditional traders and dealers. Make most of the money when you buy the car, but you'd need to know what you're doing.

I'm listening, but a 100k miles 996 is an example of your point but does not really prove it.

As mentioned in an earlier post, wouldn't the risk increase on deals like this? Such that you'd have to set aside an amount for when you come across the inevitable lemon sooner?

However thanks for your perspective and you're right that my understanding is a long way off mature!

[sasha320]

nct001 said:

Wise words re sweet spot in pricing - a cap average it's a no brainier how can you actually lose money????


My 1999 911 came from Bca bought online - bought for £7300 three years ago still worth that now - cheaper to run than an mx5.

I hate to break it to op but the specialists no names but work it out started with dross like this dressed it up with marketing and made money from there...

Change your mindset to that of a trader that is there's a bum for every seat, risk reward ratio and ease of sale.



I showed you an entry level car low investment high return low risk, I used to earn £70k a year as a group used buyer (not for Sytner but nearly) for advise like this!

Fair enough, I guess I fell into a 'want it now' perspective.