Is it a good time to start up as a small car dealer?
Discussion
I've been trading privately on and off for the last decade or so and been working for a dealership for about 6 months now. Starting up as a small car dealer has always appealed to me and I've found a small(ish) forecourt available to let and am thinking to grab the opportunity...
I guess, to rephrase the title, is it a BAD time to go into motor trading?
It would be a small scale non-FSA regulated operation to start. Turning over maybe 5 or 6 cars a month, with a margin of circa £1k per car.
Any advice would be more than welcome!
I guess, to rephrase the title, is it a BAD time to go into motor trading?
It would be a small scale non-FSA regulated operation to start. Turning over maybe 5 or 6 cars a month, with a margin of circa £1k per car.
Any advice would be more than welcome!
AOK said:
I've been trading privately on and off for the last decade or so and been working for a dealership for about 6 months now. Starting up as a small car dealer has always appealed to me and I've found a small(ish) forecourt available to let and am thinking to grab the opportunity...
I guess, to rephrase the title, is it a BAD time to go into motor trading?
It would be a small scale non-FSA regulated operation to start. Turning over maybe 5 or 6 cars a month, with a margin of circa £1k per car.
Any advice would be more than welcome!
You're in the business, so how does it look to you? What is current turnover like? How many other competitors are there around? Are they still profitable? Do you have the backup to service warranty claims or potential challenges in court if things go wrong? I guess, to rephrase the title, is it a BAD time to go into motor trading?
It would be a small scale non-FSA regulated operation to start. Turning over maybe 5 or 6 cars a month, with a margin of circa £1k per car.
Any advice would be more than welcome!
Go for it and let us know how you get on. Seriously. There are hundreds of threads on 'will this/won't this work' and without having a bit of self confidence and taking the plunge you won't know. Economically times are tough but its of course not unheard of for business to grow and flourish in times of instability. Worse case scenario you lose a bit of money and close it down in 12 months.
'trading privately' is an interesting term...
My own personal feeling is that the key to success is being able to buy the right stock for the right price, and to be able to sell it competitively. Unfortunately, this is the Holy Grail of small independent dealers at the moment. Used cars are extremely expensive right now, with dealers paying way over cap/glasses and making small profit margins. Clearing £1000 per unit after prep for your regular family hatch is very ambitious, unless you are prepared to travel the length and breadth of the country buying.
As usual, Main Dealer p/x's tend to be the better quality stock, but getting your hands on them can be tricky. Good news is, websites such as autotrade-mail.com and dealer-auction.co.uk are proving very popular for people wish to shift stuff, as long as you can prove you are a legit trader to get a login. Good luck should you decide to go for it.
My own personal feeling is that the key to success is being able to buy the right stock for the right price, and to be able to sell it competitively. Unfortunately, this is the Holy Grail of small independent dealers at the moment. Used cars are extremely expensive right now, with dealers paying way over cap/glasses and making small profit margins. Clearing £1000 per unit after prep for your regular family hatch is very ambitious, unless you are prepared to travel the length and breadth of the country buying.
As usual, Main Dealer p/x's tend to be the better quality stock, but getting your hands on them can be tricky. Good news is, websites such as autotrade-mail.com and dealer-auction.co.uk are proving very popular for people wish to shift stuff, as long as you can prove you are a legit trader to get a login. Good luck should you decide to go for it.
Mattt said:
Car salesman in 'pity me' shocker.
But I believe him - there's no way he could have made much more out of mine.You're only going to take a grand in profit from a car if you're retailing relatively new and expensive cars - the average small time trader won't have the finances, certainly on setup, to stock a forecourt with that calibre of stock - so they're likely to be buying and selling in the sub-£5k sector of the market.
I could be wrong and the OP may have £100k to buy stock, but it's unlikely.
Thanks 80quattro for some very useful advice right there. Its not the first time I've heard that forming good bonds with local forecourts is the way forward. The company I work for now take about 100 cars a week in part exchange so if I leave on good terms maybe I could form some kind of agreement. I guess it would save them transport and seller fees on a couple cars per month! Good advice, thanks.
Yes, it would be the £5-10k sector I'd be entering. Got about £15k stowed and would be taking a £20k business loan. I was at BCA lately looking to buy a car for private use and was truly staggered at how far above CAP guide cars were going for. I think the further up north you go, the cheaper they get.
If i never give it a stab I'll never know
Yes, it would be the £5-10k sector I'd be entering. Got about £15k stowed and would be taking a £20k business loan. I was at BCA lately looking to buy a car for private use and was truly staggered at how far above CAP guide cars were going for. I think the further up north you go, the cheaper they get.
If i never give it a stab I'll never know
AOK said:
Thanks 80quattro for some very useful advice right there. Its not the first time I've heard that forming good bonds with local forecourts is the way forward. The company I work for now take about 100 cars a week in part exchange so if I leave on good terms maybe I could form some kind of agreement. I guess it would save them transport and seller fees on a couple cars per month! Good advice, thanks.
Yes, it would be the £5-10k sector I'd be entering. Got about £15k stowed and would be taking a £20k business loan. I was at BCA lately looking to buy a car for private use and was truly staggered at how far above CAP guide cars were going for. I think the further up north you go, the cheaper they get.
If i never give it a stab I'll never know
I'm glad my experience may be of some help. If your employer is moving that volume of cars that frequently, they will definitely have something sewn up with someone purely due to big money stakes. A previous employer of mine used to dispose of such a volume of px's, Manheim used to collect them foc and just make on the buyers fees when the cars went thru the auction hall. Yes, it would be the £5-10k sector I'd be entering. Got about £15k stowed and would be taking a £20k business loan. I was at BCA lately looking to buy a car for private use and was truly staggered at how far above CAP guide cars were going for. I think the further up north you go, the cheaper they get.
If i never give it a stab I'll never know
Personally I would start off (and I would if I had the capital behind me) just using your 15k, and investing 100% profit back into it. If you were to sink that into three £5000 cars, and clear optomistically £2200 total profit (15% ish), after selling 14 cars (good luck finding 'em) and *possibly* being 10k up after working your plums off, you would probably be a lot wiser to decide at that time whether further investment would benefit without having put your balls too much on the line from startup.
V8mate said:
Any news OP?
The OP chickened out, primarily down to what I think is lack of experience in the trade and also lack of balls for the moment!I have, however, ditched my scum job at the biggest car supermarket in the UK and was lucky to get a job at one of the most prestigious BMW dealerships. I think 3 or 4 years will give me enough of a foundation in terms of knowledge, financial support and contacts to go into opening my own venture confidently and successfully!
Thanks for checking up though! It's funny, I look back at my initial post and think how close I was to going ahead and can't help but wonder if it would have worked out!
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