Thinking of selling Porsches
Discussion
I am thinking of giving up what I do to retail Porsches. Would intially be an retail/ industrial unit.As a non motor trader I think there is a market for well maintained cars were you dont need to work for such large margins (ie £4K-£6K) as some of the establsuhed Porsche specialists do. I am sick of trading in my cars with up to date services, all the jobs done, nearly new tyres etc only to be told it is worth so little yet see the inflated retail price once the deal has been done. Please excuse the new log in (long time PHers) but I have probably had dealings with most Porsche specialists in the past and know most of the independents to get work done and at this stage dont want people to know what I am thinking. Any views /comments or thoughts ??
Should I do it ?
Are people interested in having another specialist ?
Should I do it ?
Are people interested in having another specialist ?
My two penceworth, so no offence intended.
If you are intending to do sales alone, I'm fairly certain that its probably not a goer. There are a huge amount of people who are equally sick of paying for a sale/purchase spread. Most specialists I come into contact with ease the pain by services etc, thus creating a relationship, and taking some of the sting out of the transaction.
Yes, I know you need to earn a crust, but I would prefer it to be for doing something other than providing coffee and the latest GT Purely Porsche (otherwise you might as well be an OPC)
Other than that, honesty, politeness and knowledge should, as with most businesses, see you clear and in profit.
Whereabouts in the country are you?
If you are intending to do sales alone, I'm fairly certain that its probably not a goer. There are a huge amount of people who are equally sick of paying for a sale/purchase spread. Most specialists I come into contact with ease the pain by services etc, thus creating a relationship, and taking some of the sting out of the transaction.
Yes, I know you need to earn a crust, but I would prefer it to be for doing something other than providing coffee and the latest GT Purely Porsche (otherwise you might as well be an OPC)
Other than that, honesty, politeness and knowledge should, as with most businesses, see you clear and in profit.
Whereabouts in the country are you?
Essentially you are looking at a "stack 'em high, sell 'em low" approach?
So how much margin per car? Say £2k? So how many do you need to sell per year. I would suggest quite a lot to make it worthwhile - at least 30 - 60, maybe more, depending on your income requirements.
That is a lot of cars. And your markup - take warranty costs out of that. And the odd lemon (I once bought a Chimaera that cost the dealer a few grand to put right, out his own pocket)
But, it is perfectly achievable I think, but you need a big chunk of working capital. Initially you will need to advertise heavily, and keep a good stock to catch casual browsers / purchasers.
How will you deal with p/x? Especially non-Porsche?
I'm not knocking your idea. If it is what you want to do, and believe you can make it work, then go for it.
So how much margin per car? Say £2k? So how many do you need to sell per year. I would suggest quite a lot to make it worthwhile - at least 30 - 60, maybe more, depending on your income requirements.
That is a lot of cars. And your markup - take warranty costs out of that. And the odd lemon (I once bought a Chimaera that cost the dealer a few grand to put right, out his own pocket)
But, it is perfectly achievable I think, but you need a big chunk of working capital. Initially you will need to advertise heavily, and keep a good stock to catch casual browsers / purchasers.
How will you deal with p/x? Especially non-Porsche?
I'm not knocking your idea. If it is what you want to do, and believe you can make it work, then go for it.
Best of Luck..............hope you have lots of £££ss at your disposal and years of experience....where are you going to buy your stock........go into the market place and try and buy 5 993s over the next week at trade money......you wont be able to.....i would suggest not giving up the day job and dip your toe in the water by buying 2 or 3 and see how it goes retailing those and the margins you make......if you are dealing in newer cars such as 996s, remember if you have a car for six months chances are you will lose money when you retail it as they depreciate quickly, life in the motor trade isnt all rosey, its long hours, hard graft, fraudsters trying to take your money, cars breaking down, wives leaving you (it has its good points!!).
When its good its the best job in the world.
Of course you should do it
I think your £2k margin idea will go out of the window very quickly when this becomes your only source of income.
Don't let your passion for Porsches, or your feelings about others in the industry cloud your judgement. This will be a big investment and will have to pay your salary.
You will need help, someone you can trust who will show punters around the cars while out, or take cars away to be fixed, or go out around the country to buy them.
My guess is you will need £100k just to get started, but plenty to more to have a hope of making a decent living out of it (plus a lot of luck).
Having said all that, I'd love to be involved in something like this.
I think your £2k margin idea will go out of the window very quickly when this becomes your only source of income.
Don't let your passion for Porsches, or your feelings about others in the industry cloud your judgement. This will be a big investment and will have to pay your salary.
You will need help, someone you can trust who will show punters around the cars while out, or take cars away to be fixed, or go out around the country to buy them.
My guess is you will need £100k just to get started, but plenty to more to have a hope of making a decent living out of it (plus a lot of luck).
Having said all that, I'd love to be involved in something like this.
leosayer said:
Of course you should do it
My guess is you will need £100k just to get started
You missed off three zeros !
It is very hard to sell one or two cars in isolation. Think about everything else you buy in life. When you want a telly you go to a place that has loads to choose from, we no longer visit a greengrocer, we go to Tescos because they have a vast choice.
People want choice, it allows them to compare product. I wish it wasn`t the case then I wouldn`t need 40 used Porsches in stock, it would certainly save me a few quid.
There are one or two expenses you might not be aware of. Firstly as a car dealer your profits are taxed at 17.5% (vat) before you pay corporation / personal tax, NI accountant`s fees, etc, etc. Your insurance costs will rise a little from your current premium, you`ll need to not only pay rent but also business rates, (sadly not even in the same league as council tax !) and refurb costs. Advertising is very costly, especially when you`ll need to spread yourself about a bit, and also although you did every job on the car you part exchanged or sold to the dealer you`ll be amazed how much money can still be spent on a car before we sign it off and dine on the profit, oh and unfortunately not everyone is as nice as you, every single car I get offered is immaculate until I start to inspect them !
I think the grass is always greener on the other side of the fence and whilst I would agree that on the whole I love my job it does have it`s moments. It was also something of an uphill struggle to get here !
I wish you all the best in your venture and look forward to meeting you at the next Guild of Master Car Dealers lodge supper.
Henry
>> Edited by Henry-F on Saturday 9th July 11:05
Henry-F said:
Of course you should do it
My guess is you will need £100k just to get started
You missed off three zeros !
Err ... I'm quite sure you know more about this than me, but 100 million quid just to get started as a used car dealer seems a tad unlikely ...
... even if they are Porsches. I have given this some thought more than once, I really don't think it is as easy as it may appear.
For a start even if you are doing OK there is a good chance you don't actually make a return for the first year or two...certainly a consideration.
Also I think the market has changed in the last 5 years or so, there are enough established Porsche specialists and also since the arrival of the Boxster/996 the market as whole seems to be more homogenised which adds the risk that your stock may lose value as you hold it.
I have consider getting involved in the more specialised RS/Clubsport side of the market, but liquidity is not exactly great should you need to get paid....I think I wil enjoy the specialist pork market more as a hobby.
For a start even if you are doing OK there is a good chance you don't actually make a return for the first year or two...certainly a consideration.
Also I think the market has changed in the last 5 years or so, there are enough established Porsche specialists and also since the arrival of the Boxster/996 the market as whole seems to be more homogenised which adds the risk that your stock may lose value as you hold it.
I have consider getting involved in the more specialised RS/Clubsport side of the market, but liquidity is not exactly great should you need to get paid....I think I wil enjoy the specialist pork market more as a hobby.
Don't let them get you down if you want to do it. Don't forget that dealers borrow an awful lot of the money for their stock, and are often kean on sale or return so that they have no liabilities.
The only thing that strikes me is you should maybe work at a dealer for a bit to get a feel for selling cars. It seems unlikely you'll be any good at this game without some field experience.
Thanks for the replies wasn’t sure what I might get back on this one. To answer some points and keep the thread moving.
Location - Northwest. We have specialists in London, Midlands Leeds, York. Who around Manchester is a Porsche Specialist ?
PX - Figure a lot of cars are third car purchases so only a limited number of non-Porsche trade ins. These would be jobbed to the trade as most garages do. The Porsche p/ex I would either retail of sell on to other Porsche specialists in the trade if I didn’t think it was my thing (944's etc no offence meant)
Henry - Thanks for your comments. Wasn’t sure you would join in. I am in business now. I deal with the public and have to pay all the bills you do. Granted I have never sold cars but being fortunate to run at least 3 cars for the past ten years or so I must of bought/sold a car at least every 6 months or so. Everyone has to start somewhere. As much as I am confident you couldn't do what I do each day, given time and enthusiasm you would soon work it out.
Finally the issue re stock. If I can afford to pay £500 more than the others out there for cars and still make money I will have no problems in finding stock. Overheads are the key to this. I will be a willing buyer, will travel (I am sure some days this will be a waste of my time) and will advertise. The owners of the cars I want read GT, 911 World and Porsche post cover to cover, word for word. It's not the size of the add but what it says.
Finally money. Not sure on this yet but speaking with a number of non specialist car dealers I know to get a feel for what working cap is required. I obviously have some myself or I wouldn’t even be thinking about this.
One last thought, I recently sold my Porsche. Knowing what its retail price was likely to be I rang a number of specialist Co's for them to make an offer. They all agreed with my estimation of the retail price and all bid at my car within £500 of each other. ALL were looking to make at least £5K. Regardless of all the bills and evidence available telling them that they could re sell that car with only slight cosmetic work needed (budget £300 - £500). They will tell you that they will need to over allow on the car that is being given in px. I have yet to have any of the cars I have ever offered in px over allowed for. Unless I am missing something isn’t it time that the Internet world of low margins and low costs hit the Porsche market?
Thanks again to all who have commented and any new views would still be very much welcomed and greatly reeived
Location - Northwest. We have specialists in London, Midlands Leeds, York. Who around Manchester is a Porsche Specialist ?
PX - Figure a lot of cars are third car purchases so only a limited number of non-Porsche trade ins. These would be jobbed to the trade as most garages do. The Porsche p/ex I would either retail of sell on to other Porsche specialists in the trade if I didn’t think it was my thing (944's etc no offence meant)
Henry - Thanks for your comments. Wasn’t sure you would join in. I am in business now. I deal with the public and have to pay all the bills you do. Granted I have never sold cars but being fortunate to run at least 3 cars for the past ten years or so I must of bought/sold a car at least every 6 months or so. Everyone has to start somewhere. As much as I am confident you couldn't do what I do each day, given time and enthusiasm you would soon work it out.
Finally the issue re stock. If I can afford to pay £500 more than the others out there for cars and still make money I will have no problems in finding stock. Overheads are the key to this. I will be a willing buyer, will travel (I am sure some days this will be a waste of my time) and will advertise. The owners of the cars I want read GT, 911 World and Porsche post cover to cover, word for word. It's not the size of the add but what it says.
Finally money. Not sure on this yet but speaking with a number of non specialist car dealers I know to get a feel for what working cap is required. I obviously have some myself or I wouldn’t even be thinking about this.
One last thought, I recently sold my Porsche. Knowing what its retail price was likely to be I rang a number of specialist Co's for them to make an offer. They all agreed with my estimation of the retail price and all bid at my car within £500 of each other. ALL were looking to make at least £5K. Regardless of all the bills and evidence available telling them that they could re sell that car with only slight cosmetic work needed (budget £300 - £500). They will tell you that they will need to over allow on the car that is being given in px. I have yet to have any of the cars I have ever offered in px over allowed for. Unless I am missing something isn’t it time that the Internet world of low margins and low costs hit the Porsche market?
Thanks again to all who have commented and any new views would still be very much welcomed and greatly reeived
£5000 margin
less VAT
£4255
less recon (your figure of £500)
£3755
less Warranty (£300-£600 call it £4000
£3355
less discount/over allowance (call it £1000 maybe more maybe less all a question of how long its been in stock!)
£2355
less interest on stocking money (call it £150 a month on a £30k car thats in stock 2mths=£300)
£2055
so £5k has turned in just over £2k and we havent paid for heat, light, phone, advertising, storage or valeting, income tax, national insurance, motor insurance, your petrol for viewing cars, transport for collecting vehicles etc
Food for thought....
and you want to work for less, you'll need to shift some cars!
>> Edited by mustard on Saturday 9th July 23:26
less VAT
£4255
less recon (your figure of £500)
£3755
less Warranty (£300-£600 call it £4000
£3355
less discount/over allowance (call it £1000 maybe more maybe less all a question of how long its been in stock!)
£2355
less interest on stocking money (call it £150 a month on a £30k car thats in stock 2mths=£300)
£2055
so £5k has turned in just over £2k and we havent paid for heat, light, phone, advertising, storage or valeting, income tax, national insurance, motor insurance, your petrol for viewing cars, transport for collecting vehicles etc
Food for thought....
and you want to work for less, you'll need to shift some cars!
>> Edited by mustard on Saturday 9th July 23:26
I thought this was an interesting thread.
Don't even think about it without offering service and backup.
If you do give it a go, best of luck. My guess is that you won't or I don't think you would be asking PH.
I have never been a car dealer but some days it does appeal (for all the wrong reasons). However, I reckon that if you do it well and don't get caught out too often, then in 5 years time you may be earning yourself a good reputation and beginning to earn some money. I doubt by then that you would be doing it for a £2k margin. The greater risk would be that you didn't last that long and you lose a good few quid on the way through.
If you don't want to be a full time dealer, you could still try and do what you have outlined by being a private trader, where you sell a car every three or four months from your house. Less risk but you would not be able to offer dealer facilities.
Don't even think about it without offering service and backup.
If you do give it a go, best of luck. My guess is that you won't or I don't think you would be asking PH.
I have never been a car dealer but some days it does appeal (for all the wrong reasons). However, I reckon that if you do it well and don't get caught out too often, then in 5 years time you may be earning yourself a good reputation and beginning to earn some money. I doubt by then that you would be doing it for a £2k margin. The greater risk would be that you didn't last that long and you lose a good few quid on the way through.
If you don't want to be a full time dealer, you could still try and do what you have outlined by being a private trader, where you sell a car every three or four months from your house. Less risk but you would not be able to offer dealer facilities.
Manchester specialist Hartech in Bolton been there years............if you are based in the north you will find the market for Porsches to be nothing like the market in the south, Left Hand Drive market virtually none existant.........I have advertised cars at trade money +£1000 and not sold them, I have ended up trading them to specialists in the south (Henry included) who have retailed them without problem, now I am not a Porsche specialist although I do have some exotic stuff in my showroom from time to time, so maybe I do not market them right, but there is definatly a geographical difference. Once you are an ESTABLISHED specialist things maybe be different..........
Regarding paying £500 too much for cars to secure them, you will find thats what all the specialists are doing..I recently traded a 993 Targa Tip S for £27500.........dealer needed to spend £300 to recondition it .........he put it up at 31995, then dropped it to 29995 where it sat for a while then he sold it.....assuming he got the asking price that left a gross margin after recon of 2200, warranty off say £500, that leaves 1700, take the vat off, doesnt leave alot does it.
Why did he pay me that for the car..........because he had gaps on his forcourt and was desperate for stock......Henry will confirm buying NICE cars is the hardest part of this job, for some selling them is the easy part.
If you go for it good luck.
Yeah, it's not as easy as it sounds.
If you are to do it, I'd take a fresh approach to the number 1 problem must car buyers worry about - getting stiffed (even if the numbers illustrated above prove this is often not the case). I'd cut out the BS and be 100% transparent about pricing policy. ie "Here's what we paid, spent on gettting right and other costs." Ideally you would have a relatively fixed profit margin that buyers would be told - perhaps £500-£1000 (after you costs).
I'd also specialise in Porsche cars that enthusiasts are prepared to travel to buy. 993's, 993RS, 993 TT, 964RS, 968 CS, GT3, 996 TT X50. Be known for doing a certain range of models.
It would be expensive to kit out a garage and pay mechanics (certainly in the early days) so would be best partnering with a Porsche specialist (Ninemeister/Tech 9 for example) with an agreement to do work at a slightly discounted rate. In return, you would also carry some advertising for the specialist. Hopefully, a mutually beneficial arrangement.
Personally, I normally buy private to cut out the middle man and save some dosh although I'm in the minority of people that will do that with a £30k plus car.
Anyway, good luck with whatever you do.
P.S. If anyone privately selling an early 996TT X50 (preferably black with black sports seats, under 40k miles), let me know. I will try match your best cash/SOR trade price plus £500 on top.
If you are to do it, I'd take a fresh approach to the number 1 problem must car buyers worry about - getting stiffed (even if the numbers illustrated above prove this is often not the case). I'd cut out the BS and be 100% transparent about pricing policy. ie "Here's what we paid, spent on gettting right and other costs." Ideally you would have a relatively fixed profit margin that buyers would be told - perhaps £500-£1000 (after you costs).
I'd also specialise in Porsche cars that enthusiasts are prepared to travel to buy. 993's, 993RS, 993 TT, 964RS, 968 CS, GT3, 996 TT X50. Be known for doing a certain range of models.
It would be expensive to kit out a garage and pay mechanics (certainly in the early days) so would be best partnering with a Porsche specialist (Ninemeister/Tech 9 for example) with an agreement to do work at a slightly discounted rate. In return, you would also carry some advertising for the specialist. Hopefully, a mutually beneficial arrangement.
Personally, I normally buy private to cut out the middle man and save some dosh although I'm in the minority of people that will do that with a £30k plus car.
Anyway, good luck with whatever you do.
P.S. If anyone privately selling an early 996TT X50 (preferably black with black sports seats, under 40k miles), let me know. I will try match your best cash/SOR trade price plus £500 on top.
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