Car Dealers - Start up advice?
Discussion
Come on, OP. Give us an update.
Two months in, how's it going? Are you still trading or have you been snared by a comfortable offer of PAYE?
If you're still going, what lessons have you learned? If you were to start another car business next week, what would you do the same and what would you do differently? What has really worked for you and what has wasted either time or money?
Two months in, how's it going? Are you still trading or have you been snared by a comfortable offer of PAYE?
If you're still going, what lessons have you learned? If you were to start another car business next week, what would you do the same and what would you do differently? What has really worked for you and what has wasted either time or money?
1987 said:
What I'm trying to say is expensive stock doesn't provide greater margins.
We bought an 2002 fiesta last week for £1200 as sold on Saturday for £2995 with 0 reconditioning. I would struggle to buy a £12k and make the same profit in 3 days.
Not saying these happen everyday but margins aren't any larger until your at £20k cars.
Very very sage advice. I owned a used car lot in Florida for 6 years and this is absolutely dead on.We bought an 2002 fiesta last week for £1200 as sold on Saturday for £2995 with 0 reconditioning. I would struggle to buy a £12k and make the same profit in 3 days.
Not saying these happen everyday but margins aren't any larger until your at £20k cars.
I used to average about $2,000 per car profit, if I bought a car for $5,000 I'd sell it for $7,000, if I bought one for $30,000 I'd sell it for $33,000, MAYBE $34,000.
You always make your money when you buy, it takes no brains to go to an auction and come home with 10 cars, but it does take a lot of patience to buy nice cars "right".
No matter how much you think you'll make, don't buy junk. It will come back to bite you and it will look terrible on your lot.
Immaculate stuff sells for top dollar, and quickly. Your main goal with cars on your "front line" should be that you've removed any reason for someone to NOT buy the car. Make sure it doesn't smell of cigarette smoke, that it's clean, it runs and drives well, no warning lights, etc. Things that you may think are trivial will put someone off a car, a small door ding, a scratch, etc.
I used to sell LOTS of Used Jaguars and Land Rovers, and I had two of the best mechanics around who would service them before sale. I used to stress that, and they would also see that I sold nice cars and wasn't afraid to make them right, they sent me a lot of business and I sent them a lot of business. A good independent mechanic can be a huge help.
I used to put brand new floormats in most cars that I sold, a $100 set of brand spanking new floormats in a 5 year old XJ6 did wonders for someone's first impression of the car.
Never have a car on the lot with the fuel warning light on, throw £5 worth of fuel in the car, low on fuel is one thing, a warning light puts people off the car.
Start every car on the lot every couple of days, nothing is more embarassing or sale-killing than a dead battery.
Canvass the local franchise dealerships to buy their trade-ins, I was known as one of the few "Wackos" in Orlando who would buy Jaguars and Land Rovers, I got some gorgeous cars from Honda, Chrysler, Cadillac, Dodge, Ford, Toyota, Nissan, Subaru, etc dealers. The local Mercedes dealer was terrified of Jaguars and I got every one they traded in. Meanwhile I'd take an X300 over a W140 but I digress
Get finance sources lined up, nothing is worse than losing a deal because you can't get financing for a customer.
I used to run the following in ALL of my ads: "We buy clean, accident-free cars for immediate cash!" It worked to my benefit two ways, first I would find cars that way as I found a lot of people read the Auto Trader to get an idea of what their car could sell for, AND, stressing that we only bought clean accident free cars helped our public image.
FOLLOW UP WITH YOUR CUSTOMERS! It's the BEST way to get referrals! I used to call every person that bought a car from us 5 times. The day after they bought the car I'd call and thank them for their business, and also to make sure they were satisfied. We'd call a week later, then a month later then 6 months later then a year later. We'd also send out Christmas cards and Birthday cards every year to our customers. It didn't cost much, and our customers almost always liked that we were genuinely concerned that they were happy with both us and the car. This brought us a LOT of repeat business, let's face it, when was the last time the used car dealer YOU bought a car from did that for you?
If I can be of any advice I'm happy to help.. Good luck!
Captain Cadillac said:
Very very sage advice. I owned a used car lot in Florida for 6 years and this is absolutely dead on.
I used to average about $2,000 per car profit, if I bought a car for $5,000 I'd sell it for $7,000, if I bought one for $30,000 I'd sell it for $33,000, MAYBE $34,000.
You always make your money when you buy, it takes no brains to go to an auction and come home with 10 cars, but it does take a lot of patience to buy nice cars "right".
No matter how much you think you'll make, don't buy junk. It will come back to bite you and it will look terrible on your lot.
Immaculate stuff sells for top dollar, and quickly. Your main goal with cars on your "front line" should be that you've removed any reason for someone to NOT buy the car. Make sure it doesn't smell of cigarette smoke, that it's clean, it runs and drives well, no warning lights, etc. Things that you may think are trivial will put someone off a car, a small door ding, a scratch, etc.
I used to sell LOTS of Used Jaguars and Land Rovers, and I had two of the best mechanics around who would service them before sale. I used to stress that, and they would also see that I sold nice cars and wasn't afraid to make them right, they sent me a lot of business and I sent them a lot of business. A good independent mechanic can be a huge help.
I used to put brand new floormats in most cars that I sold, a $100 set of brand spanking new floormats in a 5 year old XJ6 did wonders for someone's first impression of the car.
Never have a car on the lot with the fuel warning light on, throw £5 worth of fuel in the car, low on fuel is one thing, a warning light puts people off the car.
Start every car on the lot every couple of days, nothing is more embarassing or sale-killing than a dead battery.
Canvass the local franchise dealerships to buy their trade-ins, I was known as one of the few "Wackos" in Orlando who would buy Jaguars and Land Rovers, I got some gorgeous cars from Honda, Chrysler, Cadillac, Dodge, Ford, Toyota, Nissan, Subaru, etc dealers. The local Mercedes dealer was terrified of Jaguars and I got every one they traded in. Meanwhile I'd take an X300 over a W140 but I digress
Get finance sources lined up, nothing is worse than losing a deal because you can't get financing for a customer.
I used to run the following in ALL of my ads: "We buy clean, accident-free cars for immediate cash!" It worked to my benefit two ways, first I would find cars that way as I found a lot of people read the Auto Trader to get an idea of what their car could sell for, AND, stressing that we only bought clean accident free cars helped our public image.
FOLLOW UP WITH YOUR CUSTOMERS! It's the BEST way to get referrals! I used to call every person that bought a car from us 5 times. The day after they bought the car I'd call and thank them for their business, and also to make sure they were satisfied. We'd call a week later, then a month later then 6 months later then a year later. We'd also send out Christmas cards and Birthday cards every year to our customers. It didn't cost much, and our customers almost always liked that we were genuinely concerned that they were happy with both us and the car. This brought us a LOT of repeat business, let's face it, when was the last time the used car dealer YOU bought a car from did that for you?
If I can be of any advice I'm happy to help.. Good luck!
That is spot on advice, and I couldn't agree more. I used to average about $2,000 per car profit, if I bought a car for $5,000 I'd sell it for $7,000, if I bought one for $30,000 I'd sell it for $33,000, MAYBE $34,000.
You always make your money when you buy, it takes no brains to go to an auction and come home with 10 cars, but it does take a lot of patience to buy nice cars "right".
No matter how much you think you'll make, don't buy junk. It will come back to bite you and it will look terrible on your lot.
Immaculate stuff sells for top dollar, and quickly. Your main goal with cars on your "front line" should be that you've removed any reason for someone to NOT buy the car. Make sure it doesn't smell of cigarette smoke, that it's clean, it runs and drives well, no warning lights, etc. Things that you may think are trivial will put someone off a car, a small door ding, a scratch, etc.
I used to sell LOTS of Used Jaguars and Land Rovers, and I had two of the best mechanics around who would service them before sale. I used to stress that, and they would also see that I sold nice cars and wasn't afraid to make them right, they sent me a lot of business and I sent them a lot of business. A good independent mechanic can be a huge help.
I used to put brand new floormats in most cars that I sold, a $100 set of brand spanking new floormats in a 5 year old XJ6 did wonders for someone's first impression of the car.
Never have a car on the lot with the fuel warning light on, throw £5 worth of fuel in the car, low on fuel is one thing, a warning light puts people off the car.
Start every car on the lot every couple of days, nothing is more embarassing or sale-killing than a dead battery.
Canvass the local franchise dealerships to buy their trade-ins, I was known as one of the few "Wackos" in Orlando who would buy Jaguars and Land Rovers, I got some gorgeous cars from Honda, Chrysler, Cadillac, Dodge, Ford, Toyota, Nissan, Subaru, etc dealers. The local Mercedes dealer was terrified of Jaguars and I got every one they traded in. Meanwhile I'd take an X300 over a W140 but I digress
Get finance sources lined up, nothing is worse than losing a deal because you can't get financing for a customer.
I used to run the following in ALL of my ads: "We buy clean, accident-free cars for immediate cash!" It worked to my benefit two ways, first I would find cars that way as I found a lot of people read the Auto Trader to get an idea of what their car could sell for, AND, stressing that we only bought clean accident free cars helped our public image.
FOLLOW UP WITH YOUR CUSTOMERS! It's the BEST way to get referrals! I used to call every person that bought a car from us 5 times. The day after they bought the car I'd call and thank them for their business, and also to make sure they were satisfied. We'd call a week later, then a month later then 6 months later then a year later. We'd also send out Christmas cards and Birthday cards every year to our customers. It didn't cost much, and our customers almost always liked that we were genuinely concerned that they were happy with both us and the car. This brought us a LOT of repeat business, let's face it, when was the last time the used car dealer YOU bought a car from did that for you?
If I can be of any advice I'm happy to help.. Good luck!
My wife and I have been in the trade for a few years, and last year we set up our first garage. We were fortunate enough not to need to borrow any money, and despite the harsh climate over the last year, we have recovered all our initial outlay, employed an extra 4 people (started with 4 staff) and now just about to open our second garage forecourt 11 miles away with a stock of 30 cars to start with, hopefully rising to 70+ and more staff.
Some of the most important and key things we think about daily are customer care; putting ourselves in the shoes of the person buying the car, it's always a lot of money for them to spend whether it be £500 or £50,000 on a car. Seems obvious, but is so often ignored.
Also, the condition of the car we are selling is extremely important, just don't overlook anything or take anything for granted. Another very important thing to us is the after sales care, don't ignore the the customer as soon they have parted with their money as aftersales care is all part of the service they are buying.
Lastly, and just as important as the above is contacts. We would struggle to survive if we went at it on our own, contacts old and new will help to progress your business quickly and educate you.
I could go on and on, but hope that the above offers some help and advice to anyone wishing to start out in the car trade.
FWIW i posted on the first page back in November 10, but i went full time in May 11.
I've went down the route of selling via my site, gumtree and usedcarsni (a local site to me here in NI), and i'm starting to use facebook too. I've avoided having a forecourt for the following reasons
(a) i think people buying cars below £5000 are hugely price driven
(b) large overheads
(c) you need to be there set hours, or have someone there (more cost)
(d) rates costs
(e) relative to other traders i know with a forecourt, there seems to be a high expectation with regards warranty from a buyer buying from a forecourt, whereas buying from a sole trader seems to form a lesser expectation?
I either meet people at my house - i've a rear yard and use the kitchen area / sunroom as my 'office', OR i meet them somewhere that suits them - maybe at their place of work or somewhere halfway if they are travelling a bit. Statistically, something like one call in three results in a viewing, and 80% of viewings result in a sale.
Stock comes from a small number of main dealers that i have built relationships with and around 50% of sales generate trade ins. I generally retail everything right down to 'trade sale to clear to make room for new stock', though i have other traders i can trade on to.
Net margins are just reasonable, but then my costs are ultra low. I spend £75 a month on advertising, £150 a month on a secure storage yard 3 miles from my home and £60 a month for trade insurance.
Website cost me £180 to get set up.
I'm selling 25-30 cars a month.
Absolutely loving it, but its very hard work and long hours - though thats not so bad when its working from home.
I've went down the route of selling via my site, gumtree and usedcarsni (a local site to me here in NI), and i'm starting to use facebook too. I've avoided having a forecourt for the following reasons
(a) i think people buying cars below £5000 are hugely price driven
(b) large overheads
(c) you need to be there set hours, or have someone there (more cost)
(d) rates costs
(e) relative to other traders i know with a forecourt, there seems to be a high expectation with regards warranty from a buyer buying from a forecourt, whereas buying from a sole trader seems to form a lesser expectation?
I either meet people at my house - i've a rear yard and use the kitchen area / sunroom as my 'office', OR i meet them somewhere that suits them - maybe at their place of work or somewhere halfway if they are travelling a bit. Statistically, something like one call in three results in a viewing, and 80% of viewings result in a sale.
Stock comes from a small number of main dealers that i have built relationships with and around 50% of sales generate trade ins. I generally retail everything right down to 'trade sale to clear to make room for new stock', though i have other traders i can trade on to.
Net margins are just reasonable, but then my costs are ultra low. I spend £75 a month on advertising, £150 a month on a secure storage yard 3 miles from my home and £60 a month for trade insurance.
Website cost me £180 to get set up.
I'm selling 25-30 cars a month.
Absolutely loving it, but its very hard work and long hours - though thats not so bad when its working from home.
Edited by daemon on Sunday 2nd October 17:23
okgo said:
What sort of profit are you making?
What prices are the bulk of your sales?
Generally £2000-£4000, though i go as high as maybe £5K and as low as £500.What prices are the bulk of your sales?
The more expensive cars i buy with a business partner. He has quite a large cash pot, and is very good at buying (good contacts, gets cars at decent prices) so he buys, I sell, i pay him and we split the profit.
On cars at £4K we aim for around £600-£800 net (of which i get half but no cash required by me), cars below £2000 i'm probably getting £300-£400 net. Cars below £1000 maybe £150-£250.
Factor that up with the volume of cars and it works out ok.
Warranty claims are costing me around £400 a month.
Hi, i know this an old post but I am interested in doing something similar but have no experience. I have sales experience, run my own business and have a real love of cars. Its something I have always thought about but not seriously up until now.
Daemon, I would be interested in hearing more about your story as I am also based in Northern Ireland.
Daemon, I would be interested in hearing more about your story as I am also based in Northern Ireland.
The Nipper said:
Hi, i know this an old post but I am interested in doing something similar but have no experience. I have sales experience, run my own business and have a real love of cars. Its something I have always thought about but not seriously up until now.
Daemon, I would be interested in hearing more about your story as I am also based in Northern Ireland.
Thanks for the interest in this thread - quite a lot happened over the period of a couple of years. Will get some time this evening or in the morning first thing and summarise it up for you, also i'll note any "learns" Daemon, I would be interested in hearing more about your story as I am also based in Northern Ireland.
Hi Daemon, I am Lisburn/Belfast area. Over the last few weeks I have been keeping my eye on the roads to see whats popular etc and I think specialising in the small/mini type car would be a good market as it is good with city driving and you also have the first time market. The miles appear to be lower on these types of cars too which is also a good selling point. Where do you start with regards traders licence and insurances etc? I know about traders vehicle insurance but what other things should I be looking at?
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