Becoming a car lease broker
Discussion
Have you spoken to leasing companies about license costs for their systems? What about dealer groups with regards to supply of vehicles? Or are you just going to rely on the lease company for and their preferred suppliers? Are you just going offer cars? Or vans? Or both?
It's a congested market place, so you'll do well to stand out as it's mainly all about price and brokers often cut their throats on fees and work an already small margin lower. The difficulty is some of the big boys will put their hand up for a lump of vehicles to be registered within a certain time frame (usually by the end of the quarter) and will get larger discounts than any one else which in turn means you can't compete on price.
I'm sure you know this already
Good luck with it though!
It's a congested market place, so you'll do well to stand out as it's mainly all about price and brokers often cut their throats on fees and work an already small margin lower. The difficulty is some of the big boys will put their hand up for a lump of vehicles to be registered within a certain time frame (usually by the end of the quarter) and will get larger discounts than any one else which in turn means you can't compete on price.
I'm sure you know this already
Good luck with it though!
b-wpbfc said:
I havn't spoken to leasing companies as of yet. The idea was to go straight to the dealer groups?.
So you're planning on just using the manufacturer funded deals? You'll miss out on a lot of other business then. Manufacturers (and dealer groups) do deals with the leasing companies directly for them to push through their broker channels. I've had it where I couldn't compete with a Lex broker on a vehicle that I supplied them using Renault Financial Services as I didn't have the Lex system to quote on even though we were a preferred supplier to Lex... Some of the leasing companies also do volume rebates which can work out to be a decent lump of money back at the end of the year.Have you done leasing before? Worked in a brokers or fleet department of a dealership? Or just worked in retail side of things in a main dealership?
So the idea is to get in contact with lex, alphabet, barclays and a few other finance companies. As well qs sub prime finance companies to be open to a bigger market. That way all offers maintain competitive. Ive worked across fleet and retail. However it's mainly been retail.
Where I'm struggling is how to reach out to dealers?.
Where I'm struggling is how to reach out to dealers?.
Sorry I phrased that poorly, I meant were you going to have an office. I know it's an expense that you could do without when starting up, but I think it would help you in the long run.
I'd probably suggest that you work for a broker for a while first, that way you'll get a good understanding of the industry and probably more important than that, make some good contacts. It really is a crowded market place, I've seen so many start up and go pop over the years. The margins are slim as it's very much a price led market place. The ones that seem to do well do a fair chunk of business deals to local companies that run of handful of cars, rather than just relying on personal deals.
Good luck with it all
I'd probably suggest that you work for a broker for a while first, that way you'll get a good understanding of the industry and probably more important than that, make some good contacts. It really is a crowded market place, I've seen so many start up and go pop over the years. The margins are slim as it's very much a price led market place. The ones that seem to do well do a fair chunk of business deals to local companies that run of handful of cars, rather than just relying on personal deals.
Good luck with it all
Some great insights provided already.
You’ve been alerted to the fact that it’s a congested market, with the normal USP usually being price.
What does your business plan say about your differentiation? Is it on price still further or some other value that your research has identified customers want but aren’t currently catered for?
Based upon what you’ve shared so far, I’d not be optimistic. Look forward to hearing if you’ve got some other angle to exploit.
You’ve been alerted to the fact that it’s a congested market, with the normal USP usually being price.
What does your business plan say about your differentiation? Is it on price still further or some other value that your research has identified customers want but aren’t currently catered for?
Based upon what you’ve shared so far, I’d not be optimistic. Look forward to hearing if you’ve got some other angle to exploit.
Just to give you a counterpoint - there are many people who start their business who don't know the potential pitfalls. It is the often the apparent arrogance of youth and inexperience that allows people to even consider starting their new businesses in the first place. Certainty that was the case for me when I started my business a few years ago.
The fact that it is a crowded market place with lots of competitors is a good thing. It means there are lots of potential customers and lots of demand.
Sure, you might feel at a disadvantage vs the big players who have the money to secure larger discounts. But they have the disadvantage that they will be typically less efficient and less flexible.
So my advice would be don't spend months and months analysing. Start doing. Set up your business, from home if necessary, and try and get your first sale. Then take it from there.
Also, many people who are focused on telling you the hurdles won't be running their own business. That isn't to say the points they raise don't exist or aren't important, but it is a perfectly good business plan to 'eat the elephant a bite at a time'. And if you can do that by actually getting real sales, all the better for you.
One point which was mentioned earlier in the thread which I think is very important is to think about your USPs. And don't let the answer to this be "we will provide great service". Every customer expects that, every supplier says they already do it, and often customers, when it comes down to it, won't pay extra for it anyway.
So for example, I would be looking to see if you can specialise in a particular vehicle type niche. Anyway, just a few thoughts. Hope it works out well for you.
The fact that it is a crowded market place with lots of competitors is a good thing. It means there are lots of potential customers and lots of demand.
Sure, you might feel at a disadvantage vs the big players who have the money to secure larger discounts. But they have the disadvantage that they will be typically less efficient and less flexible.
So my advice would be don't spend months and months analysing. Start doing. Set up your business, from home if necessary, and try and get your first sale. Then take it from there.
Also, many people who are focused on telling you the hurdles won't be running their own business. That isn't to say the points they raise don't exist or aren't important, but it is a perfectly good business plan to 'eat the elephant a bite at a time'. And if you can do that by actually getting real sales, all the better for you.
One point which was mentioned earlier in the thread which I think is very important is to think about your USPs. And don't let the answer to this be "we will provide great service". Every customer expects that, every supplier says they already do it, and often customers, when it comes down to it, won't pay extra for it anyway.
So for example, I would be looking to see if you can specialise in a particular vehicle type niche. Anyway, just a few thoughts. Hope it works out well for you.
I'm guessing its a very relationship based business like ours, so working at another brokers would help build those relationships with the dealers and underwriters.
If its anything like insurance broking, having an account with a supplier is one thing, you need to develop the relationship and trust to trade with them properly. Also, unless you are known by people in alphabet etc they are unlikely to to want to give you an agency.
If its anything like insurance broking, having an account with a supplier is one thing, you need to develop the relationship and trust to trade with them properly. Also, unless you are known by people in alphabet etc they are unlikely to to want to give you an agency.
I looked at this around twenty years ago. The main issue was , for me, is that as a broker you are never totally in control. You are merely a middleman with punters buying on price. Also there are a lot of people out there just buying some proprietary software and working out of bedrooms. They can be very disruptive.there is a broker i know of who were spending £4 k a month on adwords (i think) .
They are a well known firm.mentioned on this thread and as far as i was told, still not making any money.
There always gaps in the market that can be exploited in any market.
Good luck
They are a well known firm.mentioned on this thread and as far as i was told, still not making any money.
There always gaps in the market that can be exploited in any market.
Good luck
Edited by jas xjr on Friday 15th June 17:48
Lots of legal stuff you'll need to take care of (if you haven't already)
GDPR compliance - privacy policy, treating customers fairly, complaints procedure etc
Correct FCA registration
BVRLA membership (particularly if you want to use the leasing companies directly, they'll all require it.)
Best of luck! Richard
GDPR compliance - privacy policy, treating customers fairly, complaints procedure etc
Correct FCA registration
BVRLA membership (particularly if you want to use the leasing companies directly, they'll all require it.)
Best of luck! Richard
jas xjr said:
I looked at this around twenty years ago. The main issue was , for me, is that as a broker you are never totally in control. You are merely a middleman with punters buying on price. Also there are a lot of people out there just buying some proprietary software and working out of bedrooms. They can be very disruptive.there is a broker i know of who were spending £4 k a month on adwords (i think) .
They are a well known firm.mentioned on this thread and as far as i was told, still not making any money.
There always gaps in the market that can be exploited in any market.
Good luck
Very different space now with less and less falling into the 'bedroom broker' category.They are a well known firm.mentioned on this thread and as far as i was told, still not making any money.
There always gaps in the market that can be exploited in any market.
Good luck
Edited by jas xjr on Friday 15th June 17:48
OP - you sound very green on the subject. i think it was mentioned earlier but go and work in a well established brokerage for a year to get some real insight.
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