Do Classic Car dealers make any money?

[bqf]

Not sure if any classic car dealers are willing to share, but thought I'd ask!

I'm thinking of setting up as a classic car dealer as an alternative income stream to my main employment (eventually replacing it and becoming my main occupation). I haven't any idea of the kind of money that established dealers make though - I'm hesitant to plough too much into it if the returns aren't there.

Is there any chance of a venture, when established, turning a net profit of over £175,000?.

Scale and type - probably a 1 man band growing to 2-3 in year 3 - varied stock, not specialising in ultra high-end stuff but not bargain basement fodder either.

Any thoughts/views?

[zeb]

I hope you get some answers, could be an interesting thread this.

[williamp]

as with any busines,s to make a net profit of £127k you'll need a gross profit higher, and turnover far higher then that. So you either buy a lot of cars very cheap and sell very high, or have a few very desirable cars which will sell.

Add in premesis, insurance, staff wages, advertising etc and its a very tall order.

Either way, there is some stiff competiton and a lot of punters know what their casr are worth before they sell, so I dont believe there are any bargains out there anymore. Which means you'll need a high turnover. Of classic cars?? Good luck!

However, there are other, tangable benefits of a buisness such as this: all those company cars to drive, and the right stock might get you invites to goodwood, Mille Miglia retro etc and give you a lifestyle which you otherwise would not be invited to join.

But I cant see you making serious money. The big players have hoards of people who are on the look-out for cars all the time- remember that Bugatti Atlantic which was "discovered" a while back and went for mega money at auction?

That car had been known in the trade for years, and they were waiting for the owner to die so the widow could sell. When the time came, it was quite a fight between the auction houses, I recall.

http://news.bbc.co.uk/1/hi/england/tyne/7807210.st...

[Tyre Smoke]

£175k Nett Profit is going to virtually unachievable..... Assuming you mean profit after all expenses are taken out. Unless you have a rich supply of very rare Ferraris/Bugattis/Exotica that you can buy for a couple of thousand each.

If you mean turnover, then you need to do a bit more research into the terminology, because this means total sales.

[bqf]

Tyre Smoke said:

£175k Nett Profit is going to virtually unachievable..... Assuming you mean profit after all expenses are taken out. Unless you have a rich supply of very rare Ferraris/Bugattis/Exotica that you can buy for a couple of thousand each.

If you mean turnover, then you need to do a bit more research into the terminology, because this means total sales.

I already run 2 limited companies - I meant net profit.

[RichB]

bqf said:

Tyre Smoke said:

£175k Nett Profit is going to virtually unachievable..... Assuming you mean profit after all expenses are taken out. Unless you have a rich supply of very rare Ferraris/Bugattis/Exotica that you can buy for a couple of thousand each.

If you mean turnover, then you need to do a bit more research into the terminology, because this means total sales.

I already run 2 limited companies - I meant net profit.

Then you should know to be more diplomatic with you replies when people are simply trying to help with your question.

[na]

bqf said:

I already run 2 limited companies - I meant net profit.

Richard Branson admitted only recently that he didn't know what net (gross) profit meant for a good number of years

this subject has been covered before but as you have the cheek/business sense to cut to the chase perhaps someone will give you the answer you want

however you'll need to brush up on your politeness if you want to make that much net profit from selling classic cars

you certainly perpetute the stereotype of arrogant British management and company owners

lighten up a bit

[bigblock]

I would say that a one man operation selling mid range classics achieving a net profit of £175k a year is a bit unrealistic.

Even if you were able to achieve an average of £5k profit per car you would still need to sell 35 cars a year. I would have thought if you sold one car a month in todays market you would be doing well.

[ewenm]

Questions you'd need to answer:

• Where are you going to source the cars?
• How are you going to add value to create a margin?
• Do you have the skills to restore/fix classics or would it be a quick polish and mark-up?
• Where in the classic market will you position yourself (eg MGs & Triumphs, Americana, Exotics, etc)?
• How many of your chosen cars do you need to sell to break even?
• How many more do you need to sell to make the gross profit leading to yuor desired net figure?

I'd imagine it's a very difficult business to be in, even more so if you don't have the trade contacts and knowledge of the classic market already. Are your current businesses in a related area?

[Mermaid]

bqf said:

I already run 2 limited companies - I meant net profit.

How much net profit do you make on the 2 companies you run, and which sector?

[Snowboy]

I had a chat with a local garage owner the other day that touched on this.

Apparently all the money is in parts these days.
The garages get wholesale prices as they buy lots of stuff from the suppliers, then resell the parts with a bit added on.
It's all mostly online orders and the margins are very tight – some parts are even sold at cost to maintain a reputation.
But, lots of wholesalers are starting to sell direct to the customer, so it's getting even tighter.

The chap in question sold cars and parts, and the money was in parts.
The cars had very little profit on them, but it meant he got to drive them, and having cars in the business gave the parts side of thing some extra credibility.

I was chatting to him while he did an MOT on my car at his regular garage.

I guess it depends on how expensive each car is, and how long you're willing to hang on to them for.
Without wanting to state the obvious, if you make a grand clear profit on each car then you still need to flog 175 cars over the year.
That strikes me as quite a high turnover of cars for a one man band.

[Mermaid]

Snowboy said:

Without wanting to state the obvious, if you make a grand clear profit on each car then you still need to flog 175 cars over the year.
That strikes me as quite a high turnover of cars for a one man band.

I suspect the OP has expensive cars in mind where he can make £10k per car.

[RichB]

I will keep a close eye on this thread though, because having been in the software industry now for 30+ years getting up at say 5am to fly to Helsinki for an afternoon meeting becomes less attarctive as the years go by. Not that I'm complaining because as a career it has been lucrative and enjoyable but as I reach my "more mature" years and no longer have the responsibilities of mortgages and kids at home I realise I would like a crack at an alternative way of making a living for the next 10 years or so. To be involved in something I love and know a fair bit about would be ideal, plus I would be content with simply making a reasonable income from it. One could combine car sales with on-line parts sales but doing MOTs sounds more involved.

[bqf]

Mermaid said:

How much net profit do you make on the 2 companies you run, and which sector?

Tempted to say 'none of your business', but I've already been accused of being rude (!).

Property and Management Consultancy. Both very remunerative (£200k net in consultancy, £50k net property) but quite dull - working out a way to move into something I am genuinely interested in rather than just pretending to be.

Figure that if I could replace the consultancy with classic cars i'd be much happier and less over-worked.

Hoping to hear from classic car dealers really - although appreciate they might be unlikely to want to talk about money like this....

[bqf]

na said:

ichard Branson admitted only recently that he didn't know what net (gross) profit meant for a good number of years

this subject has been covered before but as you have the cheek/business sense to cut to the chase perhaps someone will give you the answer you want

however you'll need to brush up on your politeness if you want to make that much net profit from selling classic cars

you certainly perpetute the stereotype of arrogant British management and company owners

lighten up a bit

Read the original reply to my post - I found it patronising.

Please either contribute to the topic, or don't post - apologies in advance for being rude

[bqf]

Mermaid said:

I suspect the OP has expensive cars in mind where he can make £10k per car.

Correct.

[benjj]

I've been thinking about doing this too.

I was wondering just what could be done with a start up slush fund of c.£100k. 1st car bought for c.£50k, sold for £65k, next bought at £75k, sold at £100k etc.

However, as has been pointed out to me on several occasions by my wife, I don't have a farking clue!

PH syndicate? 5 guys put in £20k cash, one car bought and sold at a time, each member marketing it etc. Could work I guess.

[drakart]

Do you have extensive knowledge of classics and lots of friends/acquaintances in that field? Buyers and sellers tend to use the same company to buy/sell/source cars and they are usually quite close to the owner of the company. It is all about contacts and being able to go the extra mile. Unless you can provide a service that others don't and for a better price, i'd forget it as you will not get people to move from their current company.

Do not underestimate the time you will be expected to spend talking to people on the phone, in their houses and at events, time spent driving around Europe looking at suitable cars etc. What i am getting at is that is a 24/7 job, not just something running in the background.

I take it that you would hold and sell the cars for commission rather than buying the stock?

There are lots of things to think about!

[na]

bqf said:

na said:

Richard Branson admitted only recently that he didn't know what net (gross) profit meant for a good number of years

this subject has been covered before but as you have the cheek/business sense to cut to the chase perhaps someone will give you the answer you want

however you'll need to brush up on your politeness if you want to make that much net profit from selling classic cars

you certainly perpetuate the stereotype of arrogant British management and company owners

lighten up a bit

Read the original reply to my post - I found it patronising.

and you dealt with it so well

bqf said:

Please either contribute to the topic, or don't post -

IF you read what I put you'll see I have contributed - not given you the one answer you want I know but YOU did put –

bqf said:

Any thoughts/views?

and as for –

bqf said:

apologies in advance for being rude

you've no need to apologise to me as I’m very unlikely ever to be a customer of yours as I’m below the level you currently ‘serve’ and will be below the level you aim at with this venture

plus either apologise or be rude but not both as it’s very confusing to people at my low level – we’re probably best dealt with by clear shouted instructions

I think you’ll fit in very well with the old style car trade

Edited by na on Wednesday 21st September 13:08

[0a]

Are classic car dealers subject to similar requirements as a normal car dealer when it comes to any subsequent issue with a car. Ie if someone buys that nice E-type from you and the engine implodes 5 miles down the road, would you be required to sort it out?