starting a car dealership

[Emubiker]

Good morning all. I have been searching for what road I should be taking for my first "proper" venture - following small business ventures whilst at university, and I am beginning to narrow my view down. I am now considering a car dealership. Business plans aside,
What do I actually need to be able to trade in the motor industry - licences etc, and where can I obtain them from?

All thoughts welcomed.

[Ash 996 GT2]

Setup a limited company.

Buy a car, sell it.

Pay TAX

Job done.

[singlecoil]

You need a licence (from one of the government departments) to offer credit facilities, which I would imagine is prety vital. You would need planning permission from the local authority. Apart from that, you need quite a lot of money and a source of cars.

[Jazzer77]

I assume you have no experience in the motor trade?
If so, try to get a job working for a decent independant or main dealer.
Learn the ropes on their dollar - could save you 10's of thousands in the long run & build up some useful contacts.

Its not just as easy as getting some land and parking a few cars on it, you'll need a sheepskin too.

[soxboy]

Jazzer77 said:

Its not just as easy as getting some land and parking a few cars on it, you'll need a sheepskin too.

And balloons, don't forget them. Lots of them, plus some bunting. Oh and a big chunky white marker pen too.

[V8mate]

soxboy said:

Jazzer77 said:

Its not just as easy as getting some land and parking a few cars on it, you'll need a sheepskin too.

And balloons, don't forget them. Lots of them, plus some bunting. Oh and a big chunky white marker pen too.

Portakabin, FTW!

[Tuvra]

soxboy said:

And balloons, don't forget them. Lots of them, plus some bunting. Oh and a big chunky white marker pen too.

I would suggest a wacky waving inflatable arm flailing tubeman! If you can set aside a few pound, get a load and knock the opposition dead.

[bigbubba]

It is so so easy to earn a small fortune in the motor trade. Start with a big fortune and you will soon just have a small one.

Seriously, if you don't have any experience in car sales or dealership management you are committing commercial suicide.

If you are serious about it then get a job as suggested and get a few years experience first.

[Kevin VRs]

IIRC the manufacturers require huge upfront costs and agreements regarding number of cars sold per month etc. A dealership is very expensive to set up.

[Simpo Two]

Kevin VRs said:

IIRC the manufacturers require huge upfront costs and agreements regarding number of cars sold per month etc. A dealership is very expensive to set up.

That sounds like a franchised main dealer; I think the OP is thinking more or an under-the-arches operation.

You'd need a few million to go from dining table to franchised dealer I'm sure.

[Muncle Trogg]

Tuvra said:

I would suggest a wacky waving inflatable arm flailing tubeman! If you can set aside a few pound, get a load and knock the opposition dead.

You need this guy http://youtu.be/YtespeLin2c

[Emubiker]

Sorry should have given a bit more background. Whilst studying at uni, I was also breaking, as well as selling auction bought cars on a small scale (most of these were actually cars I had intended to break but were just too good and it was easier to just sell as they were. I made more than enough for a "full time" student and part time racer.

I am actually working for a very large, well known Scottish franchise.

I don't plan to start up straight away, I am still gaining experience, but I would like to be as clued up as I can beforehand. I will be hoping to set up shop about Feb 2013 (so just over a year away).

I have also seen that there are different licences depending on what country you are in. (Scotland) apparently you require less down south than you do up here.

[bigbubba]

Well, to be a car dealer you do not need any licenses at all in England.

There are licenses you will need if you want to provide extra services such as financing or if you plan to have a service department you may like to be a MOT testing station.

If you intend to sell a warranty that is an insured product then you will need FSA compliance. If the warranty is self insured then you don't need registration. If you don't know the difference then you need to find out.

Best of luck,

Sheridan

[daemon]

Emubiker said:

Sorry should have given a bit more background. Whilst studying at uni, I was also breaking, as well as selling auction bought cars on a small scale (most of these were actually cars I had intended to break but were just too good and it was easier to just sell as they were. I made more than enough for a "full time" student and part time racer.

I am actually working for a very large, well known Scottish franchise.

I don't plan to start up straight away, I am still gaining experience, but I would like to be as clued up as I can beforehand. I will be hoping to set up shop about Feb 2013 (so just over a year away).

I have also seen that there are different licences depending on what country you are in. (Scotland) apparently you require less down south than you do up here.

For clarification, are you planning on setting up an all singing all dancing dealership - forecourt, showroom, repairs, etc? If so, this will cost you a fortune to do and also require a vast amount of cash.

Or do you mean a sole trader with a used car lot?

If you elaborate on what you actually mean, then we could advise on the steps necessary to get there?

[Emubiker]

daemon said:

For clarification, are you planning on setting up an all singing all dancing dealership - forecourt, showroom, repairs, etc? If so, this will cost you a fortune to do and also require a vast amount of cash.

Or do you mean a sole trader with a used car lot?

If you elaborate on what you actually mean, then we could advise on the steps necessary to get there?

I was thinking along the line of a small (ish) used car lot. Circa ex-petrol station size. Out sourcing warranty and using other local contacts for servicing and the odd bit of paintwork for prepping of cars for sale.

I am thinking circa £50,000 in start-up costs (including approx. 10 used cars for stock (to begin with), insurances and licences, initial marketing and market research for my location. Rent and rates I am not too sure about yet as I’m just beginning to find out what I need.

[13 DJP]

You will need:

a) Trade insurance (including accompanied test drives, try Tradex)

b) Trade Plates (Apply at DVLA local office, you will need an interview)

c) An HPi on-line account

d) An aftersales warranty company (unless you do it yourself, try Warranty Direct)

e) A BCA account

f) A trailer

g) A good valeter (or contact)

h) A good mechanic (or contact)

g) A winning smile, more money than you think, the patience of an angel and balls the size of a house

Best of luck mate, if you enjoy it, you`ll have a ball

[daemon]

Emubiker said:

daemon said:

For clarification, are you planning on setting up an all singing all dancing dealership - forecourt, showroom, repairs, etc? If so, this will cost you a fortune to do and also require a vast amount of cash.

Or do you mean a sole trader with a used car lot?

If you elaborate on what you actually mean, then we could advise on the steps necessary to get there?

I was thinking along the line of a small (ish) used car lot. Circa ex-petrol station size. Out sourcing warranty and using other local contacts for servicing and the odd bit of paintwork for prepping of cars for sale.

I am thinking circa £50,000 in start-up costs (including approx. 10 used cars for stock (to begin with), insurances and licences, initial marketing and market research for my location. Rent and rates I am not too sure about yet as I’m just beginning to find out what I need.

You're probably in the right ballpark for a minimum figure. Cashflow is the killer.

I spend around £4000 a month on prep of cars, which is all very well if cars are selling, not so good when the sales dont go to plan.

If you want 10 cars actively for sale, then you'll probably need another 3-5 at the prep stage, and probably have another 3-5 sold but awaiting prep / handover.

Also, if you have a forecourt open say, 0900 to 1800, are you going to man it yourself? If so, how are you going to go to organise stock to buy, auctions, dropping cars off at mechanics / bodyman / valeters? How will you cover holidays?

Have you thought about going purely internet based? Thats what i am doing. I work for less margin, because my overheads are extremely low, but then i sell more cars because i am more competitive. Currently averaging 25 cars a month...

My website is in my profile

Edited by daemon on Wednesday 2nd November 21:16

[Emubiker]

13 DJP said:

You will need:

a) Trade insurance (including accompanied test drives, try Tradex)

b) Trade Plates (Apply at DVLA local office, you will need an interview)

c) An HPi on-line account

d) An aftersales warranty company (unless you do it yourself, try Warranty Direct)

e) A BCA account

f) A trailer

g) A good valeter (or contact)

h) A good mechanic (or contact)

g) A winning smile, more money than you think, the patience of an angel and balls the size of a house

Best of luck mate, if you enjoy it, you`ll have a ball

Thank you very much for that, Most of which I knew about already and have had a look into, but there are always "unknown unknowns" in business, as I have already found with previous ventures, hence why I have asked.

What is a "BCA Account"? This seems to stand for a few abbreviations. I have the contacts through other ventures and racing (sponsors etc. whom I have become friendly with). I currently have access to a heavy duty trailer, but also have a beavertail van (which I found to be cheaper when I was breaking cars as I didn't need the towing licence, but this can be taken if I start collecting/transporting 2 cars at a time. I have also been looking into warranties today, but struggled to find short term ones; most were covering a year or more, at different levels of cover.

I have been enjoying my job so far, still learning and making a few small mistakes, but enjoying it none the less.

[Simpo Two]

British Car Auctions I'll wager. And I'm only a photographer.

[Chicarito]

BCA = British Car Auctions.

And be careful with a beavertail - I assume you're on a modern day 3.5t limited licence, so you'd have to find a particularly light beavertail truck and be very careful about the weights of the cars you put on the back. Something like a Passat or A4 would probably put you over the limit.

I also believe you'd need a tacho for it, too.