Whether you are a car enthusiast, an entrepreneur, or both, it is a dream for you to sell the things that you are passionate about. Nothing beats pointing out the good qualities of things you are extremely passionate about and making money from doing so. Selling cars might sound like a costly business. But there is no business that does not require you to shell out some of your hard-earned cash. All business ventures will require you to spend one way or another.
Why not make it about something you love? Starting a car dealership for used vehicles is a good way to start. People who want to own a car usually opt for used or secondhand vehicles. They do so because it saves them about 10 to 70 percent compared to when buying brand-new cars.
What are used car dealerships?
Used car dealers sell and, most of the time, buy used vehicles. They price units based on the original price, age, mileage, and condition. Used car dealers also look at the make and rarity of vehicles they buy and subsequently sell. These dealerships cater to individuals who are under budget for a brand-new vehicle but would still very much like to own one.
As used car prices are noticeably cheaper, they have become a viable option for potential car owners. Dealers repair, recondition, and market used cars of good quality to buyers who either just prefer to buy used vehicles or are under budget constraints. Used car dealerships make owning a vehicle easier without the hefty costs.
How big is the industry?
According to IBISWorld, the industry for used car dealerships currently amounts to 88.8 billion dollars this year. That amount is gathered from used car dealerships in the United States alone. However, due to the coronavirus pandemic and several factors that came before, such as cheaper and brand-new cars produced by manufacturers, the industry had a slow growth in the past five years.
But with the pandemic restrictions making the use of public transport worrisome, more people opt to have their own vehicles to avoid crowds. With high unemployment rates due to virus restrictions preventing businesses from operating and people from working, there are budget constraints that will push people to opt for the more affordable used cars.
How much can opening a used car dealership cost you?
The main cost is the acquisition of used cars for selling. According to Growthink.com, over 84 percent of used car dealerships’ revenues go straight to purchasing used cars to sell. On top of buying used cars from auctions and customers, dealers also need to repair and get the used cars back to a condition that will be good for selling.
Another cost is the place where the vehicles are stored. Used car dealerships require big spaces to keep the choices of used vehicles wide for customers. Moreover, employee salary also adds up. You cannot do it all by yourself; you need to find different sources to buy used cars, secure decent deals to get them, get in touch with repair shops, and deal with customers.
Like brand-new car dealerships, this business requires a lot of manpower to work well. The National Independent Auto Dealers Association found that both new and used vehicle retailers spend an average of 33.6 percent in marketing the vehicles they have for sale.
What are the types of used car dealerships?
Chain used car dealerships will allow you to operate multiple stores in multiple places. This is especially helpful in establishing a presence in the industry. Being a reliable dealer of used vehicles will keep potential clients flocking.
Franchised used car dealerships are established while taking the name of an original used car dealership that allows for franchising. You get in touch with a dealership and let them know that you would like to engage in business with them by selling under their dealership’s name. This is especially helpful if you want a quick start on visibility. The original dealership already has customers; you can have them, too.
Starting an independent used car dealership is a good idea for the entrepreneurial mind. Doing this will require a lot of planning and financial resources. If you are ready, execution will seem difficult. But venturing independently means that you can reap the benefits without the need to share.
The modern-day attitude to online stores is positive. Starting a used car dealership that is mainly online will not only help you become more reachable, but it can throw your business visibility to new heights. More people are opting for online shopping. This includes cars, homes, and other tangible properties.
Are you ready?
If you are on the edge of saying yes to the idea of starting your own used car dealership, note that this will need excellent financial planning and the willingness to work to make the venture successful. No type of used car dealership we have given above will guarantee success. Your future dealership’s fruitfulness will depend on your willingness to plant the seeds.