There are few industries that boomed during the pandemic. Ecommerce and real estate are two that usually come to mind.
One industry that took off is the used car sales market. The used car market is twice as large as the new car market. Used cars will continue to dominate the car industry.
That’s because new car manufacturers can’t produce as many cars as they did pre-COVID. New cars are more expensive than ever as well.
It’s a great time for starting a used cars dealership in auckland. The high cost and low inventory of new cars leave buyers looking for an alternative – used cars.
You do have to tread lightly because entrepreneurial success isn’t guaranteed. Keep reading to discover what to do to become a small business owner selling used cars.
1. Get the Mindset and Experience
Do you have experience in the automotive industry? Watching Formula One doesn’t count. You should get as much experience as you can selling used cars.
That’s because you get a better understanding of the process from the perspectives of employees and customers.
What does it really take to be a small business owner? Optimism, flexibility, and a growth mindset are the key traits to have.
Assess your strengths and weaknesses and shore up your weak spots. You’ll want to get a team of professionals, such as a commercial real estate agent, business lawyer, accountant, and bookkeeper.
2. Know Your Startup Costs
You can easily hit six figures to start your used car dealership. Create a running spreadsheet to figure out how much you need to start your business.
Your start-up costs include rental property, inventory, business licenses, office equipment, and employees. Don’t forget to add marketing costs to promote your business.
Many people find it’s helpful to write a detailed start-up business plan. This gives you market insights and you know what you need to do to be profitable. It is necessary if you need to get a loan for your business.
3. Determine Your Location
Do you need a location for starting a used car business? It depends on your business model.
You could store cars in your driveway, post them on your website, and deliver them to customers in your area. You can go the traditional route, which is where your location does matter.
You need a secure space for storing inventory. You may need a service area for another revenue stream.
The location needs to be convenient for customers to get to. It also has to be affordable.
This is where a commercial real estate agent is helpful. Get someone who worked with other businesses in the automotive industry so they understand your needs and requirements.
4. Get the Dealer’s Licenses
Your business needs to operate legally, or you risk fines or worse. Most states require a dealer’s license to sell used cars.
If you plan to take someone on a test drive, you have to obtain dealer’s plates. This lets you take people out in an unregistered car.
The costs vary from state to state, so check with your business attorney or with your state’s Department of Transportation.
5. Become Bonded and Insured
Used car dealerships have unique insurance needs. First of all, you have to have a bond that guarantees you’ll operate legally and ethically.
For insurance, you’ll need a number of policies to protect your business. Consider property insurance, errors and omissions insurance, general liability, and cyber liability.
There are several factors that determine the cost. Get a quote from Auto Dealers Insurance Group or another insurance agency that has experience working with used car dealers.
6. Find Your Niche
How will you set yourself apart from other used car dealerships in your area? You do that by finding your niche.
Your niche is a part of the market that you focus your business on. Most people settle on serving anyone interested in buying a used car.
You could say that you serve women who are tired of getting taken advantage of by the automotive industry. You could focus on families with bad credit.
Those areas set you apart and make your business memorable. Your business is easily referrable.
7. Get Inventory
Once you know who you serve, you need to stock the right inventory for that audience. This requires market research.
Read industry publications for market and demographic trends. You should also ask people in your target market what they’re looking for in a used car.
Some might only want a small economic car, while others need an SUV.
8. Market the Business
There isn’t a single path to market your used car dealership. Some find success on social media, others do well with paid search ads.
Have a mix of digital and traditional marketing tactics. For instance, join your local chamber of commerce and network with the local community.
At the same time, have an impressive website and incorporate a few digital marketing tactics.
9. Focus On Customer Experience
Once you start to get customers in the door, you need to deliver a world-class experience. Why is this so important? Your customers will talk about your used car dealership, whether it was good or bad.
They’ll write reviews online and tell everyone they know. You need potential customers to see outstanding reviews.
If you deliver a high-quality experience, you get free marketing out of it. That’s how you’ll get more customers and referrals to your business.
Tips for Starting a Used Car Dealership
Starting a used car dealership now is the best way to capitalize on a terrific market opportunity. You do have to ensure that you’re prepared for business ownership.
There are a lot of steps to take before you open your doors. Know your strengths and gain as much experience as you can in the industry.
Most importantly, know who you serve and serve them well. Click on the Business and Finance link at the top of the page for more tips to help you start your business.
