Thursday, January 28, 2021

How to start a successful used vehicle dealership business in 5 steps

The used car business is a massive one and one that is fairly accessible compared to other business models. Some start with nothing but a few vehicles and work their way up, while others would rather start with a bigger operation. Running a successful used car dealership is a challenge, however, and while there is a lot of demand in the sector, there is a lot of competition as well. Here’s how to start a successful used car dealership business in five steps.

Look at your market

The very first thing you have to do is look at the market where you are. You need to look at the type of vehicles people are driving and selling.

You want to get a profile on which type of buyer lives in the area. Will this be in an urban setting or the countryside? Does the area have a lot of families or singles? Is it an area that deals with a lot of congestion and limited parking spaces?

These are all things that will allow you to refine your selection of vehicles. You also have to check to see which other dealerships are in direct competition with you and if the space is already over-saturated.

Start looking at costs and structure

The next thing you’ll have to do is start looking at costs and company structure. You can decide to start as a sole trader or a company. You will also have to consider what your scope of service is. If you decide to service vehicles as well, this will add to your costs.

One of the best things about a used car dealership is that you can start with nothing but a vacant lot and an office. Your biggest expense here will be your inventory. But you may want to add things like security, or a space to store your vehicles to protect them from damage.

Another thing you’ll need to look into is insurance, especially motor trade insurance. This type of insurance will cover drivers that will be operating any vehicles on the property. If you want to find the best prices on motor trade insurance then be sure to conduct a comparison search online before you buy.

Consider franchising

Another thing you need to think about is whether you’d like to join a dealership franchise. Franchising as a used car dealership has tons of benefits. For one, you’ll get instant brand recognition. But, more importantly, you’ll be able to strike deals with suppliers that will allow you to get better vehicles. Not only that, but a good franchise will help you with everything from marketing to finding a good location.

This is something you should never underestimate, and good franchises want their franchisees to be successful. So, make sure that you research the different franchises out there, see what they have to offer, and get second opinions from others who have worked with them.

Get accredited with the Motor Ombudsman

Used car dealerships don’t have the best of reputations, and as a new one, you’ll have to find ways to prove to your prospective customers that you can be trusted.

By getting your accreditation, you are showing that you are dedicated to honest service and this is something that could help you stand apart. You’ll also benefit from resources like access to their adjudication service and information line as well as extra exposure for your brand.

Look at financing options

You will also need to look into financing options if you’re thinking of starting big. Either way, you will probably have to seek financing at some point in time, so it would be wise to start doing your homework now.

The good thing is that car dealerships can use the vehicles in their inventory as collateral. This will allow you to get more financing offers and better deals as well. However, you will need more than that to impress loan officers. You will also need to come in prepared with a detailed business plan and reasonable projections. So, make sure that you have one professionally drafted if you want to increase your chances of getting approved.


If you want to start a successful used vehicle business, these are the steps you’ll need to take. Once you’re officially open, you will need to constantly work on your craft and look at what your competition is doing so you can always be a step ahead.

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