requesting advice for new dealer

[hk60614]

Hello all,

I found dealer refresh doing a search on google. I am in the process of starting a new dealership in IL for used cars. I wanted to see if there are any used car dealers in IL or in other states that would like to share there experiences, advice etc. A little back ground: I have been in the corporate world for most of my career (Analytics, finance, number cruncher), worked with a friend on the wholesale and retail side. I have a business plan with every expense down to a pen. What can I expect year one? Thanks in advance for any advice.

Cheers

 

[yagoparamo]

If you have money saved and time to screw around for a little bit I would take a job at a dealer and do sales for 3-6 months.

It will give you a good understanding of the sales process, customer needs, etc.

 

[joe.pistell]

If you have money saved and time to screw around for a little bit I would take a job at a dealer and do sales for 3-6 months.

It will give you a good understanding of the sales process, customer needs, etc.

Killer advice from Yago. I'd add to that and find the best car dealer (not just a used car dealer) and work there in any capacity and take LOTS of notes.

 

[hk60614]

Yago, Joe,

Thank you for your advice. I have in the past worked for a dealership and have a general idea of sales and dealing with customers. I know its not easy, but then nothing good comes easy. I am a car geek and enjoying working and dealing with people. I guess my some of my concerns are: driving sales, the numbers for ROI that I have are based on my 8 months experience etc. How difficult do you feel it would be to sell 5 to 8 cars a month based on competitive pricing, online marketing, website, and a decent referral base, as a start up?

 

[hk60614]

at your convenience can you please advise typically how much money you budget a month for fuel/gas for inventory, sourcing inventory, and misc? Thank you

 

[Bill Simmons]

Yago, Joe,

How difficult do you feel it would be to sell 5 to 8 cars a month based on competitive pricing, online marketing, website, and a decent referral base, as a start up?

If 5 - 8 cars a month is your goal, you don't need a website or online marketing budget. Used car dealerships come in all shapes and sizes and there are many different successful business models. Have you decided what niche you want to be? Low end special finance, buy here pay here type of lot? Or high-line cars? There are a lot of successful used car dealers on DR. Give us a little more info on your business model and we could offer more solid advice.

 

[hk60614]

If 5 - 8 cars a month is your goal, you don't need a website or online marketing budget. Used car dealerships come in all shapes and sizes and there are many different successful business models. Have you decided what niche you want to be? Low end special finance, buy here pay here type of lot? Or high-line cars? There are a lot of successful used car dealers on DR. Give us a little more info on your business model and we could offer more solid advice.

Good morning Bill,

There are two business plans. One is looking at the worst case scenario, which is I need to sell at least 5 cars a month over a 12 month period in year one. More is absolutely better. In year one I will not have in house financing; I have met and spoken with a couple of different groups that will assist me with taking care of that. My goal is fast turn over on good reliable cars, aggressive margins and great customer service, amongst other things. The cars will mostly be late model American and Japanese with all services up to date. The inventory will range in price from 6k to the max at 12K. I like to think of year one as a buy here pay here hybrid with I can help you get financing. The reason for the Website is I want to heavily target online sales vs the traditional method.
I appreciate everyone’s advice.

Thank you.

Hasan

 

[yagoparamo]

Good morning Bill,

There are two business plans. One is looking at the worst case scenario, which is I need to sell at least 5 cars a month over a 12 month period in year one. More is absolutely better. In year one I will not have in house financing; I have met and spoken with a couple of different groups that will assist me with taking care of that. My goal is fast turn over on good reliable cars, aggressive margins and great customer service, amongst other things. The cars will mostly be late model American and Japanese with all services up to date. The inventory will range in price from 6k to the max at 12K. I like to think of year one as a buy here pay here hybrid with I can help you get financing. The reason for the Website is I want to heavily target online sales vs the traditional method.
I appreciate everyone’s advice.

Thank you.

Hasan

Hasan,

Not to blow up the party but what you want is what everyone wants. Let me explain:

"My goal is fast turn over on good reliable cars, aggressive margins and great customer service, amongst other things"

Everyone's goal in the car business (for the most part) is to turn cars fast, but things get in between one sale and the next... Aggressive margins are not easy goal, every dealer tries that specially nowadays with pricing tools like vAuto that tell you how to follow the market. Great customer service is always a good idea, but from experience I think that when you are trying fast turn in small profit margins actually becomes harder than you think.


"The cars will mostly be late model American and Japanese with all services up to date. The inventory will range in price from 6k to the max at 12K."

These type of cars are the hardest ones to find, most expensive to buy. The $6-$12 range in Japanese cars means high mileage cars so the whole fast turn great service comes into play. If you look at most markets, the $10k range is sold by dealers (not picking on them) that sell and forget for the most part. There is not a lot you can do to have a "good reliable japanese car for $8000" in large numbers so you can sell them every month.



"The reason for the Website is I want to heavily target online sales vs the traditional method."

The website is cheap, $399 for an independent dealer for a mobile adaptive top of the line site. Problem is the money you need to spend to advertise the site and bring traffic to it. I would say that for a new dealer than needs to compete with other stablished businesses around your area you will need at least $10K a month to bring some traffic (site, retargeting, PPC, 1 or 2 3rd party sites, maybe a local magazine for cheap cars, etc)

 

[hk60614]

Yago I appreciate your advice. Cheers

 

[Bill Simmons]

Sourcing the right cars in the price ranges that you mentioned may present a challenge. BUT, there are a lot of options. Once you are licensed and a registered dealers in your state, you can then join some online inventory, dealer only, sale websites. DealerMatch is a good choice to start with. This is a paid site but the monthly membership fee is nominal. Free sites that you can source inventory from are Manheim OVE and SmartAuction. Another place that you can attend a physical auction that always has a huge selection of cars in the price range that you mentioned is CarMax auctions. I checked their directory and they list 6 stores in Illinois. They have auctions at their stores selling their trade-ins and the cars that they buy from consumers that they do not want to retail. Depending on the size of the stores in your area, they either have them weekly or biweekly. The competition at these sales will be high. It is not uncommon that one near me in Laurel MD has 1000+ cars each with with 800-900 dealers there bidding. Hope this helps and wishing you the best.