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Here's How To Start A Car Dealership And Cruise To The Top Of Your Market

Here's How To Start A Car Dealership And Cruise To The Top Of Your Market

2018 was a milestone year for car dealerships with new car sales topping $1 Trillion. That’s right, trillion. In addition, parts and services totaled out at more than $116 billion.

It’s no wonder that so many business-minded people seek to open their own dealership. They can be very lucrative when successful and create a strong bond with the surrounding community.

But owning and operating a successful dealership takes hard work and a lot of business know-how. Keep reading below to get an insider’s guide on how to start a car dealership that will stand out among the pack.

What Type of Dealership Are You?

This might seem trivial at first but you need to establish what kind of dealership you’re seeking to start. Will you sell new or used cars? Maybe both?

Will you franchise or be an independent business?

All of these questions represent different investments and hurdles when getting started.

For instance, selling new cars will most likely mean you’re a franchise dealership for a manufacturer. This requires a much higher initial investment but the potential profits are higher.

But if you choose specialize in used cars you might not need as much money up front but the earnings potential is lower as well.

Write a Rock Solid Business Plan

Before you get caught up in the glitz and glamour of planning how your dealerships name will look on a billboard you need to make sure you have an airtight plan of attack. This is crucial to your success.

Do you require capital in starting your dealership? Most likely you will. And investors need the confidence of knowing you have a clear path to success. It’s the only thing they have to go on.

Make sure your business plan is conservative with its estimates and plans. More conservative than you think it needs to be.

This roadmap will set the direction of you company and esatblish the goals in realistic terms. Investors don’t need fluff. They need concise steps on how you’re going to achieve success.

Your ability to communicate your vision for the dealership to your partners and employees will be the glue that keeps you on track.

Do Extensive Market Research

Where do you plan to open your dealership? Is there even a need for another care dealership there?

Every state, city and town is different. It’s important to drill down to the tangible figures of what makes each area tick.

How many cars were sold there and what type were they? Were most of them bought online or from customers who live out of town?

These facts will help you narrow down exactly how you should approach starting your dealership.

Who is Your Customer?

The market research you perform will also lead you to what kind of customer your trying to sell to. Things like age and gender are huge driving factors.

Do your customers maintain white or blue collar occupations? What cars fit into this category. Do your customers typically return to the dealership for service or will they use a local shop elsewhere?

The more familiar you are with your area and the people who live there the more you can tweak your dealership’s approach to selling.

Location is Still Important

Despite the border-less world the internet has created, picking the right location for when opening a car dealership is still vital. Your market research should tell you how big the population is. More people will correlate to more potential sales.

Intersections or busy roads? Maybe a sprawling country lot that people make a trek to? These all have pro’s and cons.

You need to determine how visible your location is going to be. Are you close to competitors? Many times, customers feel empowered when dealerships are next to each other as it gives them a walk-able option when they feel it’s time to look elsewhere.

Learn the Best Practices of Selling

The “sleazy car salesman” stereotype exists for a reason. For decades, high pressure sales tactics shrouded in misinformation made customers uncomfortable.

Today, customers are armed with more information than ever. Building a rapport with them is paramount because they can essentially buy a car from any number of other places. Customers can potentially be customers for life and a good sales team will be the “vehicle” that gets you there.

In short, your sales staff is not simply selling cars, they’re selling your company.

Consider Having a Service Department

A service department is an expensive addition to your dealership but it can pay for itself exponentially.

For one, they build trust with your customers. You can even develop relationships with customers who didn’t buy their car from you. With proper followup marketing, you can keep service customers abreast of new promotions and the good experience they with their service repairs can translate into new sales.

Auto manufacturers also pay service departments a lot of money to perform warranty work. This is literally business that’s being thrown your way simply because you specialize in the work required.

Get a Command on Marketing

Marketing your business today is an entirely new ball game. Customers are savvy so you have to be creative.

The customers crave an interaction that’s unique. Simply sending out mailers doesn’t do the trick anymore. But sending a mailer with a unique QR code that brings customers to a virtual showroom on their smartphone is fresh and unique. This shows that your business is modern and progressive with the times.

A dealership in Colorado created used their ingenuity to partner with a local newspaper to create a fun quiz entitled, “What Kind of Driver are You?” This resulted in over 300 emails for follow-up. It also created two customers to visit the lot the day after and one ended up in a sale!

Main thing to remember – Be creative!

“How to Start a Car Dealership” Begins with Honesty

Learning how to start a car dealership will make you realize you’re touching more lives than just your own. Your employees and customers will forever be linked with your success.

It’s important to shirk the dirty little secrets of the past and seek to open a dealership that treats everyone with respect.

Have a clear pay structure that rewards sales staff and doesn’t change compensation because they’re “making too much money.” Foster an environment of comradery and family.

Don’t leave customers in the dark or use outdated tactics like “holding them hostage.” Customers are your source of income and they deserve the utmost level of respect and proper communication.

If you’re up front and honest about your prices and processes, the longevity of those relationships will pay off many times more than a simple quick sale.

Your path to success starts with this fundamental principle. Let us guide you every step of the way and give you the tools to make your dealership a true market leader. Contact us to start your journey now.