What could be nicer than owning your own car dealership? Sign a dealer agreement with a car factory, build a car dealership and meet paying customers.
Of course, this is a very simplified scheme for opening a car dealership. Let’s start by writing a business plan. This will help you decide on the prospect of this business idea.
Car dealership business plan: calculation of capital investments
To open a car dealership, you first need a room:
1) a room of 300 sq. m (at the rate of 30 sq. m for each car), for insurance companies, representatives of banks and car service, the same amount.
You need to think over the layout: showroom, auto parts store, office space, reception, service center. Use the advice of experienced professionals on how best to arrange the premises for the convenience of customers.
The construction of such a dealer complex will require an investment of 25,000 dollars.
More than a million dollars — in the city center. 5 thousand dollars will be required with the maintenance center.
Payback is approximately 5-7 years.
2) A more serious option (a range of imported car brands) — more serious figures — up to 300 million dollars in the construction and equipment of a car dealership.
3) However, for starters, you can get by with a less chic option: arrange the existing suitable premises in accordance with the dealers’ requirements.
This option is most likely suitable for a domestic manufacturer. This will cut your costs by at least half (up to $15 million).
Responsible for the dealer to conduct an advertising campaign (at his expense). Every month, this is a considerable amount in the expense item. However, the distributor will provide advertising handouts (layouts, booklets, videos for broadcasting).
Risks of implementing a car dealership project
Since the business project of a car dealership is a rather serious enterprise, it is important to think about the risks.
- You will make a small profit on the difference between the dealer price and the manufacturer’s price. Car dealers earn the main money on “related” services: service, installation of additional equipment. Therefore, one must be prepared to make a profit not immediately;
- Investing in a business is not limited to car dealership equipment. Plus to this: purchase of cars, purchase of test and replacement cars, service equipment;
- It is very important to develop a quality service. To do this, it is necessary to select and train auto mechanics. And this is another significant cost item;
- The payback period will increase the «habit» of the distributor to sell not the most popular and popular brands of cars. There is a concept — a lineup. All the latest models and developments of the car manufacturer should be present in the showroom.
- Cars for test drives will become an additional load, which some manufacturers oblige to purchase.
Car dealership business plan: location
In order to find a good location for your car dealership, you need to consider:
- There is a busy highway not far from your city. It is worth organizing a car dealership there;
- Make sure that in the area (maximum 30-45 minutes by car) there are no representative offices-competitors of the same brand as your future car dealership;
- It will be much more profitable to open a dealership of a brand that is not yet represented in your city. There will be fewer problems with attracting buyers and competitors.
Auto parts stores can also be considered as related services .
Work with personnel
Highly qualified specialists for this business will be required, ranging from a simple consultant to an experienced leader.
Sales technology in this business is especially important — it can affect everything the client decides or make a purchase in your car dealership.
Indicate in the business plan of the car dealership the real amount of wages for employees.
Depending on the sales results, you can provide for a bonus, but to attract real professionals to work in your car dealership, the salary should be sufficient.
Pay special attention to developing a business plan for a car dealership, and enlist support, hire a team of professionals.