Car dealership business plan

Business plan

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.

  1. 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;
  2. 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;
  3. 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;
  4. 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.
  5. 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:

  1. There is a busy highway not far from your city. It is worth organizing a car dealership there;
  2. 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;
  3. 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.