Start a used car business or not?

Mike_81

Hi,

I've recently been made redundant but have been lucky enough to receive a handsome redundancy settlement.

Cutting to the chase, I'm thinking about setting up as a used car salesman. I've got enough money to bring in 6 or 7 decent quality cars initially with enough left over to cover 3 months' costs (premises rent, bills etc). I also have a very competent mechanic friend who is willing to work with me and the cost of him is also factored in.

Having conducted only a limited amount of research so far I was wondering if anyone on here has any experience of this sector and could maybe give me some advice or warn me off completely!

Thanks in advance!

Mike

acs_2

assuming you can sell, negotiate, know the obligatories regarding buying and selling cars and have genuine business acumen my questions to you would be, can you can spot a motor riddled with problems and you can spot someone trying to pull a fast one? if not... id tread carefully with dealing in 2nd hand cars....

fwiw, thats my view. hope it helps

agrinnall

No experience whatsover. But just thinking about a few things.

Have you also factored in the cost of setting up to accept card payments and the ability to provide finance to buyers?
I assume dealers have to have insurance cover that allows both them and their clients to drive the vehicles.
Advertising costs - local papers, Autotrader, etc.
Setting up and maintaining a website.

Plenty of people do it so it must be possible, but it would be interesting to know how many of them go bust - hopefully it won't happen to you, at least you are thinking it through rather than just launching straight in.

InsideInsurance

Where are you sourcing the cars from? Are you going to be able to deal with "requests" (ie someone who knows what they want which isnt one of your 6 cars)? Why should I buy from you who only has 6 cars for me to chose from -v- the chain or the car supermarket that has hundreds/ thousands?

I have seen one or two places that only have a few cars on the forecourts, their business is still there despite the fact I have never seen a single customer looking but I think they are in a small minority

saintjammyswine

The market at the moment is shocking. Established dealers large & small are really struggling. Finance deals, scrap charges and the relative low price of new cars now, in this climate means that people are not buying as many second hand cars. More people are choosing to keep their car longer & repairit rather than replace. Invest your money wisely for a couple of years until it picks up again.

david69_2

I have often thought about doing this over the year as i feel i can spot a bargain and sometimes take a risk on a vehicle but if it was me i would look at running it from home to start with keeping it low key say only have a couple of cars at home so you dont upset the neighbours.
It all depends on if you have the space to do it in an ideal world you would live in a nice big house with plenty of garage space and no neighbours close by .

I think you will struggle to make a decent living if you have a site as you will need to be there all the time to man it .
There are plenty of people making a decent living buying 1 or 2 car a week and turning them over for a profit .

Mike_81

All,

Thanks so much for your replies thus far; all feedback is very much appreciated.

I'll have to look into the legal stuff a bit more if I'm serious about doing this and will ensure that I'm whiter than white and have a thorough working knowledge before even thinking about setting up.

I've taken what David and Saintjammyswine have said and think that sounds like some very good advice. I'll keep doing my research but will most likely focus on running from home, buying 1, maybe 2, vehicles at a time and selling them on before buying more. I definitely think that sounds more sensible than jumping straight in feet first to an area which, in all honesty, I don't know a great deal about so far.

I have considered getting a job, or trying to, in a car showroom as a salesman to get some experience under my belt. There are quite a few of these jobs available in my area so maybe that would be more sensible before risking my own cash?

With regard to sourcing, I've spoken to a few main dealers who can supply trade ins but more negotiation would obviously be required. Auctions would most likely be the main source though.

As I've said, thank you so much for all your feedback so far it's very much appreciated.

Mike

saintjammyswine

To be honest working in a main dealer will be more about finance deals than knowing about the industry & cars etc. I think if you were to do it then start privately, there are different rules about traders & private sellers with regards to the legal side, best to check up on that first but a less risky way to start.

w211

Just wondering (and if you've thought about), what sort of used cars will you selling, and if you intend to specialise in a certain make or type of car (i.e. sports cars, prestige, cheap runarounds, etc..)?

megtyler

my friends and i are starting a 2nd hand bike and motorbike store. we figured that it's the way to go since oil price continue to increase, people will go for cheaper alternatives.

Mike_81

w211 wrote: »

Just wondering (and if you've thought about), what sort of used cars will you selling, and if you intend to specialise in a certain make or type of car (i.e. sports cars, prestige, cheap runarounds, etc..)?

Yep I've given this quite a lot of thought and come to the conclusion that I would go down the road (pardon the pun) of selling small 'first cars' like Fiesta's, Polo's etc and cheap family cars such as Astra's, Focus's and the like. My top end sellers would be around 7k so realistically looking at somewhere between £500-£1000 profit on each one after servicing, cleaning etc.

That's what my initial enquires suggest anyway, I could be very, very wrong of course!