Starting your own dealership

[Michael]

I have been wondering this and instead of continuing reasearch on it, I have decided to bring it here.

What does it take to start your own car dealership? Ever since I was young I dreamed of owning one. We all know that bad things that come with one, as you have greedy sales people, but besides that what do you have to do to start one.

Do any of you know?

[The Artist]

In sweden to be a MB dealer.. you need to be located far from another MB dealer.. and you need to put down like i dont remember if it was 10 million kroner or 10 million euros.. so that you can get the licence.. and a stock of cars to display..
And i think if you pay that.. MB will suply you with machinery and other things to make it look like MB dealer.. i guess its like a frenchise thing..

[Giannis]

Yes it is a kind of franchise. I don't know details though. BMW, if you really want to know, i can make some reasearch on this subject for you!

BTW, owning a car dealership is my life-dream, too!

[Matt]

My dad owns a BMW and a chrysler dealership out here in SO CAL. I'll ask him sometime and tell you in this thread, probably today or sometime next week. The dealerships are franchised and the franchise for a particular location is what costs the most money. The rent and labor costs are less than the franchise. There is more than one way to start one. First of all you could climb up the ladder of a particular dealer ship and eventually buy it off the owner or you could buy one that already exists (if you have enough capital). I dont know the details but ill ask.
P.S. sometimes owning a dealership is more burden than fun....
lawsuits, employee problems, liability, ect. ect.

[Centurion]

Well there are two types of dealers, official ones and non official ones. Basically anyone can become a non official dealer but that still requires extensive business capita and knowledge. As some of the members have mentioned offcial dealers are franchise businesses where you have to follow lots of regulation and pump tones of money into the business.

[Michael]

Originally Posted by Giannis

Yes it is a kind of franchise. I don't know details though. BMW, if you really want to know, i can make some reasearch on this subject for you!

BTW, owning a car dealership is my life-dream, too!

If you could that would be awesome.

I am doing this because I am honestly ignorant when it comes to the subject matter.

It must be nice, but also a burden at times like Matt said. Then again you know what you are getting into when you start your own business and hire employees so it comes with any business.

It must be nice to own the dealership that shares the name of your favorite brand.

[Giannis]

Originally Posted by BMW

If you could that would be awesome.

I am doing this because I am honestly ignorant when it comes to the subject matter.

It must be nice, but also a burden at times like Matt said. Then again you know what you are getting into when you start your own business and hire employees so it comes with any business.

It must be nice to own the dealership that shares the name of your favorite brand.

I'll do some research. I'll post what i found probably on Monday! It would be awesome if i had a dealership. My dream... Too bad that's already a BMW dealrs. here!!

[Alx]

BMW.... i would love to get into it, but my computer would freeze before posting.... The answer is very long and detailed and there is to much to explain... sorry.

[Michael]

Originally Posted by AlxAmg

BMW.... i would love to get into it, but my computer would freeze before posting.... The answer is very long and detailed and there is to much to explain... sorry.

My friend if you do not wish to share that is alright, although I would love to hear what you have to say on the matter because of a. I know you have an excessive amount of knowledge on this topic and, b. I think it would benefit all of us to hear what you have to say.

[Alx]

Ok, if this sounds vague, its only because there's too mych detail to type.

Used car dealerships are easier to open, problem is getting banks, banks dont like to acquire paper from used car dealers due to the fact they come and go, a shingle (franchise) is really the way to go, to buy into one is big bucks and supplying the cars for a 80 car lot (which is very small) is very expensive, the auction might let you buy cars on credit, but you need history with them to get a nice line of credit (which takes alot of time to establish at a high rate[APR]).

Used car dealership is nice for all cash business and very little expense but again it is hard to get customers and banks for finance, which means only cash or Capital one at 22%APR, which most would never go for, basically you are very limited with a used car franchise. Also need cash to buy cars. If you know someone who really trusts you you can get them to co-sign for your used car lot and some banks will sign up with you.

New car franchise is better, but much more money invloved and much more expense. Franchise's are expensive to buy, but lets say you get one for $400,000. Which is really cheap (probably a dying brand) btw. You automatically get banks, to work with so you can finance everyone, but you are now under the franchises' guidelines. You have to sell a certain amount of new cars to maintain the franchise and get incentives, and need excellent credit to get a floor plan so someone would finance your lot of cars (which is now well into the millions)... You must stock new cars and used obviously, and you pay interest to the bank that is financing them for you. Advertising is a must, we have a $150,000. budget. per store monthly, on average you expect to deliver 7%-10% of the customers of your budget.
Store profit should be just about $4000 per copy front end and back end combined for a very succesful store. Employees probably about 30 minimum, and all DMV must be in house, probably even an inhouse insurance broker.

Real start up cash for such a cheap franchise, is roughly $500,000. - $1,000,000. And excellent credit to get floor planning and inventory. There is so much more detail to this that as i re-read my post i feel there is so much i left out, that ties in, but this is the jist of it. Should at least give you a concept.