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I've found a good number of cars on craigslist really really cheap. Some I've bought, then later on resold for a profit. Others I had my friends buy. And I've met two men that specialized in buying high mileage well maintained cars that were traded in to dealerships and they would then peddle those cars themselves. Those guys seemed to make an okay living at it.
The O.P. never said what his business background was or what kind of dealership he would like to own and run.
There are alot of people that do this at car auctions in many bigger cities where dealers often dump the cars they don't keep as well as others.
miu, I think the OP made his concern pretty clear about "new car dealer".
Futher concerns about buying and re-selling cars ...
1) there's a huge difference between finding a now-and-then "good deal" on your retail internet sources and having a continual supply of quality merchandise with an upside available to sustain a dealership sales volume. Do you honestly believe that you could find 10-20-30 (or more) cars per month that were "good deals" with enough upside remaining on each to sell through your dealership?
2) most states have clamped down on casual car dealers due to consumer fraud/liability/insurance/ethics/paperwork issues, as well as lost sales tax revenues from car transactions. For example, WY ... where I live ... used to allow a private individual to have 12 car transactions per year and be "private"; now it's only 3 transactions per year. More than that, and you are ... by law ... a "dealer", and must have a business location, insurance, bonding, and follow all the laws regarding title trail.
3) The dealer requirements are to protect the buying public from defective vehicles or fraud that are sold without accountability. So, more and more ... you simply can't be a "dealer" from your house on a casual basis. Zoning laws in many residential areas (as well as HOA's) prevent you from running a commercial business from your home. It's one thing if you're truly a private party selling a car you've owned for awhile for your personal use ... it's another situation entirely when you actively seek to buy/re-con/sell cars for an income without complying with motor vehicle dealer licensing laws. The states are aggressively shutting down those "casual dealers".
4) the days of dealing in cars with "open titles" in your inventory held for re-sale is long past in most states. Why? because the sales tax people want their due on each transfer of a vehicle, and the Motor Vehicle Dealers' Board wants control of cars sold on other than regular titles (to protect the public). Additionally, the Car Licensing department wants you to register/license/insure your cars in your name for public safety and revenue issues. The only way to avoid the registration issue is to truly be a car dealership, use dealer plates, and have correct dealer/business insurance.
They're trying to shut down those cars that are bought for re-sale, but driven on the streets without insurance on either no-plate or mis-used plates by a casual dealer.
5) We now have "S" titles, for example ... where a car has been "salvaged" for many possible reasons (theft recovery, physical damage, etc.). A lot of "great deal" cars are on "S" titles (or should be), or otherwise in pretty poor condition. Many people would not knowingly buy a car with an "S" title ... consider the huge number of cars coming out of flood damage situations ... many of these are seriously defective cars today, but still in the marketplace instead of at the crusher's. They may have safety, performance, and emissions issues which the general buying public cannot discern on looking at a well prepped and detailed car .... available at a back of retail market price.
As a pro repair shop, I, too, made a lot of money (years ago) taking a couple of wrecked/damaged cars and putting one back out on the street that was complete, correct, and proper (specialized in BMW's and MB's) ... but those days are long gone where the resulting car was titled on a regular title. I knew wholesalers who specialized in buying all the insurance salvage cars of these marques in several states for years, and then creating a serviceable car out of all the parts ... but again, that business is dead, long gone. "S" title cars don't sell very well in today's marketplace to knowledgeable buyers ... they have no manufacturer's warranty and aren't elegible for aftermarket warranties. Nor, in some states, be eligible for insurance. There's a lot of unknowns about these cars.
The bottom line is that the days of "casual" professional car dealings are rapidly coming to an end. With everybody from the EPA, DMV's, Sales Tax departments, manufacturer's liability issues, lenders, insurance/dealer bonding issues & public protection concerns all coming into play ....
I'd say "congratulations" on your success, miu, in finding and selling a car to your profit on a onesy-twosey basis, and the same for your friends who have apparently made a buck or two doing this. But there's a huge disconnect between doing this activity and sustaining a viable, profitable, dealership.
Oh ... and your friends with that car repair shop that turn a car or two now and then? In today's business/legal/DMV/insurance situation ... they're now a professional car dealership ... and need to have all of the overhead costs associated with that business met. If they don't, and your state DMV is on the ball ... they're looking at some rather prohibitive fines and loss of business license. Include in the list of people who would actively seek to shut them down the legitimate dealers who bear all those costs of a proper dealership and resent the intrusion upon their turf ....
The automotive world has moved on from the days of "horse trading" now and then. There's too much consumer/public liability at stake, too much tax revenue at stake ... and the states are aggressively seeking to regulate all of that to the benefit and protection of the car buying public.
Sidestep all those efforts and you might find yourself in very hot water with the regulating authorities in your state when the day comes that you've got a dissatisfied buyer (with cause or not) with a car you've sold who finds out that you've been acting as a dealer without proper business documentation and a legal place of business. It may get very expensive for you very quickly.
it's pretty sad but i'm afraid you've probably got this one spot on. just about every business today has this kind of govt intrusion where they've essentially made it nearly impossible for the little guy to get a foothold in the market. it's sad because the auto business is still as crooked as it's ever been with the exception that they've put a few small scoundrels out of business and a lot of honest traders too. while the regulators might argue that we're now safer when buying used cars, they never look at the unintended (or intended, depending on how conspiratorial you are) consequences, that being that we're paying much more of a premium for used vehicles.
to the op, unless you have big financial clout behind you, a new auto dealership will remain a pipe dream. if however you did have the moolah, i doubt whether a new dealership would be the best place to invest your cash taking into consideration the number of them which have recently gone under.
Hi, I would like to one day open my own buisness and would like to ask a question. Is starting a car dealer costly? I would like to start my own new car dealer, but I am not sure how hard it would be to do that nor how much it would cost. How much does it cost and what do I have to do in order to open a new car dealer? I need answers. Someone please help.
There is a huge ongoing consolidation occurring in the auto industry. A number of dealers have gone out of business with more to follow.
Personally, I think you are better off in other business ventures but if it's something you are really interested in then I would consider getting a job at one first.
You could pursue a dealership for that new Chinese car company that's starting to see in the US. It could be a wild success, as people are now preferring economy cars. Or it could become the next Yugo
my son owns a car leasing / new car buying business in long island and new jersey .
they act as a go between the dealers and both corporate and private clients . they work with lots of dealers to get new cars , either leases or buying .
it cost him a few hundred thousand to buy in to the business and become a partner and he got few existing customers . that is what it cost to be a partner in the business and the services they offer . he is bringing in all his own accounts and now has some biggies .
they provide all kinds of services for their customers like they make all your service appointments , pick up your car at work or home and leave a loaner . they have people get your car to you when it is ready .
they provide all services like free inspections and they come to you to make the deal on your car .
when you trade a car in , rather then give you a wholesale price they sell the car on consignment on their lot and give you 2/3's of the additional money they receive selling it retail .
they have been doing very very well but it is a very cash heavy business .
my son's partners wife owns a toyota dealership and that takes a ton of dough .
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