Does anyone own a used car lot?

Question

What types of profits can you expect?

How much money do you need to start?

What types of licenses and certificates do you need?

Answer 1

It is a very expensive business to get started in. Forget about inventory for just a minute. I will tell you my fixed expenses for 2008: Bond - $7800, Insurance (three dealer plates) - $14,400 - land rent - $36,000 - license renewal $600, Tax Deposit $2900. utilities - est, $7200

before I sold the first car of 2008, I was staring down the barrel of abot $70,000 in expenses to cover. And that is before inventory costs! IN order to make that back, I know I need to make over $10,000/month in profit to pay the bills, and make myself about $40,000 per year.

There are companies called 'flooring companies' that will help with inventory costs - they are financiers for dealers.  They loan the money to buy the car, when it sells you pay them back.  You have 90 days to pay regardless of whether it sells or not.  Of course they get interest on their loans as well - DSC, AFC and MAFS are the largest flooring companies.  So you dont have to have the whole $200K up front.  Just have it in 90 days or you will come to work on an empty lot one day.  No pressure.

The first thing you should do is strongly consider the wisdom of getting yourself in the business. If you have no experience in the car business, then its not the smart move. And I know you have no experience as a dealer. Its very hard work it takes a lot of time and energy, and knowledge of the business, business practices, and the marketplace.

You will need a surety bond, insurance, credit references, business license, Tax ID, place of business, sign, inventory, and anythign else the DMV requires.

Answer 2

After a few years, if successful you can make a nice living. You will need availablity of at least $200,000 and that won't go far. Most used lots of any size carry an inventory of $300,000 - $1,000,000. Licenses and building requirements vary by state/county/municipality. Go work for a dealer if you have no experience, which I am assuming you don't or you would already know the answer!

Also keep in mind, your 'profits' are dictated by the market. If you were a dealer specializing in trucks, your inventory decresed by nearly $5000 per truck almost overnight with the rise in gas prices. This is not a business for an amateur, or someone without huge balls!