How to Start a Car Dealership

When deciding what kind of business you should build, it’s best to start by following your passion. For instance, if you are especially fond of automobiles, you can build a car dealership business.

According to IBIS World, the car dealership grows by 4.3% every year. The industry offers independent financing options that have improved over better economic conditions. The high demand for new and used cars gives you an opportunity to grow productively. However, to run this kind of business, you need something more than passion. You need knowledge and skills. Turbo Marketing the secrets to a successful car dealership here. If you are really determined to enter the market, follow the steps below:

Step 1: Assess your customers’ needs.

The first step in any business venture is to identify how high the demand for your product is. To do this, you might need to conduct a survey. How many people in your area owns a car? How many cars are sold annually? What kind of cars are purchased most?

While doing this, you might also want to evaluate your competition. How many car dealers are in your area? How many cars do they sell in a year? What do you think your edge will be when you enter the market?

The most ideal situation is where the demand is high and the competition is low. Carefully study the risks of the car dealership business before you go into it.

Step 2: Plan your market.

What kind of car dealership will you open? The most successful dealerships are franchises of car companies. This is the safest option for you. If you enter into an agreement with a popular car brand, it will be easier for you to sell your cars as you will be able to build your credibility right away. Choose which brand you want to work with depending on the demand of your target customers.

Once you’ve decided which brand you’ll be signing the contract with, decide whether you’ll be selling used, new, or both cars. Again, your decision will largely depend on your target customers.

Step 3: Finance your business.

You can’t build your business without financing. A typical car dealership business costs millions of dollars. Do you have such an amount? If not, then you have several options. You can operate a franchise that allows you to pay annual fees. You can also get a bank loan. Lastly, you can find investors who are willing to put their money into your business. Just be sure to draw detailed financial projections. How much do you think your car dealership business will earn every month? When can you pay your loans? What is your plan in the case that your business fails?

Step 4: Set up your dealership.

Every country and state have different requirements when it comes to opening a car dealership. You will have to obtain a license to sell cars and get a permit to build your business in the city. Gather all the forms you have to fill and apply to the Department of Trade and Industry. Once your application is approved, you can start running your business.


In just four steps, you can set up your own car dealership business. However, each step is not easy. You need to be smart in making your choices so that you will not lose money and waste time.

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