How to Run a Profitable Used Car Business


At nearly $37,000, the average price for a new car is higher than ever. Many people are finding much more cost-effective options in the used car market.

While few things compare to that new car smell, there are many advantages to buying a used car and the demand isn’t slowing down. For those looking to start a business, it can be an enticing option as part of your business expenses.

The car business is very competitive, but worry not! With the right planning and resources, it’s very well possible to succeed. Keep reading for tips and advice on how to run a profitable used car business.

Develop a Business Plan

The first step before starting anything is to obtain your car dealer license.

Now, before you get to the fun part of deciding which cars to sell, you must do your homework. Determine how large your fleet will be, the number of employees, and if you’ll specialize in any type of cars.

With the amount of revenue involved, develop a used car business plan that includes bookkeeping tasks. This includes setting up a payroll and to make W2 forms. If you hire sales associates to help you move cars off the lot to prospective customers, decide if you’ll pay them hourly, solely commission, or both.

Attend Auctions

Once you’re licensed and ready to hit the ground running with a business plan you can begin building your inventory. Auto auctions are one of the best resources for used cars.

These auctions are typically exclusive to licensed dealers and feature all types of vehicles from cars to motorcycles. Attending for the first time can be exciting, but bid responsibly. Research cars you’re interested in and always test drive if you have the opportunity.

In recent years the Internet has made auto auctions accessible for bidding on used cars. Sites like eBay allow for people even without a car dealer license to bid from around the world. Always use good judgment when selecting your fleet.

Find a Trustworthy Mechanic

Many high-end car businesses like dealerships employ their own service department with licensed mechanics. This isn’t a necessity to run a used car business, but you should have a cordial relationship with one or more local mechanics.

The reasoning is twofold.

Whether it’s an oil change or replacing an engine, many of the used cars you obtain before selling to make a profit will need some sort of maintenance. You’ll need a resource you can trust

Additionally, having a trustworthy mechanic is helpful for prospective buyers. Someone considering purchasing a used car may want an inspection beforehand. This is a perfect opportunity to recommend your mechanic to make the process seamless.

Starting a Used Car Business

Selling used cars takes time, planning, and patience. It can take several months to make a profit.

As these tips will help steer you in the right direction for generating revenue, there are important steps still required. This includes having proper business licenses and insurance coverages depending on the size of your operation. You’ll also need to determine the type of warranty you’ll offer on each used vehicle, if any.

Interested in more articles about the used car business? Check out the rest of our blog for more tips on ridesharing, transportation, and other car facts.

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How to Run a Profitable Used Car Business