How to Buy a Car Dealership

So – you wanna be a car dealer. The first thing you do is put away your gold and checkered sports jacket – and dump those white tassel shoes. And while you’re at it, leave Spot at home. Today’s new car dealers are high-powered local business owners who generate jobs and have an amazing amount of clout, locally and nationally. Just ask President Obama about how car dealers were able to avoid his recent finance regulatory bill. Indeed, a car dealer runs a multi-faceted organization that includes sales, finance, service and marketing.

Anything less and you’re destined to stand on your head.

Difficulty: In this market, really hard
Time Required: Ongoing

Here’s How:
1. Get Funding. It seems silly to start here, but it’s vital: As a car dealer you’ll need funding – and lots of it – to survive, especially in a market where sales are down approximately 4 million from the high water mark just a few years ago. The product you’re selling ain’t cheap, either, nor is the insurance or the employees. Don’t forget that automakers require you to purchase your cars before you sell them, and most if not all have requirements around your dealer property – rules that will cost you millions of dollars with which to comply.

2. Do you Homework. Which brand of motor car do you plan to sell? Will you open a single brand car store, or one with multiple brands? One automaker? Import or domestic? Do some heavy research into your local demographics, and get to know your community by the cars people prefer. For example, southern California has long been known as a super strong import market, but with key improvements to domestic cars such as Ford, it may be a good idea to try a popular alternative.

3. Know your Territory. Typically, automakers will hand dealers a territory mapped to their store’s location – say by zip code. You may think, at first glance, that this territory is yours for the taking – but not so fast. In metro areas, other dealers are sure to overlap into your area, and that means that they’ll also get leads. Try to get a feel for where your area would be, and how many other dealerships are playing in the same sandbox. And don’t forget that customers have a bad habit of going where they want to go, not where they’re supposed to. And that’s not all: make sure you’re selling the right car in the right area, and that there are enough consistent car buyers in your area to keep the lights on and food on the table.

4. Get to know your network: Find out how many dealers are selling your automaker’s cars, and whether it’s too many – or not enough. Along with this, you can learn about what kind of direct support you should expect from the automaker, such as direct incentives or other percentage cash rebates.

4. Get your licenses. Go to your state DMV, fill out the proper forms and submit. When they come back incomplete, do it again and try to be patient. While you’re at it, check into zoning requirements in your area, required city paperwork and also be sure to get your car salesman’s license.

5. Join the Club. There are a few very powerful dealer lobbying organizations with great resources for you to tap; get involved and stay involved.

Tips:
1. Be sure you understand your automaker’s rules around marketing and advertising. Not knowing whether you can live with the rules they impose could wind up costing you in money and lost opportunity.

2. Invest in the Internet. This is where people are shopping nowadays, and automakers are funneling plenty of valuable leads to their dealers via media placements and websites. Be sure your staff is savvy and ready to convert digital leads into actual car sales, and make sure that you’re ready to invest heavily in online media and search. It’s simply your best billboard.

3. If you have the money, consider hiring your own ad agency to work with the automaker’s. This should improve your advertising and give you time to do other, more important things – like sell cars.

What You Need:
Patience
Money
Partners with money
Licenses
Membership to key organizations

Required Information:
NADA
NIADA

Related Articles:
Edmunds: Confessions of a Car Salesman
eHow:: How to be a Car Dealer
GM: Dealer holding program

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