How to Open a Car Dealership

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The requirements to open a car dealership vary by state. Success is possible if you do your homework and comply with laws and regulations. Whether you plan to open a used or a new car dealership, take the following steps into consideration.

  • Contact your state's department of motor vehicles (DMV) to inquire about the requirements to open a car dealership. Dealers must obtain state authorization before opening, usually by passing a multiple choice test. Most states issue a temporary certification that allows you to apply for a permanent dealership license.

  • Select a business location that is not in the immediate vicinity of residential properties. Abide by all local zoning restrictions. Secure a building and lot that is big enough to display a large number of vehicles.

  • Set up the building. Obtain supplies and furniture and decorate the interior. Set up utilities and phone service. Create signs to display information such as name of the dealership, car models available and business hours.

  • Purchase inventory. If you are interested carrying specific new cars, contact the manufacturer to arrange an agreement. Obtain temporary license plates and vehicle identification numbers (VINs) by following your state's DMV regulations.

  • Generate a buyer's guide, disclosure agreement and related forms to use in sales transactions. Contact the state DMV to learn of any required stickers. Apply for car rejection/ approval stickers to use when a car has a serious defect and needs to be returned to the manufacturer.

  • Use innovative techniques to advertise your new car dealership. Promote the business through ads in newspapers and car magazines. Use local radio stations to publicize your dealership. Create incentives and highlight special marked down prices to attract buyers.

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