How to Open a Dealership


Owning a dealership allows you to manage various new and used automobiles. This venture can be a rewarding and profitable experience. However, it's a business that requires a large amount of time securing start-up capital, building an inventory and making a profit. Most dealerships are open 6 days a week for 12 or more hours a day. Competition is fierce in this industry. You're more likely to be successful if you have a business plan, find reliable investors and obtain the necessary permits.

Write a detailed business plan for your dealership. A business plan is necessary if you plan on applying for a loan from a bank or investors. The business plan should outline your company's long-term goals, your corporate structure and how you plan to market your services. It should cover start-up costs and monthly operating expenses.

Contact your state's department of motor vehicles. State regulations vary in each state, but most require individuals to obtain a license to open a dealership. Typically, you must pass a written exam before you can receive your license.

Register your dealership with your Secretary of State's office. Hire an attorney to assist you in this process if needed. If you hire employees, you need to file an application for an employment identification number (EIN) from the IRS.

Lease or purchase a location for your dealership. Pick an empty lot with commercially zoned areas and high traffic. Obtain the necessary permits if your location is not already zoned for an automobile dealership.

Establish financing for your dealership. Generally, the start-up costs for a dealership is large. Therefore, consider securing financing from a combination of bank loans, investors and grants.

Purchase your automobiles through a dealers auction or establish a professional relationship with a car manufacturer. In addition, establish a relationship with insurance companies and banks to allow your customers to purchase or finance cars from your dealership.

Hire a sales team and mechanics to work on-site at your dealership. Market and advertise your dealership through television ads, radio spots and the newspaper. Offer incentives such as discounted oil changes to new customers that visit your dealership. Launch a website that provides information about your dealership and allows customers to browse your inventory online.

Tips & Warnings

  • Work with a certified public accountant to assure that all your taxes, sales figures and expenses are well calculated.
  • You're less likely to be successful if you open a dealership in a poor area that is already over saturated with other dealerships.

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