Do you want to know exactly how much it cost to start a used car dealership business? If YES, here is a detailed cost analysis for starting a used car dealership business and raising finance.

Used car dealership business as the name implies is all about selling used cars to willing buyers. Asides from the fact that the owners of used car dealership shops are known for selling used cars, they also go out of their way to source for sellers who want to sell their cars. They buy used cars at favorable price and then re–sell at a good price that guarantees profit for them. In a nutshell, they are in the business of buying and selling used cars.

Having provided you with a:

  1. Industry Overview
  2. Market Research and Feasibility
  3. Used Car Dealership Business Plan
  4. Used Car Dealership Name ideas
  5. Licenses and Permits
  6. Used Car Dealership Marketing Plan
  7. Cost of Starting a Used Car Dealership
  8. Marketing ideas & Strategies

We will consider how much it cost to start a grocery store from scratch including the operating costs.

One good thing about used car dealership business just like consignment business is that you can start this business without money and still make profit. This is so because you can convince people who are looking towards selling their used cars to drop it with you while you help them source for buyers and enter an agreement to make a certain percentage from the deal once you are able to sell off the car.

  • Industry Overview

The truth is that if you are trustworthy and dependable, it will be easier for people to trust you with their used cars and wait while you help them sell. If the deal pulls out, it will be a win–win situation for both parties. You will make your profit and the owner of the car will make money off his or her used car.  In other words, you would be automatically helping them get rid of the used car they do not want and in turn make your profit.

No doubt starting a used car dealership business can be interesting and at the same time rewarding if you situate your car dealership shop in a strategic location where you can easily attract people with low income who can’t afford brand new cars. The fact that fairly used cars are highly affordable and far cheaper that brand new cars make used car dealership business a thriving and profitable business.

One good thing about starting a used car dealership business is that if you are diligent enough and if you have good business/marketing strategies, you can build the business from just one outlet to numerous outlets across different cities in the United States of America.

Over and above, starting a used car dealership business just like starting any other business might not be entirely easy, but one thing is certain, it is a straight–forward business that can generate huge and steady profit if well positioned and properly managed.

People often think that starting this type of business does not require any professional skills; in as much as this is true, you would still need a good knowledge of automobiles, good business skills, bargaining skills and of course customer services skills if indeed you want to build a profitable business.

How Much Does It Cost to Start a Used Car Dealership?

When starting a used car dealership garage business, you just have to get your costing cum economic analysis right if your intention of building the business is to generate profit, grow the business and perhaps expand the business and start exporting used cars to other countries of the world.

When conducting costing and economic analysis for your used car garage business, you just have to critically examine these key factors; place, product, pricing and promotion. As a matter of fact, you would have to continue to review these key factors at regular intervals while running your used car dealership business. As a used car dealership garage owner, you just have to have a proper grasp of your competitive landscape if indeed you want to maximize profit and be in the front-line of the industry.

It is important to note that spare parts replacement cost is one of the most important factors contributing to the overall cost of a used car dealership garage business and should be considered as a major factor when carrying out your costing and economic analysis.

The cost analysis as it relates to starting a standard used car dealership business in the United States of America, Canada, United Kingdom, and Australia can be said to be almost the same except for few variations. For example, the cost of setting up a full-service state of the art car dealership garage facility which has the following; mini–car wash or car washing facility, mini auto repair, maintenance and servicing garage are same especially when bench–marked against the US Dollar.

For instance, if you live in the United Kingdom and you decide to import spare parts for your used cars that are put  up for sale from Japan, you will pay same price for these auto spare parts no matter the part of the world you live in, the only variation will be the cost of shipping the auto spare parts to your destination and perhaps the cost of fixing the auto spare parts.

Other factors that may be slightly different in terms of costing when it comes to starting a standard used car dealership business in any of the countries listed above are cost of labor, cost of transportation and logistics, local tax, insurance policies, business incorporation fee, rent/leasing amongst other factors.

Over and above, when it comes to starting a medium scale used car dealership company, you should be prepared to either rent or lease a standard and centralized garage facility with good human and vehicular traffic; this is going to be one of the areas where you are expected to spend the bulk of your start–up capital.

How Much Does It Cost to Start a Used Car Dealership in the United States?

These are the key expenses you are expected to make when starting a medium scale but standard used car dealership business in the United States of America;

  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, and Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  • Marketing promotion expenses for the grand opening of the used car dealership company in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, theft, workers’ compensation, auto insurance, and property casualty) coverage at a total premium – $30,400.
  • The cost for leasing a standard garage facility in a good and centralized location along a major road – $150,000
  • The cost for remodeling the facility – $100,000.
  • Other start-up expenses including stationery ($500) and phone and utility (gas, sewer, water and electric) deposits ($6,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
  • The cost for start-up inventory and the purchase of used cars – $500,000
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • The cost for the purchase of furniture and gadgets (telephone, fax machines, printing machines, computers, tables and chairs et al): $14,000.
  • The cost for building and hosting a website: $600
  • The cost for opening party: $8,000
  • Miscellaneous: $10,000

You will need an estimate of nine hundred and fifty thousand dollars ($950,000) to successfully set up a medium scale but standard used car dealership garage in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Starting a small scale but standard used car dealership garage business with minimal used cars that are put up for sale in the United States of America will cost about two hundred and fifty thousand dollars to five hundred thousand dollars ($250,000 to $500,000).

When it comes to starting a standard and large-scale used car dealership garage with several outlets in key cities in the United States of America, a used car garage that has the capacity to export used cars to other countries, and a company that has the intention of selling franchise, then you should look towards budgeting well over two million, five hundred thousand dollars ($2.5 million).

How Much Does It Cost to Start a Used Car Dealership in the UK?

These are the key expenses you are expected to make when starting a medium scale but standard used car dealership garage business in the United Kingdom;

  • The cost for remodeling the facility – £80,000.
  • The cost for leasing a standard car garage facility in good and centralize location along a major road – £205,000.
  • The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – £28,400.
  • The cost for hiring business consultant (including writing business plan) – £2,500.
  • Marketing promotion expenses for the grand opening of the used car dealership garage in the amount of £3,500 and as well as flyer printing (2,000 flyers at £0.04 per copy) for the total amount of £3,580.
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, and Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – £13,300.
  • In the United Kingdom, Online applications are usually registered within 24 hours and cost £12 (paid by debit or credit card or PayPal). Postal applications take 8 to 10 days and cost £40 (paid by check made out to ‘Companies House’). There’s a same day service costing £100.
  • Other start-up expenses including stationery (£300) and phone and utility (gas, sewer, water and electric) deposits (£1,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – £60,000.
  • The cost for start-up inventory and the purchase of used cars – £450,500.
  • The cost for store equipment (cash register, security, ventilation, signage) – £9,500.
  • The cost of purchase and installation of CCTVs: £4,500
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, fax machine, tables and chairs et al): £2,500.
  • The cost for building and hosting a website: £600
  • The cost for opening party – £6,300
  • Miscellaneous: £8,000

You will need an estimate of nine hundred and twenty thousand Pounds Sterling (£920,000) to successfully set up a medium scale but standard used car dealership garage in the United Kingdom. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Starting a small scale but standard used car dealership garage business with minimal used cars that are put up for sale in the United Kingdom will cost about two hundred and twenty thousand to four hundred and seventy thousand Pounds Sterling (£220,000 to £470,000).

When it comes to starting a standard and large scale used car dealership garage with several outlets in key cities in the United Kingdom, a used car garage that has the capacity to export used cars to other countries, and a company that has the intention of selling franchise, then you should look towards budgeting well over two million  British Pounds Sterling (£2 million).

How Much Does It Cost to Start a Used Car Dealership in Canada?

These are the key expenses you are expected to make when starting a medium scale but standard used car dealership garage business in Canada;

  • For federal incorporation of business in Canada, the cost to incorporate is $200 if filed online through Corporations Canada’s online Filing Centre ($250 if filed through other means).
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  • Marketing promotion expenses for the grand opening of the used car dealership company in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, theft, workers’ compensation, auto insurance, and property casualty) coverage at a total premium – $30,400.
  • The cost for leasing a standard garage facility in a good and centralized location along a major road – $150,000
  • The cost for remodeling the facility – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits ($6,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
  • The cost for start-up inventory and the purchase of used cars – $500,000
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • The cost for the purchase of furniture and gadgets (telephone, fax machines, printing machines, computers, tables and chairs et al): $14,000.
  • The cost for building and hosting a website: $600
  • The cost for opening party: $8,000
  • Miscellaneous: $10,000

You will need an estimate of nine hundred and fifty thousand dollars ($950,000CAD) to successfully set up a medium scale but standard used car dealership garage in Canada. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Starting a small scale but standard used car dealership garage business with minimal used cars that are put up for sale in Canada will cost about two hundred and fifty thousand dollars to five hundred thousand dollars ($250,000CAD to $500,000CAD).

When it comes to starting a standard and large scale used car dealership garage with several outlets in key cities in Canada, a used car garage that has the capacity to export used cars to other countries, and a company that has the intention of selling franchise, then you should look towards budgeting well over two million, five hundred thousand dollars ($2.5 millionCAD).

How Much Does It Cost to Start a Used Car Dealership in Australia?

These are the key expenses you are expected to make when starting a medium scale but standard used car dealership garage business in Australia;

  • In Australia, the fees to register your business name with ASIC include: $34 for 1 year. $80 for 3 years.
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  • Marketing promotion expenses for the grand opening of the used car dealership company in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, theft, workers’ compensation, auto insurance, and property casualty) coverage at a total premium – $30,400.
  • The cost for leasing a standard garage facility in a good and centralized location along a major road – $150,000
  • The cost for remodeling the facility – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits ($6,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
  • The cost for start-up inventory and the purchase of used cars – $500,000
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • The cost for the purchase of furniture and gadgets (Telephone, fax machines, printing machines, computers, tables and chairs et al): $14,000.
  • The cost for building and hosting a website: $600
  • The cost for opening party: $8,000
  • Miscellaneous: $10,000

You will need an estimate of nine hundred and fifty thousand dollars (AUD$950,000) to successfully set up a medium scale but standard used car dealership garage in Australia. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Starting a small scale but standard used car dealership garage business with minimal used cars that are put up for sale in Australia will cost about two hundred and fifty thousand dollars to five hundred thousand dollars (AUD$250,000 to AUD$500,000).

When it comes to starting a standard and large scale used car dealership garage with several outlets in key cities in Australia, a used car garage that has the capacity to export used cars to other countries, and a company that has the intention of selling franchise, then you should look towards budgeting well over two million, five hundred thousand dollars (AUD$2.5 million).

Estimating Start-Up Cost for Used Car Dealership Garage Business Based on the following factors;

  • Specific Location

In starting a used car dealership business, it is very important to be strategic with the location you choose to pitch your business tent. It is important to note that used car dealership shops may likely not thrive in highbrow areas of the society, but rather in the lower class/middle class suburbs of the city.

So, it is needful that you locate your used car dealership shop where the middle and lower class of the society live. This is because besides getting loads of people that will patronize you in this area, you would also get facility at a very cheaper rate compared to what you might get in high brow areas.

  • Staff/Manpower

When it comes to starting a standard used car dealership garage business on a large scale, you will need the services of the following professionals;

  • Car Garage Manager (Owner)
  • Accountant/Cashier
  • Merchandise Manager
  • Marketing and Sales Executive
  • Cleaners/Car washman
  • Auto technician (Optional since it can be contracted)
  • Security Guard

Can a Used Car Dealership Business be Bootstrapped on a Lean Budget Right from Home?

If you a looking for a small scale business that you can be successfully bootstrapped on lean a budget right from your home, then you should consider starting a used car dealership business. This is possible when you have a good network of people who have used cars that they want to sell.

All you have to do is advertise the used cars on your website/the internet and look for ways to pull traffic to your website. Besides, there are several platforms on the internet that you can advertise used cars for free. So also, if you have enough space in front of your yard, you can pack the used cars and tag them for sale. But you would have to confirm from your local council if this is allowed.

The challenge here is that you must be ready to take on more than half of the available roles in the business. You should be able to serve as the manager, accountant, car wash man, sales and marketing officer et al.

How Much Does It Cost to Buy a Used Car Dealership Franchise?

In the United States of America, the Average Cost of Purchasing a Used Car Dealership Franchise is $50,000. Examples of 3 Well – Known Used Car Dealership Franchising Companies in the United States of America are;

  • Thrifty Car Sales–Franchising Company
  • The Payless Way–Franchising Company
  • com‎®

In the United Kingdom, the Average Cost of Purchasing a Used Car Dealership Franchise is £60,000. Examples of 3 Well – Known Used Car Dealership Franchising Companies in the United Kingdom are;

  • Macklin Motors-Franchise
  • Hartwell: Car Dealer-Franchise
  • Auto Trader

In Canada, the Average Cost of Purchasing a Used Car Dealership Franchise is $50,000 (Canadian Dollar). Examples of 3 Well – Known Used Car Dealership Franchising Companies in Canada are;

  • AutoCanada
  • com ®
  • Car Nation Canada

In Australia, the Average Cost of Purchasing a Used Car Dealership Franchise is AUD$50,000. Examples of 3 Well – Known Used Car Dealership Franchising Companies in Australia are;

  • AUTOrecruit Australia
  • AHG – Dealerships – Automotive Holdings Group Limited
  • Peter Warren Group – Australia