Start-up Luxury and Near Exotic Car Dealership

[archytype]

:coolgleamA: My partner and I have a passion for cars and want to be business owners of a near exotic/luxury used car dealership.
I plan to quit working in several months and using 100k to startup this luxury used car business, the first year or so the business is only required to break even so long as it is growing. Once the business takes liftoff my partner will also quit his lucrative day job to also run the company.

I have checked out the local competition, my city's market seems to have sufficient gap. I plan to start-up by leasing a warehouse near the airport, advertising nationally with a marketed website, and banking on internet sales.

I have no idea how I can start this business with only 100k. My understanding is that a moderate dealership of 40 luxury used cars would require 350k startup and a 600k floorplan. A floorplan is near impossible to get without 2 years ownership success in the field.

Even if I spend all my 100k savings I can only buy 5-7 luxury highly salable cars, and to make profit to start out I'll need to sell them all within a month and can assume that after overhead, etc I'll only make 1k per car. How the heck am I ever going to quickly grow this business to where I can yield a profitable business? I understand that a lot of 35-40 used cars will make about 100k for the owner, and 150 luxury used cars will yield a successful owner 300k.

Does anyone have dealership experience and can offer advice?

 

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[awesom-o]

My partner and I have a passion for cars and want to be business owners of a near exotic/luxury used car dealership.

The market doesn't give a rat's a$$ what you want or your 'passion'. Sounds more like this is something you want to do rather than the market demands .

Even if I spend all my 100k savings I can only buy 5-7 luxury highly salable cars, and to make profit to start out I'll need to sell them all within a month and can assume that after overhead, etc I'll only make 1k per car. How the heck am I ever going to quickly grow this business to where I can yield a profitable business?

:nonod:

Read the book come back and re-evaluate

 

[RBefort]

I don't know because I don't have experience. Is there a gap because there isn't a need for luxury cars/exotic cars in your area? I live in Kansas City, KS, and 1 mile from my house is the only and largest upper level luxury/somewhat exotic dealership (they don't sell lambos and such because it's KS lol). They sell high end Mercedes, Range rovers, Porches, Audis, etc. All of the rest of the market is dominated by a few large players who have built a dealership for every major make of automobile. Name is Aristocrat Motors, if you want to Google. maybe you can contact them or someone like them and get some more info? Exotic cars has a very small market, and most have built reps with several high end dealerships already, I imagine. Not to say you can't earn their business or create your own, just something to think about. I can't see this business growing "quickly." Going to take awhile. Would almost be better not going the whole formal route and start by getting access to dealer auctions and start flipping cars or really really small. Keep us updated

 

[archytype]

It's a huge city and market (not wanting to reveal too much location specifics) with room for this business, and there are many people who want luxury /high line cars I'm not worried. I've bought, drove, and eventually sold a few high end cars to the highest local bidder and have seen the competition move cars rather quickly.

The people I prefer to sell too are nationally based and would fly to me b/c I'd have the lowest price, they have sufficient income but still want a bargain for a well kept luxury car. The Aristocrat motors suggestion you gave me I would not consider competition b/c their strength is selling new cars and they have high overhead and have to sell their used cars for too much to flip quickly, plus their inventory is crap.

Anyone have any knowledge in this area?

We currently make 400k yearly but can only save 100k/year extra each year. When I quit working to start this venture our ability to save will be drastically reduced so I need to make sure it's can break even to start.

I am currently talking with a similar start-up dealership owner nearby that recently failed to take in their lessons learned. With the market wiped from the recession seems a good time to emerge since people are spending money again. The Aristocrat motors

 

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[DrkSide]

My partner and I have a passion for cars and want to be business owners of a near exotic/luxury used car dealership.

I have to agree with awesom-o, you need to read the book and then you will realize that you need to look at what the market needs and wants. Remember, it is about your customers not you.

It's a huge city and market (not wanting to reveal too much location specifics) with room for this business, and there are many people who want luxury /high line cars I'm not worried. I've bought, drove, and eventually sold a few high end cars to the highest local bidder and have seen the competition move cars rather quickly.

How do you know there are many people who want luxury/high end cars? Just because you have bought and sold a few cars does not make you an expert and just because the competition is doing it doesn't mean that you can. What are you going to do better than them?

We currently make 400k yearly but can only save 100k/year extra each year. When I quit working to start this venture our ability to save will be drastically reduced so I need to make sure it's can break even to start.

Something is not right here. You spend 75% of your income? On what? If you are very serious about this you are going to need to cut that number and I would assume that there is alot of unnecessary spending in that figure.

 

[1PercentStreet]

LOL, you'll need a lot more than $100k to start a dealership.

You'll need millions to even start a Chevy/Ford/Toyota dealership.


100k doesn't buy 7 luxury cars.

 

[KeonTheGreat]

What's your definition of luxury? At 100k you MIGHT be about to get about 5 Hondas.

 

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[psaco131]

Start small, reinvest profits and slowly build your inventory, THEN you get a building.

 

[Ãœbertreffen]

I've not met one person who has an issue buying luxury/high-end exotics out of state. Cars are shipped across the USA all day long. Just a thought to consider. I wouldn't necessarily limit yourself locally.

If you're going the used route I would look into try selling a few cars at first. Even that can be a PITA if you want your dealer license. Depending on your state it can require you to have a building with glass fronts, parking space, a mechanic shop, office space, money upfront and other regulations required. This is when you could get in with a dealership or someone who has their dealer license. Money can still be made without one but you're just limiting your options. For awhile there, many cars were going higher at auction than at private sale. Cash for clunkers years ago limited the supply of used cars and shot prices up.

I would also try to find the same type of cars that you can continuously sell. Find your specialty. Not something you have to limit yourself to but you could be the guy to get X cars from because you always carry used inventory of fine examples. I know plenty that do this and do very well with it. Some even get a "grocery list" of what their clientele are looking for. Search and find one at auction. Snag it up and ship it out.

There's red tape but I'd look at exporting as well. It depends on the country. Unfortunately there are some big dogs in this as well who pay off to get around red tape. There's still ways. Weird enough we shipped a 997 TT to Germany. A G55 AMG to Dubai. It happens even if you sell through US channel markets.



- Devin

 

[wade1mil]

Does anyone have dealership experience and can offer advice?

I've been around dealerships my entire life.

Making yourself different is good if you are going strictly used. No way in hell you will get new. I want to say my dad put in $50k toward a Chevy dealership back in the mid 2000's and had less than 5% ownership.

If you're going used, and you plan on making $1k per car, you don't belong in the business. Most new car brands have a small profit of $200-1,500 depending on kickback. All car salesmen want to sell used cars because there is a chance they can get a commission on $5-10k profit. They make a mini on new cars, usually a $200 commission. With a $10k profit, they can make $2,500+ with spiffs.

Having said that, I agree with the first person that responded. Nobody in this world, including your partner, cares what you want or what your passions are. Only you do. If there is a need in your market, then great, but it will only work if this is the case. It will work because of what they want, not because it's your passion.

ALSO you might look into this, but I've bought a few cars in the $30k+ range, which it sounds like the price point you'd be targeting. I won't buy a used car for that much money. You MIGHT find that people that buy Lexus, Mercedes, BMW in your area buy them new, and may not want them used. If you're selling to the new buyers, you won't make sales. If you're selling to the "I want a BMW because it makes me look rich" crowd, they might not be willing to pay $30k, they still want a "$80k (back when it was new) car" for $8k and no down payment.

All that, plus the fact that I would never work in that business. My dad would kick my a$$ if I tried

 

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[archytype]

I have to agree with awesom-o, you need to read the book and then you will realize that you need to look at what the market needs and wants. Remember, it is about your customers not you.

How do you know there are many people who want luxury/high end cars? Just because you have bought and sold a few cars does not make you an expert and just because the competition is doing it doesn't mean that you can. What are you going to do better than them?

Something is not right here. You spend 75% of your income? On what? If you are very serious about this you are going to need to cut that number and I would assume that there is alot of unnecessary spending in that figure.

That's before taxes, I have expenses is all I will say. After next year saving abit more will be achievable.

I'm not concerned about the business model, I'm concerned about the facts.

Who here has car dealership experience? Specifically purchasing used luxury cars for significantly less than retail?

 

[archytype]

About the passion part, that's why I want to go into the industry but would expect the customers to purchase because of the value. I know my market and am not concerned about having buyers, I'm trying to figure out how to get rock bottom prices on these used cars so I can undercut the competition. Does anyone have experience in the purchasing of luxury used cars?

 

[Laverdure]

all I can say here is ... you want to go north while you are going south ..

you need to target a market you love and THEN FIND THE product or service that will feel their need... never fall in love with a product or service otherwise you might lose a lot of money since there might not be a need for this market

 

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[biophase]

:coolgleamA: My partner and I have a passion for cars and want to be business owners of a near exotic/luxury used car dealership.
I plan to quit working in several months and using 100k to startup this luxury used car business, the first year or so the business is only required to break even so long as it is growing. Once the business takes liftoff my partner will also quit his lucrative day job to also run the company.

I have checked out the local competition, my city's market seems to have sufficient gap. I plan to start-up by leasing a warehouse near the airport, advertising nationally with a marketed website, and banking on internet sales.

Have you been to Luxury Motors? They were pretty small 10-15 years ago. What do you consider a luxury car, are we talking 3 series beamers or SL55s?

The local exotic used car places here rent fairly small showrooms and have 15-20 cars in them. I don't think you need a huge space, I'd start out with a few cars. From what I've seen these places get many repeat business from guys who like to buy cars every few months.

 

[archytype]

Have you been to Luxury Motors? They were pretty small 10-15 years ago. What do you consider a luxury car, are we talking 3 series beamers or SL55s?

The local exotic used car places here rent fairly small showrooms and have 15-20 cars in them. I don't think you need a huge space, I'd start out with a few cars. From what I've seen these places get many repeat business from guys who like to buy cars every few months.

I'm not in your city so don't know Luxury Motors, but we have similar setups in my city on a larger scale though.

Your question is relative because you can get an 07' SL500 for the price of a '10 3 series. I would sell 3-series so long as it would draw national attention and draw locals in. I'll have to test the waters to see how well exotics will sell vs. luxury sedans vs. luxury suvs. If nothing else having a trophy Bentley and an exotic in inventory will bring up the cache. I can also sell my own luxury vehicles to start and can fluff alittle inventory with consignment to appear busier.

Can you reference any specific local exotic dealerships with small inventory, it seems like having around 50 cars per dealership is most typical.

 

[Genium]

Have you been to Luxury Motors? They were pretty small 10-15 years ago. What do you consider a luxury car, are we talking 3 series beamers or SL55s?

The local exotic used car places here rent fairly small showrooms and have 15-20 cars in them. I don't think you need a huge space, I'd start out with a few cars. From what I've seen these places get many repeat business from guys who like to buy cars every few months.

Ahh I know about Luxor Autos, I've been there a few times, in Old Town Scottsdale.. some pretty awesome cars Gotta love Scottsdale. Motivation everyday

Maybe do some research into what luxury cars are selling good in your area? And then if you can compete against private parties selling on craigslist. I know some people sell their cars for pretty cheap sometimes

 

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[biophase]

I'm not in your city so don't know Luxury Motors, but we have similar setups in my city on a larger scale though.

Your question is relative because you can get an 07' SL500 for the price of a '10 3 series. I would sell 3-series so long as it would draw national attention and draw locals in. I'll have to test the waters to see how well exotics will sell vs. luxury sedans vs. luxury suvs. If nothing else having a trophy Bentley and an exotic in inventory will bring up the cache. I can also sell my own luxury vehicles to start and can fluff alittle inventory with consignment to appear busier.

Can you reference any specific local exotic dealerships with small inventory, it seems like having around 50 cars per dealership is most typical.

Luxury Motors is in Chicago. My friend bought a Ferrari and M3 there years ago. I've been there many times. Do you know who the high end exotic dealers are in your area? What about Gold Coast or Chicago Motor Cars? How many have you been to? I haven't lived in Chicago for almost 10 years and I still remember the luxury car dealers I used to go to. I'm curious as to where you see the gap in the market in Chicago.

I know that when I was looking for my Ferrari that I visited several very small dealerships that had a handful of cars. There's no reason that you need a specific number of cars to get started.

If I'm looking for a Ferrari, I don't care if your dealership has 10 cars or 100 cars, I just want to see the one I want. Your market demographic is very specific. It's not like Carmax where someone looking for a Jeep can be swayed to buying an Explorer. Someone looking for an M3 isn't going to leave with an E55 so having a selection doesn't matter.

I don't understand what kind of dealership you are trying to be. Are you going to be the type that would have a used Audi R8 or used SL500s?

 

[yulthebull]

I run a successful luxury and exotics dealership in an extreamly affluent city. I would suggest to you that you first slow down in order to speed up. Your $100k won't last you very long once you get yourself office space and the expenses that come with that. This is not factoring in flooring costs on the vehicles themselves. Also, you won't be able to establish yourself with any lending instructions or banks and most customers in that field will shy away if you can't offer financing.

Our marketing budget alone on a monthly basis is just shy of $30-40k per month. The biggest dilemma you will face is lack of trust in this niche market. Buyers in this level will go with the dealership that has a reputation of selling quality vehicles because they have the means to spend a couple thousand more if necessary.

If I was in your shoes I would hold onto your dream of owning and operating a successful exotic and luxury dealership as your big vision, but start small. You don't need a dealership to start. Learn how to acquire cars first and sell them at a small level. Start with 5 cars in medium range price points and work your way up and your capital. It will be hard work but I would rather save you your $100k. If you want to be a player and make a small dent in this field you will need at least $1M in liquid cash and years of proven experience to get set up with any lender worth having as a partner.

Good luck. Start now if you are serious and prove to yourself in a small scale that you can do this.

 

[Scot]

I run a successful luxury and exotics dealership in an extreamly affluent city. I would suggest to you that you first slow down in order to speed up. Your $100k won't last you very long once you get yourself office space and the expenses that come with that. This is not factoring in flooring costs on the vehicles themselves. Also, you won't be able to establish yourself with any lending instructions or banks and most customers in that field will shy away if you can't offer financing.

Our marketing budget alone on a monthly basis is just shy of $30-40k per month. The biggest dilemma you will face is lack of trust in this niche market. Buyers in this level will go with the dealership that has a reputation of selling quality vehicles because they have the means to spend a couple thousand more if necessary.

If I was in your shoes I would hold onto your dream of owning and operating a successful exotic and luxury dealership as your big vision, but start small. You don't need a dealership to start. Learn how to acquire cars first and sell them at a small level. Start with 5 cars in medium range price points and work your way up and your capital. It will be hard work but I would rather save you your $100k. If you want to be a player and make a small dent in this field you will need at least $1M in liquid cash and years of proven experience to get set up with any lender worth having as a partner.

Good luck. Start now if you are serious and prove to yourself in a small scale that you can do this.

No offense man, but the last post was 4 years ago...

 

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[jon.a]

archytype was last seen:

Apr 3, 2013

 

[yulthebull]

archytype was last seen:

Apr 3, 2013

There is still relevance in this post today. People constantly ask the same question believing that the process is easy based on what they see on social media.

I didn't bother to look at the date as this post came up in my suggested feed to my previously replied post.

 

[Roli]

REDACTED - May cause offence

 

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[Scot]

REDACTED - May cause offence

You're no fun.

There is still relevance in this post today. People constantly ask the same question believing that the process is easy based on what they see on social media.

I didn't bother to look at the date as this post came up in my suggested feed to my previously replied post.

The threads still relevant, but pulling. A Gary V and motivating someone to "just start" even though they haven't been seen in 4 years, not really.

 

[Roli]

You're no fun.

I know But I suddenly thought that my little joke wouldn't go down with the person in question, and they hold quite a lot of sway in these here parts.

Wow! I think I may even be learning diplomacy, all by accident!

 

[jon.a]

I know But I suddenly thought that my little joke wouldn't go down with the person in question, and they hold quite a lot of sway in these here parts.

Wow! I think I may even be learning diplomacy, all by accident!

If it was me and it's a joke, go for it

 

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[Roli]

If it was me and it's a joke, go for it

No it wasn't you; and I'm pretty sure I would have left it if it was, I think I have gauged your sense-of-humour-ometer quite well

 

[jon.a]

No it wasn't you; and I'm pretty sure I would have left it if it was, I think I have gauged your sense-of-humour-ometer quite well

Well then, it must be @biophase.
Don't be a wimp, unless of course it was way out of line.

 

[Roli]

Well then, it must be @biophase.
Don't be a wimp, unless of course it was way out of line.

OK, I don't think it was out of line...

It's not going to be funny now it's had so much build up.

I simply said that Biophase was a lot mellower back then, he would have torn the OP a new one for asking that same question today

 

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[yulthebull]

You're no fun.



The threads still relevant, but pulling. A Gary V and motivating someone to "just start" even though they haven't been seen in 4 years, not really.

Your an absolute joke. Arguing for the sake of arguing instead of knowing when to shut your mouth. You read one book by Gary V and now you think everyone is being motivational.

I gave real advise. Stop being a comment controller and get off of this thread unless you have anything to contribute.

 

[Scot]

Your an absolute joke. Arguing for the sake of arguing instead of knowing when to shut your mouth. You read one book by Gary V and now you think everyone is being motivational.

I gave real advise. Stop being a comment controller and get off of this thread unless you have anything to contribute.

My intention was not to be a dick, but rereading my comment, I was out of line. My apologies for that.