Anybody here buy/sell cars?

mcc · 08-26-07, 03:41

Well, I just had an interesting opportunity come up. I came across a guy that has a very small car lot. Actually, he doesn't even use it from what I can tell, but in our state you have to have an actual lot in order to get your dealer's license, so he rented one. He just wants someone to split the lease with him, which would run me about $280/month. My initial thought was to use it as a fixed location and do some combination of fixed/mobile and see what I could work out. However, after looking at the place today, I don't think it would bring me much business. The road it is on has a bunch of other auto places, such as auto glass, body repair, mechanics, etc. There are at least a couple of each of those places. At the end of the block is a car wash. The garage appears to be in good condition, but it is set back off the road behind a house that was converted into office space.

So, although the garage itself isn't a bad little place, the location seems to suck. Nobody would even know I was there unless I put out a sign in front closer to the road, and I don't know how effective that could be.

That leads me to a few possibilities. First, I could go around to some of the other auto related businesses, and even the offices and such in that little business district, and see if I could drum up some business that would flow my way.

Second, and possibly more intriguing, is the opportunity to work with this guy selling cars. He has a license and experience, and he is willing to let me use his space and work under his license. I may be able to learn the ropes from him. He at one time owned a very well known tax service, but he sold it and now he has a small accounting firm. He dabbles in cars very part-time, but he is still selling 4-5 cars a month at a profit of around $1,000 each. So, I could learn from him, and all I would have to do is share rent of the space with him, which could potentially bring me a little detailing or washing business as well.

What do you guys think? Do any of you sell cars, and if so, do you think this might be a good opportunity to learn the ropes? Any suggestions or advice is appreciated, as I'm not exactly sure what to think.

Thanks for any input

PRB · 08-26-07, 06:03

I have owned a small dealership.

People such as the guy you're talking with tend to do pretty well once they know the market and have some business sense about them.

Selling at such a small location is very different than the big/franchised dealerships and it can be interesting. JUST selling leaves a great deal of down time. Some days...many days, you won't have a single customer if his volume is 4-5/month.

Would you invest in purchasing inventory yourself or strictly maintain and sell his inventory?

Incidentally, not sure how much detailing business you do now, but a fixed location for that little amount would be nice. You might be able to drum up some business from the other auto-related businesses nearby. Depending on what you do, one or two details could cover your half of the rent, leaving the rest for profit potential

94BlkStang · 08-26-07, 06:15

Quote:

Originally Posted by mcc

Well, I just had an interesting opportunity come up. I came across a guy that has a very small car lot. Actually, he doesn't even use it from what I can tell, but in our state you have to have an actual lot in order to get your dealer's license, so he rented one. He just wants someone to split the lease with him, which would run me about $280/month. My initial thought was to use it as a fixed location and do some combination of fixed/mobile and see what I could work out.

Thanks for any input

To me it seems like a decent deal as it gives you a place to detail when the weather is bad and the cost at $280.00/month is very cheap. It could also allow you to pick up a car or two along the way to resell them and make some additional profit and could list the vehicles on craigslist. A small wholesale car dealer use to lease a shop next to my dad's auto repair shop and would wholesale the cars and occasionally advertise a car in the paper. With an actual lot it would make it easier to retail the cars rather than having to wholesale them through the auction.

PRB · 08-26-07, 06:20

All this talk about cars for sale and lots makes me miss that business a little bit.

I'm trying to find a reasonable car to drive during the winter months so I can put away my summer car...the one that just started giving me mechanical fits. I postponed another purchase I was considering to fix the one I thought was repaired.

Wholesaling cars can bring some nice results. Many people have a lot with some cars on it, but rarely sell to the public since they have a lot of connections with other dealers. They get a car, prepare it for sale, then get a call from some other lot instead of a retail customer. Not as much profit, but much simpler

toyotaguy · 08-26-07, 06:36

DO IT!!!!!

280 a month....thats only 2 cars or even 1 and the rest of the month is profits...

plus you have his cars to detail if he likes your work
you have lots of business opportunity with all the other auto business that dont offere detailing...you can get in with the owner of those places to sell your services to their customers for a small fee, or a free detail of their car (costs you next to nothing)

I am still looking for an opportunity like that for myself...I think I just need to get out there and promote myself in that sense...seems like the more I talk about my business, the more business I get...go figure!!!! LOL

jsatek · 08-26-07, 07:33

I owned a mid-size new car franchise for many years. We sold between 140-160 cars per month.

Its a long road to profit. At $1000 per car, you are giving $$$$$ away....

jsatek · 08-26-07, 07:50

Inside info...I guess:

Used Car Dept: pays all of your dealership bills, generates $50,000 to $60,000 per month in profits.

New Car Dept: waste of real estate. We only use the franchise name to draw in customers for financing and used cars. Finance reserve pays your home bills, typically $12-15k per month.

Parts: generally a waste also, covers its bills, generates $10-15k of profit per month, if run properly. A manufacturer wont sell you a franchise without crippling you with a ridiculous parts quota.

Service: decent return. Way too much work. More effort than new cars. Generally $20k of profit per month. But generates 90% of agita and anxiety.

Body Shop Dept: Cash cow. Super high initial investment. Great annuity return, typically $20-25k per month in profit. $1 million up front gets you $250k per year in profit. Better than real estate or the stock market.

These numbers were from the late 90's early 00's. I don't know how the business is now. I will tell you, you can lose your shirt if you don;t know how to buy cars. Thats the formula, buy well, the rest will fall into place.

mcc · 08-26-07, 09:18

I was thinking this was probably a pretty good opportunity, and you guys seem to back me up for the most part.

PRB- In answer to your question, I would like to buy inventory myself and sell it. Additionally, I would be glad to handle his inventory if he would like me to. Right now I just want to learn from him, but he is making money now, and I think I can learn from him on the purchasing end.

It looks to me like he doesn't really have any cars on the lot at all. He parks them around in high traffic areas or just sells them online. Even if he did have them on the lot, it is doubtful anyone would see them because the location is set back behind another small office building.

JSatek- You say that it is a long road to profit. If this guy is currently buying and selling 4-5 cars per month, at roughly $1000 profit per car in his spare time, then how is it a long road to profit. The lot he has is rented by him for $560/month, and he doesn't really even use it much at all. So, there aren't many utilities either. It seems to me in that scenario that profit is easy to come by. Am I missing something? Please explain.

I would just buy cars under his license and split the cost of the lot with him. For doing so, he would teach me the ropes somewhat, and I would get use of the garage if I wanted. I can buy and sell them, detail them myself, do minor things like changing oil and such, and I have friends that are mechanics. So, I think I have most of the bases covered, but I know that there is always something that goes unaccounted for. I'm trying to figure out what that is.

Thanks for all the input so far.

94BlkStang · 08-27-07, 08:55

Quote:

Originally Posted by jsatek

Inside info...I guess:

Used Car Dept: pays all of your dealership bills, generates $50,000 to $60,000 per month in profits.

New Car Dept: waste of real estate. We only use the franchise name to draw in customers for financing and used cars. Finance reserve pays your home bills, typically $12-15k per month.

Parts: generally a waste also, covers its bills, generates $10-15k of profit per month, if run properly. A manufacturer wont sell you a franchise without crippling you with a ridiculous parts quota.

Service: decent return. Way too much work. More effort than new cars. Generally $20k of profit per month. But generates 90% of agita and anxiety.

Body Shop Dept: Cash cow. Super high initial investment. Great annuity return, typically $20-25k per month in profit. $1 million up front gets you $250k per year in profit. Better than real estate or the stock market.

These numbers were from the late 90's early 00's. I don't know how the business is now. I will tell you, you can lose your shirt if you don;t know how to buy cars. Thats the formula, buy well, the rest will fall into place.

I think you're getting well beyond what the OP had in mind. He's looking at a small lot with a garage to do some detailing and possible minor repairs and maybe sell a few cars, not a full fledged car dealership.

mcc · 08-27-07, 03:55

Yeah, I'm not looking to open some huge dealership, just sell a handful of cars each month.

Anyway, I've talked further to the guy, and relayed my concerns about the location (even though the price is great). He offered to let me buy and sell as an agent under his license, and I don't even have to rent the garage if I don't want to. Now, I'm still going to look into that, but right now I'm 100% mobile, and that may be where I stay. It would be nice to have a garage to detail in, but the location isn't near many of my customers, the car lots around there all have garages that I could use if I decided to do dealer work (which I don't think I want because they won't pay anything), and I can do invidual customers wherever they are anyway.

If all goes as planned, I'll be going to my first auction this Thursday. He says that he typically pays $1500-$2000 for a vehicle, and sells them for about $1000 or so more. Does that sound right to any of you former car salesmen? Any tips for going to the auctions?

jeteast99 · 08-27-07, 08:36

I have a shop in Orlando I run with my father. We do detailing, light car repairs, and auto sales. If he is letting you run as an agent under his license, DO IT! Make sure you know your states regulations and be sure to know how to complete all the paperwork.

The first week or two that you go to the auction jsut stand back and observe. Learn the pace of the auctioneer, the light system, and most importanyly the sales price of vehicles. Also don't just go to one auction, go to a few. Each auction has different markets and find one that fits you. Some auctions like Manheim have website that show you the sales from prior auctions. They also have a market report which gives you the average wholesale price of vehicles based on sales.

Also get ahold of the books. Trade in, black book, gold book, etc.

What about your funds? Do you have enough to buy one car or a few? If not see if this guy has a floorplan with the auction and if he will allow you under it. This allows you to buy vehicles under credit for a fee of $80 pluse interest. You will be looking at no more than $200 for the fee plus interest.

mcc · 08-27-07, 09:22

Thanks for the info jeteast99!!

Can you explain further about this "under" process? Would he have to okay me to buy on credit like you are talking about? If so, what would his risk be since I'm working under him? My feeling is that he kind of wants to keep us separate, as he is doing a nice thing by letting me work as an agent on his license.

It sounds like you know a bit about the auctions. Any other advice would be welcomed.

Right now I could go buy at least one car, possibly two, depending on what price range I go in. He said that a $1500-$2000 car brings an additional $1000 when he sells them. That kind of minimizes the risk somewhat. I'm just worried about buying a piece of junk, because I've heard that some of the sellers are crooks. I won't take kindly to someone bilking me out of my hard earned money.