There are a lot of dealerships out there. And not all of them are created equal. The key to success is to know your customers and to work with them to find the right car for them. If you’re looking to start a used car dealership in South Africa, there are a few things you need to know first. One of the most important factors to consider is how much it costs to start a used car dealership in South Africa.
Here’s the bottom line. If your goal is to build a reputable brand from day 1, you’re looking at needing around R4 million in capital to get your used car dealership off to a good start, according to TopAuto.
The cost of starting a used car dealership in South Africa can vary depending on a number of factors. One of the most important factors to consider is the location of your dealership. If you’re looking to start a dealership in a major city, the cost will be higher than if you’re looking to start a dealership in a smaller town.
Another factor to consider is the size of your dealership. If you’re looking to start a large dealership, the cost will be higher than if you’re looking to start a small dealership. Some people want to go all out from the get go, while others are happy to start off small from home.
The cost of starting a used car dealership in South Africa can vary depending on a number of factors, so it’s important to do your research before you start. By doing your research, you’ll be able to determine the right cost for your dealership and the right cars to sell.
Breakdown of Costs
The cost of starting a used car dealership in South Africa can vary depending on the size and scope of the business. However, some of the basic costs that are typically associated with starting a business include:
– Business Registration fees start at a couple hundred Rand and escalate upwards depending on the type of business registration and your service provider.
– Licensing fees
– Business Insurance
– Advertising and marketing costs: as a rule of thumb you should invest between 20 and 30% of your profits back into advertising
– Website development costs: a decent website by a professional web designer costs around R10 000, remember you get what you pay for so don’t skimp on quality.
– Staffing costs (may not be necessary as you start out)
– Lot or business premises rental or bond costs
The average cost of starting a small used car dealership in South Africa is around R500,000. This includes the cost of the leasing a premises, initial stock, vehicle licensing and other associated costs.
In addition to the cost of starting a dealership, you’ll also need to factor in the cost of inventory. The cost of inventory can vary depending on the type of cars you’re selling. If you’re selling high-end cars, the cost of inventory will be higher than if you’re selling low-end cars. If your target market is students, for example, you’ll be able to acquire cheaper stock and potentially turnover stock faster than if you try sell Porches and Ferrari’s in the millions.
If you find yourself growing exponentially and needing to acquire new stock for your floor, you can apply for floor plan finance. This is specialised finance for used car dealerships to give you the purchasing power you need to make quick buying decisions and capitalise on good deals to make bigger profits.
If you missed our last post covering the steps to starting a used car dealership in South Africa, you can get all the details here.