If cars are your passion, perhaps it has always been your dream to start your very own used car dealership. As the saying goes, when you are doing something you love, you won’t work a day in your life! As great as that may be, as with starting any business, there is a lot of work that goes into starting a used car dealership in South Africa. To help you, we’ve compiled a step by step guide of how to start a used car dealership in South Africa.

Who is This Business Right For?

A used car dealership owner should possess certain traits to be successful. These include

– A love for cars

– A good eye for spotting a good deal

– Excellent customer service skills

– A good knowledge of cars

– The ability to work hard

What Does a Typical Day at a Car Dealership Look Like?

When you run a used car dealership, you can expect to spend most of the day attending to various tasks. You will need to be able to:

– Deal with customers

– Handle the paperwork associated with buying and selling cars

– Inspect and appraise cars

– Advertise and market your business

– Manage your inventory

– Deal with finances

– Keep your lot clean and organized

How Does a Car Dealership Make Money?

Most used car dealerships make their money by finding stock at good deals and then selling the vehicles at a higher price to make a profit. Used car dealerships also make money by selling car parts, accessories and offering services.

What are Some Skills and Experiences Essential To Building a Successful Car Dealership?

In order to start a car dealership, you will need to have skills in sales, marketing, and management. You will also need to have a good understanding of the automotive industry and the current market conditions. It is also helpful to have experience in the used car market, but this is not a must. Passion, drive and a good work ethic are the driving forces behind any successful business.

What are the Costs Involved In Opening a Car Dealership?

Used car dealerships can be started with a relatively low amount of money, making it a good business opportunity for those who are looking to get into the automotive industry. The costs involved in opening a car dealership can vary depending on the size and location of the dealership. However, some of the most common costs include:

– The purchase or lease of a property, unless running the business from home

– The purchase of new and used cars

– The cost of renovations to the property

– The cost of signage and advertising

– The cost of employee salaries (this may come later only as you expand)

Opening a car dealership can be a lucrative business opportunity, but it is important to do your research and planning in order to make sure that you are able to cover the costs involved.

What are the Steps to Starting a Car Dealership?

Step 1: A Solid Business Plan

The first step in starting any business is to create a detailed business plan. This document will outline your business goals, strategies, and how you plan on achieving them. In order to start a used car dealership in South Africa, you will need to research the market and understand the competition.

Step 2: Register a Legal Entity & for Tax

Once you have created a business plan, you will need to register your business with the South African government. This process can be completed online and will require some basic information about your company.

You will also need to apply for a special permit to trade which you can get more information on here.

Step 3: Open a Business Bank Account

In order to open a business bank account, you will need to provide your company’s registration documents, as well as a letter from your financial advisor confirming that you are the owner of the company.

Step 4: Set Up Business Accounting System

You will need to set up a business accounting system to track your income and expenses. This will help you keep track of your financial performance and make sure you are making a profit. You can use a simple spreadsheet or a more sophisticated accounting software package, many which are very affordable and available online.

Step 5: Get Business Insurance

You will need to get insurance for your dealership. This will protect you in case of any accidents or damage to your business, stock or even to customers visiting your lot. Remember the floods in April 2022 and the looting in 2021? Imagine not being covered and watching your floor stock float away, get written off by water damage or driven away by looters. Its not worth risking going without business insurance, especially in South Africa.

Step 6: Find a Location

The next step is to find a location for your dealership. You will need to find a space that is large enough to house your inventory and office space. It is also important to find a location that is accessible to your target market.

Step 7: Growing Your Business With Floor Plan Finance

The final step is of course acquiring stock for your use car dealership. You may have enough capital to invest in stock as you get started but when you start to grow exponentially as word gets out, you may find you have a cash flow problem on your hands. So how do you work around this? Used car dealership floor plan finance! This will help you to get the stock you need to keep your business growing without breaking the bank or having to apply for a business loan. In fact, our fast-track option lets you apply for up to R150k without going through the full application process to get cash in your hands faster than ever.

There you have it! Your ultimate quick-start guide to starting a used car dealership in South Africa. Keep your eye out for more in our series on floor plan finance and business tips for used car dealers in South Africa.

Check out our previous post covering the benefits of floor plan finance here