Opening a Car Dealership: What You Need to Know

A car dealership is a very good business option for entrepreneurs who have sales experience and skills. It also requires some business acumen and careful consideration. Although a car dealership can be very lucrative, getting it off the ground will require some work on your part. Below are a few things you should know before you open your car dealership.

Location Is Very Important

The dealership’s location will impact your sales. In turn, the location will affect your profits and the ability to keep the business going. So, what makes for a good location? Sales and competition are the first things you should consider. The location you choose should not have too many dealerships around. This ensures that there is ample demand and low competition, two things that will affect sales.

The location you choose will also determine the cost of opening the business (think taxes, rent, etc.) plus your payroll costs. Some other factors to consider when choosing a business location include crime rates, annual pay of the residents, as well as other costs like electricity.

Decide on the Type of Dealership

There are primarily three types of dealerships: new car dealerships, used car dealerships, and a mix of both. Your target customers can help you decide which type of dealership to open as well as the types of vehicles you sell. For example, there are some areas where people prefer Asian, German or electric cars. If you do not target the people in these areas correctly, you might end up with inventory you cannot sell.

You Will Need Insurance

You should invest in a good motor trade insurance policy when you open a car dealership. This is a type of insurance for businesses that deal with cars that do not belong to them. Since this insurance can get expensive depending on where you open the dealership, you should compare different providers and plans before you choose a plan to get the best one for your business and budget.

Savvy car dealership owners in the UK turn to Quotezone. This is an insurance comparison website that lets you compare different motor trade insurance providers.

Have a Solid Business and Financial Plan

Business and financial plans are important for new businesses and they are usually shaped by where the dealership is located as well as what type of dealership you would like to run.

As you develop the business plan, you need to think about your business strategy, product range, results from market and SWOT analysis, marketing options and opportunities, as well as the number of employees you will have.

You have to also think about your vision for the business as well as what your plans are for the future. The more detailed the business and financial plans are, the better the chances of the business succeeding.


If you have a solid plan in place, starting a car dealership should go smoothly. Just ensure the plan is as detailed as possible and covers all aspects of the business.


Leave a Reply

Your email address will not be published. Required fields are marked *