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Car Dealership Business Plan Template & PDF Example

• September 4, 2024
• Business Plan

Creating a comprehensive business plan is crucial for launching and running a successful car dealership. This plan serves as your roadmap, detailing your vision, operational strategies, and financial plan. It helps establish your car dealership’s identity, navigate the competitive market, and secure funding for growth.

This article not only breaks down the critical components of a car dealership business plan, but also provides an example of a business plan to help you craft your own.

Whether you’re an experienced entrepreneur or new to the retail industry, this guide, complete with a business plan example, lays the groundwork for turning your car dealership business concept into reality. Let’s dive in!

Our car dealership business plan is meticulously organized to encompass all key components necessary for a comprehensive strategic framework. It details our dealership’s operations, marketing strategies, market environment, competitors, leadership team, and financial outlook.

• Executive Summary : Offers an overview of your Car Dealership’s business concept, including the range of new and pre-owned vehicles, market analysis , management team, and financial strategy.
• Car Dealership & Location: Describes the dealership’s prime location, accessibility, and facility features, including the showroom and service area.
• Vehicles & Rates: Lists the types of vehicles offered, from economical compact cars to luxury SUVs, including pricing and financing options.
• Key Stats: Shares industry size , growth trends, and relevant statistics for the car dealership market.
• Key Trends: Highlights recent trends affecting the car dealership sector, such as the surge in Electric Vehicle (EV) sales and the shift towards Built-to-Order sales.
• Key Competitors: Analyzes main competitors in the area and how your dealership differentiates itself, focusing on vehicle selection, customer service, and additional services like maintenance and repairs.
• SWOT : Strengths, weaknesses, opportunities, and threats analysis tailored to the car dealership business.
• Marketing Plan : Strategies for promoting your dealership and attracting customers, including online presence, targeted promotional campaigns, and community engagement.
• Timeline : Key milestones and objectives from the initial setup through the first year of operation and beyond.
• Management: Information on who manages the Car Dealership, detailing their roles, experience in the automotive industry, and business management.
• Financial Plan: Projects the dealership’s 5-year financial performance, including revenue from vehicle sales, profit and loss statements, cash flow analysis, and balance sheet.

Car Dealership Business Plan

Fully editable 30+ slides Powerpoint presentation business plan template.

Download an expert-built 30+ slides Powerpoint business plan template

Executive Summary

The Executive Summary introduces your car dealership’s business plan, providing a succinct overview of your dealership and its offerings. It should describe your market positioning, the range of vehicles you offer—including new and pre-owned cars, financing options, and after-sales services—its location, size, and an overview of daily operations.

This section should also delve into how your car dealership will establish itself within the local market, including the number of direct competitors in the area, identifying who they are, along with your dealership’s unique selling points that set it apart from these competitors.

Moreover, you should include information about the management and founding team, detailing their roles and contributions to the dealership’s success.

Additionally, a summary of your financial projections, including revenue and profits over the next five years, should be included here to provide a clear picture of your dealership’s financial strategy.

Car Dealership Business Plan Executive Summary Example

Business Overview

An effective executive summary starts with a concise yet informative  business overview . This includes spotlighting the dealership’s name, its prime location, and an insight into its daily operations.

Highlighting the  unique selling proposition  ( USP ) is vital. Whether it’s the dealership’s commitment to customer service excellence, a diverse inventory offering various vehicle brands, or personalized after-sales services, this distinct factor sets the dealership apart in a competitive automotive market.

Example: “[Your Company Name],” situated in the heart of [City/Region], operates as a premier car dealership. Spanning a spacious facility, it offers various vehicles catering to diverse customer preferences, ranging from economical compact cars to luxury SUVs. Our dealership’s USP lies in delivering an extensive selection of top-tier vehicle brands such as Toyota, Ford, BMW, and Tesla, combined with a commitment to comprehensive after-sales support, financing options, and access to a state-of-the-art service center.

Market Overview

A compelling executive summary includes an insightful market overview. It should encompass  market size , growth trends, and an analysis of the  competitive landscape  within the automotive dealership industry.

Example: The US car dealership market represents $614 billion in total vehicle sales in 2022. Notably, the average yearly revenue per dealership stands at approximately $36.5 million, emphasizing the significance of each dealership’s role in the market. Recent trends illustrate a surge in Electric Vehicle (EV) sales, doubling in 2022, while a shift towards Built-to-Order sales aligns with evolving consumer preferences for personalized vehicles. The market is characterized by a mix of national dealership chains and independent local dealers, with [Your Company Name] poised to carve a niche by providing a diverse vehicle inventory and unparalleled customer service.

Management Team

The proficiency and expertise of the management team are integral to the success of your car dealership. This section aims to spotlight the qualifications and experiences of key team members, emphasizing their pivotal roles in steering the dealership toward success.

Highlighting the team’s expertise in managing financial operations, budgeting, financial analysis, and ensuring the dealership’s financial stability and growth builds credibility and assures potential investors and partners of the dealership’s capability.

Example: [Your Company Name] is led by a proficient management team with a wealth of experience in overseeing financial operations, budgeting, and analysis. Their expertise in identifying cost-saving  opportunities , ensuring financial stability, and driving sustained growth for the dealership forms the backbone of our operations.

Financial Plan

The financial plan section encapsulates the strategic fiscal objectives and projections of your car dealership. It offers a concise overview of revenue targets and profit margins and outlines the trajectory guiding the dealership’s financial growth.

Example: As part of our strategic growth plan, [Your Company Name] aims to attain a significant milestone by achieving $38 million in yearly revenue and a commendable  operating profit  margin ( EBITDA ) by 2028. This strategic trajectory involves maintaining competitive pricing structures, a relentless focus on operational efficiency, and an unwavering commitment to delivering unparalleled customer service. These strategies, coupled with the dedication of our adept team, aim to ensure consistent growth and profitability for the dealership in the years ahead.

For a Car Dealership, the Business Overview section can be effectively divided into 2 main categories:

Car Dealership & Location

Describe the dealership’s physical setup, focusing on its design, layout, and overall ambiance that welcomes customers. Mention features such as the showroom’s size, the display arrangement of vehicles, and any customer-friendly areas like waiting lounges or consultation spaces.

Next, highlight the dealership’s location, emphasizing its accessibility and the convenience it offers to customers, such as proximity to major roads or highways and the ease of parking. Also, explain why this location is strategically chosen to attract your target customer base, considering factors like local traffic flow, visibility, and the presence of nearby complementary businesses.

Vehicles & Rates

Detail the variety of vehicles offered, including new and pre-owned models, different brands, and vehicle types (such as sedans, SUVs, trucks, and electric vehicles). Emphasize any unique or highly sought-after models that could attract customers.

Outline your pricing strategy for the vehicles, ensuring it reflects the value offered and aligns with the market segment you’re targeting. Discuss any financing options, leasing deals, or special promotions that make purchasing more accessible and appealing to customers.

Industry Size & Growth

In the Market Overview of your car dealership business plan, begin by analyzing the size of the automotive industry and its growth potential. This examination is essential for grasping the market’s breadth and pinpointing opportunities for expansion.

Key Market Trends

Next, delve into current market trends , such as the growing consumer interest in electric and hybrid vehicles, advanced safety features, and digital sales platforms. Highlight the demand for vehicles that cater to evolving lifestyle needs and environmental concerns, along with the shift towards online purchasing and personalized buying experiences.

Competitive Landscape

A  competitive analysis  is not just a tool for gauging the position of your car dealership in the market and its key competitors; it’s also a fundamental component of your business plan. This analysis helps in identifying your car dealership’s unique selling points, essential for differentiating your business in a competitive market.

In addition, the competitive analysis is integral in laying a solid foundation for your business plan. By examining various operational aspects of your competitors, you gain valuable information that ensures your business plan is robust, informed, and tailored to succeed in the current market environment.

Identifying Your Competitors in the Car Dealership Industry

The initial step towards understanding your dealership’s position involves identifying and analyzing the key competitors within the automotive market. Start by mapping out local car dealerships, both independent and franchised, specializing in similar vehicle types or brands.

For instance, if your dealership specializes in luxury vehicles, your direct competitors might include other luxury dealerships within your vicinity, as well as larger franchised dealerships offering similar high-end car models. Additionally, consider indirect competitors such as online car sales platforms or used car dealerships, as they may cater to overlapping customer segments.

Leverage online tools and platforms such as dealership locators on automotive brand websites, Google Maps, and industry-specific platforms like Edmunds or Cars.com to gain insights into competitor locations and their inventory offerings. 

Analyzing customer reviews and ratings on platforms like Yelp or DealerRater can provide valuable information about competitor  strengths and weaknesses . For instance, positive reviews praising the customer service or wide vehicle selection at a rival dealership highlight aspects crucial for comparison.

Car Dealership Competitors’ Strategies

An in-depth analysis of your competitors’ strategies involves scrutinizing various facets of their operations:

• Vehicle Inventory:  Evaluate the range and variety of vehicles offered by competitors. If a nearby dealership gains traction with electric or hybrid models, it signifies an emerging  market trend  towards eco-friendly vehicles that might influence consumer preferences.
• Sales and Financing Approach:  Consider the sales tactics and financing options employed by competitors. A dealership offering flexible financing plans or exclusive warranty packages may attract customers seeking added value.
• Customer Service and Support:  Assess the quality of customer service and post-sale support provided by competitors. A dealership known for its responsive customer service or efficient maintenance services may have a competitive edge.
• Marketing and Promotion:  Study competitors’  marketing strategies , whether they rely on digital marketing, traditional advertising, or exclusive promotional events. A dealership leveraging social media influencers or hosting test-drive events could have a unique marketing approach.
• Technological Integration:  Observe if competitors embrace innovative technologies in their operations, such as virtual showrooms or online vehicle customization tools. A dealership utilizing augmented reality for virtual car tours might stand out in enhancing the customer experience.

What’s Your Car Dealership’s Value Proposition?

Reflect on your dealership’s distinct  value proposition . Perhaps your dealership specializes in rare vintage car collections or offers personalized concierge services for clients. Identifying gaps in the market through customer feedback and emerging industry trends is crucial.

For instance, the increasing demand for electric vehicles or the emphasis on contactless transactions could signify opportunities for differentiation if competitors have yet to fully cater to these preferences.

Consider your dealership’s location and target demographic. A dealership situated in a bustling urban area might prioritize convenience and streamlined services, while one in a suburban setting might emphasize family-oriented vehicle options and comprehensive safety features.

Begin with a SWOT analysis for the car dealership , identifying Strengths (such as a diverse vehicle inventory and strong customer service), Weaknesses (like limited market presence or competitive pressure), Opportunities (for instance, the growing demand for electric vehicles and online sales channels ), and Threats (such as economic fluctuations affecting consumer spending on big-ticket items).

Marketing Plan

Then, craft a marketing plan that details strategies to attract and retain customers through targeted advertising campaigns, promotional financing offers, a dynamic online presence, and community engagement events.

Marketing Channels

Marketing channels for a car dealership serve as pathways to communicate your brand and vehicle offerings to potential buyers. These channels are vital for establishing brand awareness, engaging with customers, and driving foot traffic to your showroom.

Digital Marketing

In today’s digital era, a robust online presence is imperative. This includes:

• Social Media : Utilize platforms like Instagram and Facebook to showcase your inventory, share informative car-related content, and engage with users through comments and direct messages.
• Website and SEO:  Develop a user-friendly website displaying your inventory, customer testimonials, and blog posts about car buying tips and industry updates. Implement SEO strategies to enhance your dealership’s online visibility.
• Email Marketing:  Build an email list by offering incentives like exclusive previews of new vehicle arrivals or maintenance tips. Send regular newsletters with updates on promotions, vehicle features, and industry news.

Local Advertising

Connecting with your local community can yield substantial results:

• Radio and TV Ads:  Utilize local radio stations or television channels to broadcast ads highlighting special deals, seasonal promotions, or unique vehicle models.
• Community Involvement:  Sponsor local events, charity drives, or sports teams to boost brand visibility and forge community connections.
• Partnerships:  Collaborate with complementary businesses like insurance agencies or car maintenance centers to offer bundled services or joint promotional deals.

Promotional Activities

Captivate potential buyers with compelling offers:

• Special Promotions:  Launch seasonal sales events such as ‘Year-End Clearance’ or ‘Summer Road Trip Deals.’ Offer discounts or incentives for test drives.
• Referral Programs:  Incentivize existing customers to refer friends and family by offering discounts on services or accessories for successful referrals.
• Customer Appreciation Events:  Organize exclusive events or workshops showcasing vehicle features, safety tips, or new technological advancements.

Sales Channels

Sales channels  are instrumental in selling vehicles and additional services to customers. These channels optimize revenue and ensure customer satisfaction.

In-Showroom Upselling

Maximize sales opportunities during customer visits:

• Additional Features:  During test drives or vehicle selection, highlight premium features or upgrades available for specific models.
• Service Packages:  Offer bundled maintenance packages or extended warranties to add value to the purchase.
• Finance and Insurance Services:  Educate customers about financing options and insurance packages available through the dealership.

Online Sales and Services

Leverage technology for efficient sales processes:

• Online Inventory Access:  Enable customers to browse your inventory, check vehicle specifications, and schedule test drives through your website or dedicated mobile application.
• Virtual Showroom Experience:  Offer virtual tours or interactive presentations of vehicles, providing a comprehensive experience for online buyers.
• E-Commerce:  Facilitate online transactions for accessories, spare parts, or merchandise associated with the vehicles you sell.

Customer Retention Programs

Encourage repeat business and foster loyalty:

• Maintenance Plans:  Offer subscription-based maintenance plans for regular servicing and upkeep of purchased vehicles.
• Customer Support and Engagement:  Establish a customer service department for addressing queries, and feedback, and providing ongoing support post-purchase.
• Exclusive Benefits: I mplement membership or loyalty programs offering discounts on future purchases, priority servicing, or VIP events. These programs foster a sense of belonging and incentivize customers to continue their relationship with your dealership.

Strategy Timeline

Lastly, establish a comprehensive timeline that marks key milestones for the dealership’s launch, marketing initiatives, customer base development, and growth goals, ensuring the business progresses with clarity and focus.

The Management section focuses on the car dealership business’s management and their direct roles in daily operations and strategic direction. This part is crucial for understanding who is responsible for making key decisions and driving the car dealership toward its financial and operational goals.

For your car dealership business plan, list the core team members, their specific responsibilities, and how their expertise supports the business.

The Financial Plan section is a comprehensive analysis of your financial projections for revenue, expenses, and profitability. It lays out your car dealership’s approach to securing funding, managing cash flow, and achieving breakeven.

This section typically includes detailed forecasts for the first 5 years of operation, highlighting expected revenue, operating costs , and capital expenditures.

For your car dealership business plan, provide a snapshot of your financial statement (profit and loss, balance sheet, cash flow statement), as well as your key assumptions (e.g. number of customers and prices, expenses, etc.).

Make sure to cover here _ Profit and Loss _ Cash Flow Statement _ Balance Sheet _ Use of Funds

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Car Dealership Business Plan

A car dealership is a company that sells new or used vehicles to the general public under the terms of a dealership agreement with a carmaker or its sales subsidiary. Car dealerships are rewarding because they are connected to both the wholesale and retail markets.

Are you looking to start writing a business plan for your car dealership business? Creating a business plan is essential to starting, growing, and securing funding for your business. We have prepared a car dealership business plan template for you to help in start writing yours.

Free Business Plan Template

Download our free car dealership business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

• Fill in the blanks – Outline
• Financial Tables

How to Write a Car Dealership Business Plan?

Writing a car dealership business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section of the business plan intended to provide an overview of the whole business plan. Generally, it is written after the entire business plan is ready. Here are some components to add to your summary:

• Start with a brief introduction: Start your executive summary by introducing your idea behind starting a car dealership business and explaining what it does.
• Market opportunity: Describe the target market in brief, and explain the demographics, geographic location, and psychographic attributes of your customer. Explain how your car dealership business meets its needs. Clearly describe the market that your business will serve.
• Mention your services: Briefly describe the services that a client can expect from your business like new and used cars, maintenance and repairs of the car, car rental services, etc.
• Management team: Name all the key members of your management team with their duties, responsibilities, and qualifications
• Financial highlights: Provide a summary of your financial projections for the company’s initial years of operation. Include any capital or investment requirements, startup costs, projected revenues, and profits.
• Call to action: After giving a brief about your business plan, end your summary with a call to action, for example; inviting potential investors or readers to the next meeting if they are interested in your business.

Ensure you keep your executive summary concise and clear, use simple language, and avoid jargon.

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2. Business Overview

Depending on what details of your business are important, you’ll need different elements in your business overview. Still, there are some foundational elements like business name, legal structure, location, history, and mission statement that every business overview should include:

• The name of the car dealership business and the concept behind it: new car dealership, used car dealership, small car dealership, luxury car dealership, private seller, online retailer, or something else.
• Company structure of your car dealership business whether it is a sole proprietorship, LLC, partnership firm, or others.
• Location of your car dealership and the reason why you selected that place.
• Ownership: Describe the owners of your dealership business and mention their roles in running it. Whose shares in the corporation are they, and how each owner helps in the business?
• Mission statement: Add a mission statement that sums up the objectives and core principles of your business. This statement needs to be memorable, clear, and brief.
• Business history: If you are already running this business, including an outline of the business’s history and how it came to be in its current position. If you can, add some personality and intriguing details, especially if you got any achievements or recognitions till now for your incredible services.
• Future goals: It’s crucial to convey your aspirations and your vision. Include the vision of where you see your business in the near future and if you have any plans of opening a new franchise of your business in the same city in the future.

This section should provide an in-depth understanding of your car dealership business. Also, the business overview section should be engaging and precise.

3. Market Analysis

Market analysis provides a clear understanding of the market in which your car dealership business will run along with the target market, competitors, and growth opportunities. Your market analysis should contain the following essential components:

• Target market: Identify your target market and define your ideal customer. Know more about your customers and which services or cars they prefer.
• Market size and growth potential: Provide an overview of the industry. It will include market size, trends, growth potential, and regulatory considerations. Highlight the competitive edge and how your car dealership business is different from the rest.
• Competitive analysis: Identify and analyze all other dealerships in the local market, including direct and indirect competitors. Evaluate their strengths and weaknesses, and explain how your business can offer qualitative services.
• Market trends: Analyze current and emerging trends in your industry, such as changes in technology or customer preference as in the shift towards automatic cars. Explain how your business will cope with all the trends.
• Regulatory environment: Describe any regulations or licensing requirements that affect the car dealership, such as insurance, dealer’s license, zoning permits, or safety codes.

Some additional tips for writing the market analysis section of your business plan:

• Use a variety of sources to gather data, including industry reports, market research studies, and surveys.
• Be specific and provide detailed information wherever possible.
• Include charts and graphs to help illustrate your key points.
• Keep your target audience in mind while writing the business plan.

4. Products And Services

The product and services section of a car dealership business plan should describe the specific services and products that will be offered to customers. To write this section should include the following:

• Create a list of the services that your car dealership will offer, which may luxury cars, new cars, used cars, maintenance, repairs, etc.
• Describe each product and service: For each service, provide a detailed description of what it entails, and the qualifications of the professionals who will provide the service.
• Emphasize safety and quality: In all descriptions of services and products, emphasize the importance of safety and quality. Explain how your car dealership will ensure that all services and products are delivered with the highest standards of safety and efficacy.

Overall, a business plan’s product and services section should be detailed, informative, and customer-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

• Develop your unique selling proposition (USP): Clearly define your unique selling proposition – it might be your pricing, the range of vehicles you offer, after-sales service, digital experience, specialization in vintage, hybrid, or sports cars, or any other aspect that distinguishes you from the competition.
• Determine your pricing strategy: Develop a pricing strategy that is competitive and affordable, yet profitable. Consider offering promotions, discounts, or packages to attract new customers.
• Marketing strategies: Develop a marketing strategy that includes a mix of online and offline marketing tactics. Consider social media, email marketing, content marketing, brochures, print marketing, and affiliating with online car buying/selling options.
• Sales strategies: Mention your sales strategy as in – offer incentives and promotions to attract new customers, or partner with other businesses to establish referral programs that can help you generate more business. Consider offering incentives for referrals or special discounts for partnerships.

Overall, the sales and marketing strategies section of your business plan should outline your plans to attract and retain customers and generate revenue. Be specific, realistic, and data-driven in your approach, and be prepared to adjust your strategies based on feedback and results.

6. Operations Plan

When writing the operations plan section, it’s important to consider the various aspects of your business processes and procedures involved in operating a business. Here are the components to include in an operations plan:

• Hiring plan: Tell the staffing requirements of your car dealership, including the number of employees needed, their qualifications, and the duties they will perform. Also mention the perks you will provide to your employees.
• Operational process: Outline the processes and procedures that you will use to run your car dealership business. It includes the scheduling of appointments, meeting with clients, and everything else.
• Inventory management: Provide details on how frequently new vehicles will be purchased, how the inventory will be cycled, and how the dealership will make sure it has a variety of automobiles to suit the demands of its clients in your inventory management plan.

By including these key elements in your operations plan section, you can create a comprehensive plan that outlines how you will run your car dealership business.

7. Management Team

The management team section provides an overview of the individuals responsible for running the car dealership business. This section should provide a detailed description of the experience and qualifications of each manager, as well as their responsibilities and roles.

• Key managers: Describe the key members of your management team, their roles, and their responsibilities. It should include the owners, and senior management including their education, professional background, and any relevant experience in the industry.
• Organizational structure: Describe the organizational structure of the management team, including reporting lines and how decisions will be made.
• Compensation plan: Describe your compensation plan for the management team and staff, including salaries, bonuses, and other benefits.
• Board of advisors: If you have a board of advisors for your business, then mention them along with their roles and experience.

Describe the key personnel of your company and highlight why your business has the fittest team.

8. Financial Plan

When writing the financial plan section of a business plan, it’s important to provide a comprehensive overview of your financial projections for the first few years of your business.

• Profit & loss statement: Create a projected profit & loss statement that describes the expected revenue, cost of products sold, and operational costs. Your business’s anticipated net profit or loss should be computed and included.
• Cash flow statement: Estimate your cash inflows and outflows for the first few years of operation. It should include cash receipts from clients, payments to vendors, loan payments, and any other cash inflows and outflows.
• Balance sheet: Prepare a projected balance sheet, which shows the assets, liabilities, and equity.
• Break-even point: Determine the point at which your car dealership business will break even, or generate enough revenue to cover its operating costs. This will help you understand how much revenue you need to generate to make a profit.
• Financing needs: Estimate how much financing you will need to start and operate your car dealership business. It should include both short-term and long-term financing needs, such as loans or investment capital.

Remember to be realistic with your financial projections, and to provide supporting evidence for all of your estimates.

9. Appendix

When writing the appendix section, you should include any additional information that supports the main content of your plan. This may include financial statements, market research data, legal documents, and other relevant information.

• Include a table of contents for the appendix section to make it easy for readers to find specific information.
• Include financial statements such as income statements, balance sheets, and cash flow statements. These should be up-to-date and show your financial projections for at least the first three years of your business.
• Provide market research data, such as statistics on the size of the industry, consumer demographics, and trends in the industry.
• Include any legal documents such as permits, licenses, and contracts.
• Provide any additional documentation related to your business plans, such as marketing materials, product brochures, and operational procedures.
• Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your car dealership business should only include relevant and important information that supports the main content of your plan.

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This car dealership business plan sample will provide an idea for writing a successful business plan, including all the essential components of your business.

After this, if you are still confused about how to write an investment-ready business plan to impress your audience, then download our car dealership business plan pdf .

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Frequently Asked Questions

Why do you need a car dealership business plan.

A business plan is essential for anyone looking to start or run a successful car dealership. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your car dealership business.

How to get funding for your car dealership business?

There are several ways to get funding for your car dealership business, but one of the most efficient and speedy funding options is self-funding. Other options for funding are:

• Bank loan – You may apply for a loan in government or private banks.
• Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
• Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your car dealership, usually online.
• Angel investors – Getting funds from angel investors is one of the most sought options for startups.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your car dealership business?

There are many business plan writers available, but no one knows your business and idea better than you, so we recommend you write your car dealership business plan and outline your vision as you have in your mind.

What is the easiest way to write your car dealership business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any car dealership business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Building a Profitable Car Dealership Business from Scratch: A Step-by-Step Guide

• November 16, 2023
• Automotive Lead Generation

If you are passionate about cars and have a strong entrepreneurial spirit, starting your own car dealership business can be an exciting and lucrative venture. However, building a profitable car dealership business from scratch requires careful planning, market understanding , and a solid financial foundation. In this step-by-step guide, we will explore the key aspects of starting a car dealership business and provide valuable insights to help you succeed.

Understanding the Car Dealership Business

Starting a car dealership business requires a comprehensive understanding of the industry and its dynamics. The car dealership industry involves the buying and selling of new and used vehicles to consumers or other businesses. It encompasses various segments, such as passenger cars, commercial vehicles, and luxury automobiles.

As a car dealer, your primary goal is to acquire vehicles at wholesale prices and sell them at a profit. However, this is just the tip of the iceberg. To succeed in this competitive market, you will need to establish strong relationships with suppliers, manage your inventory effectively, negotiate prices, and provide exceptional customer service .

Let’s delve deeper into the key aspects of the car dealership business.

The Basics of the Car Dealership Industry

The car dealership industry is a complex and multifaceted sector that requires a deep understanding of market trends and consumer preferences. It is essential to keep up with the latest developments and technological advancements in the automotive industry to stay ahead of the competition.

When it comes to the types of vehicles you can sell, the possibilities are vast. From compact cars to SUVs, from electric vehicles to hybrid models, the choices are endless. Understanding the different vehicle segments and their unique characteristics will help you cater to a wide range of customer preferences.

Moreover, the car dealership business is not limited to just selling vehicles. Many dealerships offer additional services such as maintenance and repairs, financing options, and extended warranties. These value-added services can significantly enhance customer satisfaction and loyalty.

Key Players in the Car Dealership Market

To navigate the car dealership market successfully, it is crucial to be aware of the key players in the industry. Understanding their roles and characteristics will help you identify opportunities and develop a competitive edge.

Franchise Dealerships are one of the major players in the market. These dealerships have exclusive rights to sell new vehicles from a specific brand or manufacturer. They often offer additional services like maintenance and repairs, making them a one-stop-shop for customers.

Independent Dealerships, on the other hand, are not affiliated with any particular brand. They typically specialize in selling used vehicles and have more flexibility in terms of inventory selection and pricing. This flexibility allows them to cater to a broader range of customer budgets and preferences.

In recent years, online car marketplaces have gained significant popularity. These platforms connect buyers and sellers, facilitating transactions and providing extensive vehicle listings. Online car marketplaces offer convenience and a vast selection of vehicles, making them a preferred choice for many customers.

By understanding the strengths and weaknesses of these key players, you can position your dealership strategically and differentiate yourself from the competition.

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Profitability Factors in the Car Dealership Business

While the car dealership business can be profitable, several factors contribute to your success. It is essential to consider these factors and implement effective strategies to maximize profitability .

Market Demand plays a crucial role in determining the success of your dealership. Assess the demand for vehicles in your target market. Are there specific vehicle types or brands that are highly sought after? Understanding market trends and consumer preferences will help you make informed decisions regarding your inventory selection.

Location is another critical factor. Choose a strategic location that ensures visibility, accessibility, and proximity to potential customers. A well-chosen location can significantly impact foot traffic and customer reach.

Pricing Strategy is a delicate balance. Set competitive prices that attract buyers while still allowing for a reasonable profit margin. Conduct market research and analyze your competitors’ pricing strategies to determine the optimal pricing for your vehicles.

Effective Inventory Management is essential to minimize holding costs and maximize turnover rate. Keep track of your inventory, analyze sales data, and adjust your purchasing decisions accordingly. Maintaining a diverse inventory that caters to different customer preferences can also help attract a wider customer base.

Customer Experience is a key differentiator in the car dealership business. Provide exceptional customer service and build long-term relationships with buyers. A satisfied customer is more likely to become a repeat customer and refer your dealership to others.

By considering these factors and implementing effective strategies, you can increase the profitability of your car dealership business. Remember, success in this industry requires continuous adaptation to changing market dynamics and a relentless focus on customer satisfaction.

Planning Your Car Dealership Business

Identifying your target market.

It is essential to identify your target market before launching your car dealership business. Consider factors such as demographics, income levels, preferences, and local competition. By understanding your target market’s needs and preferences, you can tailor your inventory and marketing efforts to attract the right customers.

Moreover, conducting market research will help you identify trends, predict demand, and adjust your business strategy accordingly.

Choosing the Right Location

The location of your car dealership can significantly impact your success. Look for areas with high foot traffic, easy access, and visibility. Consider the proximity to major roads, commercial hubs, and residential neighborhoods.

Additionally, check local zoning laws and regulations to ensure that your chosen location allows for car dealership activities. Consult with a real estate professional to find the best-fit location for your business.

Deciding on New or Used Cars

Another critical decision is whether to focus on selling new or used cars . Both options have their advantages, and your choice will depend on factors like market demand, available resources, and competition in your area.

Selling new cars might require establishing partnerships with specific manufacturers, meeting certain sales quotas, and complying with brand guidelines. On the other hand, selling used cars allows for more flexibility in terms of pricing, selection, and sourcing.

Legal Considerations for Car Dealerships

Necessary licenses and permits.

Before opening your car dealership, you must obtain the necessary licenses and permits to operate legally. Consult with your local licensing agency or business regulatory authority to identify the specific requirements for your area.

Common licenses and permits typically include a dealer license, salesperson license, and potentially additional permits for vehicle storage, display, and vehicle registration.

Understanding Zoning Laws

Car dealerships are subject to zoning laws, which regulate the types of activities that can take place in specific areas. Ensure that your chosen location is zoned for car dealership activities or obtain the necessary permits or variances.

Consult with a legal professional or local zoning authorities to navigate the zoning regulations and avoid any potential issues.

Insurance Requirements for Car Dealerships

Obtaining comprehensive insurance coverage is crucial to protect your car dealership business from potential risks and liabilities. Insurance requirements may vary depending on your location and the type of vehicles you sell.

Common insurance policies for car dealerships include general liability insurance, inventory insurance, garage liability insurance, and workers’ compensation insurance. Consult with an insurance professional to design an insurance package that suits your specific needs.

Financing Your Car Dealership Business

Startup costs for a car dealership.

Starting a car dealership requires a significant upfront investment to cover various expenses. These may include:

• Property or lease costs for your dealership location.
• Initial inventory purchase.
• Licensing and permit fees.
• Office equipment, furniture, and signage.
• Marketing and advertising expenses.
• Insurance premiums.

Ensure you have a detailed business plan and secure adequate funding to cover these startup costs and sustain your business until it becomes profitable.

Securing Financing for Your Business

If you don’t have the necessary capital to finance your car dealership business, securing financing options can be a viable solution. Explore traditional banking options, government-backed loans, or private investors who specialize in financing car dealership startups.

Prepare a comprehensive business plan, financial projections, and supporting documents to increase your chances of obtaining financing. Demonstrate your knowledge of the industry, market analysis, and strategies for profitability to instill confidence in potential lenders or investors.

Managing Cash Flow in the Car Dealership Business

Effective cash flow management is vital in the car dealership business to ensure ongoing operations and sustained growth. Some key practices include:

• Implementing a robust accounting system to track revenue, expenses, and inventory.
• Regularly reviewing financial statements to identify trends, bottlenecks, and areas for improvement.
• Establishing relationships with reliable suppliers and negotiating favorable terms.
• Minimizing holding costs by optimizing inventory turnover.
• Being diligent with expenses and prioritizing cost control measures.

By continuously monitoring and managing your cash flow, you can navigate potential challenges and position your car dealership for long-term profitability.

Starting a profitable car dealership business from scratch requires careful planning, market understanding, and financial preparedness. By following this step-by-step guide, you can make informed decisions, overcome challenges, and build a successful car dealership enterprise. Remember to continuously adapt to market trends, provide exceptional customer service, and prioritize profitability to thrive in the competitive car dealership industry.

Want to improve your sales and move cars off the lot faster? Book a test drive with AutoRaptor to see how our simple dealership CRM software can help you close more deals effectively.

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Here is a free business plan sample for a car dealership business.

Have you been toying with the idea of opening a car dealership but feel overwhelmed by the thought of planning it out?

Look no further, as we're about to guide you through a comprehensive business plan tailored for the automotive sales industry.

As any seasoned entrepreneur will tell you, a robust business plan is crucial to navigating the road to success. It serves as a roadmap, helping you to establish clear objectives, strategies, and financial projections for your venture.

To shift your planning into high gear without any detours, you can utilize our car dealership business plan template. And if you need an expert pit stop, our team is on standby to review and fine-tune your plan at no cost.

How to draft a great business plan for your car dealership business?

A good business plan for a car dealership must be tailored to the unique aspects of automotive sales and service.

To start, a comprehensive market overview is crucial. This should include current industry statistics and emerging trends, as illustrated in our car dealership business plan template .

Your business plan should articulate your vision clearly. Define your target market (such as families, luxury buyers, or commercial enterprises) and your dealership's unique value proposition (such as specializing in electric vehicles, offering exceptional after-sales service, or providing a wide range of financing options).

Market analysis is a key component. This requires a thorough understanding of local competitors, automotive industry trends, and consumer buying habits.

For a car dealership, it's important to detail the range of vehicles and services you plan to offer. Describe your inventory - new cars, used cars, commercial vehicles - and how these cater to the preferences and needs of your target customers.

The operational plan is critical. It should outline the location of your dealership, the showroom layout, vehicle procurement strategies, and the sales process.

As a car dealership, you must emphasize the quality of your vehicles, customer service excellence, and adherence to automotive industry standards and regulations.

Address your marketing and sales strategy next. How will you draw in and keep customers? Consider advertising tactics, customer loyalty programs, and cross-selling opportunities (such as selling car accessories or offering maintenance packages).

Implementing digital strategies, like maintaining an updated website and active social media profiles, is also vital in the modern marketplace.

The financial plan is another crucial element. This includes the initial investment, sales projections, operational expenses, and the point at which you will break even.

In a car dealership, understanding the profit margins for different types of vehicles and services is essential, so meticulous planning and a firm grasp of your financials are necessary. For assistance, refer to our financial forecast for a car dealership .

Compared to other business plans, a car dealership's plan must pay special attention to inventory management, manufacturer relationships, compliance with automotive regulations, and the cyclical nature of car sales.

A well-crafted business plan will not only help you clarify your strategies and vision but also attract investors or secure loans.

Lenders and investors are looking for a solid market analysis, realistic financial projections, and a clear understanding of the day-to-day operations of a car dealership.

By presenting a detailed and substantiated plan, you show your credibility and dedication to the success of your dealership.

To achieve these goals while saving time, you can complete our car dealership business plan template .

A free example of business plan for a car dealership business

Here, we will provide a concise and illustrative example of a business plan for a specific project.

This example aims to provide an overview of the essential components of a business plan. It is important to note that this version is only a summary. As it stands, this business plan is not sufficiently developed to support a profitability strategy or convince a bank to provide financing.

To be effective, the business plan should be significantly more detailed, including up-to-date market data, more persuasive arguments, a thorough market study, a three-year action plan, as well as detailed financial tables such as a projected income statement, projected balance sheet, cash flow budget, and break-even analysis.

All these elements have been thoroughly included by our experts in the business plan template they have designed for a car dealership .

Here, we will follow the same structure as in our business plan template.

Market Opportunity

Market data and figures.

The automotive retail industry is a significant component of the global economy.

As of recent data, the global automotive dealership market is valued at several hundred billion dollars, with projections indicating steady growth. This is fueled by increasing vehicle sales, both new and pre-owned, and the expansion of automotive services.

In the United States alone, there are over 18,000 franchised car dealerships, generating a combined annual revenue of over 1 trillion dollars. This underscores the critical role car dealerships play in the American economy and the automotive industry at large.

These figures highlight the robust nature of the car dealership market and its substantial contribution to economic activity.

The automotive industry is witnessing several key trends that are shaping the future of car dealerships.

Electric vehicles (EVs) are gaining momentum, with more consumers seeking environmentally friendly transportation options. This shift is driving dealerships to diversify their inventory to include a range of EVs and hybrids.

Connectivity and autonomous driving technologies are advancing, leading to an increased demand for vehicles equipped with the latest tech features.

Online car buying platforms are transforming the traditional car purchasing experience, offering more convenience and transparency to consumers. This trend is compelling dealerships to enhance their digital presence and offer virtual showrooms and online financing options.

Subscription services and flexible ownership models are also emerging, providing alternatives to traditional car ownership and leasing.

Amidst these trends, consumer expectations for exceptional service and personalized experiences remain high, pushing dealerships to prioritize customer satisfaction and loyalty programs.

These trends are indicative of the dynamic nature of the car dealership industry and the need for businesses to adapt to the evolving preferences of modern consumers.

Success Factors

Several factors contribute to the success of a car dealership.

First and foremost, a diverse and high-quality vehicle inventory that meets consumer demands is essential. Dealerships that offer a wide range of models, including the latest releases and certified pre-owned vehicles, are more likely to attract a broad customer base.

Innovative marketing strategies and a strong online presence are also critical in a digital age where many consumers begin their car buying journey online.

The location of the dealership plays a significant role in its visibility and accessibility to potential customers.

Exceptional customer service, from the initial inquiry to post-sale support, is vital for building trust and encouraging repeat business.

Lastly, efficient operations management, competitive pricing, and the ability to adapt to industry trends, such as the rise of electric vehicles and digital sales platforms, are key to a dealership's long-term viability and profitability.

The Project

Project presentation.

Our car dealership project is designed to cater to the evolving needs of modern consumers who are seeking reliable, eco-friendly, and technologically advanced vehicles. Strategically located in an area with high vehicular traffic and easy accessibility, our dealership will offer a diverse range of vehicles, including electric and hybrid models, family cars, and luxury vehicles, all from reputable manufacturers.

We will prioritize exceptional customer service, a transparent buying process, and a comprehensive after-sales support system to ensure a seamless and satisfying ownership experience.

Our dealership is set to become a trusted destination for car buyers who value sustainability, innovation, and quality in their automotive choices, thereby contributing to a greener and more technologically connected community.

Value Proposition

The value proposition of our car dealership is centered on providing a diverse selection of high-quality vehicles that cater to the environmental consciousness and lifestyle needs of our customers.

Our commitment to sustainability, customer satisfaction, and technological innovation positions us as a forward-thinking dealership that not only sells cars but also contributes to a cleaner environment and enhances the driving experience with the latest automotive advancements.

We are dedicated to fostering long-term relationships with our customers by offering a trustworthy, informative, and hassle-free car buying journey, and aim to educate our customers about the benefits of eco-friendly and smart vehicle choices.

Our dealership is determined to be a cornerstone in the community, offering a sustainable and advanced automotive solution that aligns with the values and aspirations of our customers.

Project Owner

The project owner is an automotive industry professional with a passion for cars and a deep understanding of the modern consumer's expectations.

With a background in automotive sales and a keen interest in environmental sustainability, he is driven to establish a car dealership that stands out for its commitment to offering eco-friendly and technologically advanced vehicles.

With a vision of innovation and customer-centric service, he is dedicated to providing a selection of cars that not only meet the practical demands of daily life but also contribute to the reduction of carbon footprints and the promotion of green technology.

His dedication to excellence and his enthusiasm for the automotive industry make him the driving force behind this project, aiming to revolutionize the car buying experience and support the community's transition to more sustainable transportation options.

The Market Study

Market segments.

The market segments for this car dealership are divided into several categories.

First, there are individuals looking for reliable and affordable transportation, who prioritize functionality and value in their vehicle purchases.

Next, there are car enthusiasts and luxury buyers who seek the latest models, high performance, or premium features in their vehicles.

The market also includes families in need of spacious and safe vehicles for daily commuting and long-distance travel.

Finally, businesses and professionals requiring fleet vehicles or company cars form another significant segment, emphasizing durability and cost-effectiveness.

SWOT Analysis

A SWOT analysis of this car dealership project reveals several aspects.

Strengths include a wide selection of vehicles, strong relationships with manufacturers, a knowledgeable sales team, and a reputation for excellent customer service.

Weaknesses could include the high costs associated with maintaining an extensive inventory and the challenge of adapting to rapidly changing automotive technology.

Opportunities lie in the growing demand for electric and hybrid vehicles, the potential to offer competitive financing options, and the ability to expand services such as maintenance and repairs.

Finally, threats could include economic downturns affecting consumer spending, increased competition from other dealerships and online car sellers, and regulatory changes impacting the automotive industry.

Competitor Analysis

Competitor analysis in the car dealership sector reveals a diverse and competitive landscape.

Among direct competitors are other local dealerships, national chains, and online platforms that offer vehicle sales and leasing options.

These players compete on price, vehicle selection, financing options, and customer service quality.

Potential competitive advantages include exclusive dealership agreements with manufacturers, a strong online presence, exceptional after-sales support, and a loyal customer base.

Understanding competitors' strengths and weaknesses is crucial for carving out a unique position in the market and ensuring customer loyalty.

Competitive Advantages

Our car dealership stands out due to our commitment to providing a diverse range of high-quality vehicles that cater to various customer needs and preferences.

We offer competitive pricing, flexible financing options, and a customer-centric approach that ensures a seamless buying experience.

Additionally, our after-sales services, including maintenance, repairs, and parts, help us maintain strong relationships with our customers, fostering trust and repeat business.

We pride ourselves on our knowledgeable staff who are passionate about cars and dedicated to helping customers find the perfect vehicle for their lifestyle and budget.

You can also read our articles about: - how to start a car dealership business: a complete guide - the customer segments of a car dealership business - the competition study for a car dealership business

The Strategy

Development plan.

Our three-year development plan for the car dealership is designed to establish us as a leader in the automotive sales industry.

In the first year, we will concentrate on building a robust inventory of quality vehicles and creating a strong local presence through exceptional customer service and community engagement.

The second year will focus on expanding our reach by establishing additional showrooms in key locations and enhancing our online sales platform to cater to a wider audience.

By the third year, we aim to diversify our offerings to include electric and hybrid vehicles, as well as providing financial services such as leasing and car loans. We will also seek strategic partnerships with automotive service providers to offer a comprehensive customer experience.

Throughout this period, we will remain dedicated to customer satisfaction, transparency in transactions, and staying ahead of industry trends to serve our clients better and secure our market position.

Business Model Canvas

The Business Model Canvas for our car dealership focuses on a diverse customer segment that includes first-time buyers, families, professionals, and car enthusiasts.

Our value proposition is centered around providing a wide range of high-quality vehicles, competitive pricing, and a superior customer buying experience.

We will facilitate sales through our physical dealership locations and a user-friendly online platform, utilizing key resources such as our knowledgeable sales team and our partnerships with reputable car manufacturers.

Key activities include vehicle procurement, sales consultations, and after-sales support.

Our revenue streams will be generated from vehicle sales, financing options, and after-sales services, while our costs will be primarily associated with inventory acquisition, facility maintenance, and marketing initiatives.

Access a complete and editable real Business Model Canvas in our business plan template .

Marketing Strategy

Our marketing strategy is built on brand recognition and customer loyalty.

We plan to engage potential customers by showcasing the reliability and variety of our vehicle inventory. We will host test drive events, participate in local and regional auto shows, and maintain an active online presence with virtual tours and detailed vehicle information.

We will also establish partnerships with local businesses and organizations to expand our network and referral base.

Utilizing social media, targeted advertising, and influencer partnerships, we aim to reach a wider audience and establish our dealership as a trusted name in the automotive industry.

Risk Policy

The risk policy for our car dealership is focused on mitigating risks associated with inventory management, market fluctuations, and customer satisfaction.

We will implement a dynamic inventory management system to align with market demand and avoid overstocking. We will also keep abreast of industry trends to adapt to changes in consumer preferences, particularly with the shift towards sustainable vehicles.

To ensure customer satisfaction, we will provide comprehensive training to our staff and implement a feedback system to promptly address any concerns.

Additionally, we will maintain a conservative financial strategy to safeguard against economic downturns and have comprehensive insurance policies to cover potential liabilities.

Why Our Project is Viable

We are committed to launching a car dealership that meets the evolving needs of modern consumers.

With a focus on quality, customer service, and adaptability to market trends, we are poised to carve out a significant share in the competitive automotive market.

We are enthusiastic about the opportunity to serve our community and look forward to the growth and success of our dealership.

Open to strategic adjustments and innovation, we are confident in the viability and future prosperity of our car dealership.

You can also read our articles about: - the Business Model Canvas of a car dealership business - the marketing strategy for a car dealership business

The Financial Plan

Of course, the text presented below is far from sufficient to serve as a solid and credible financial analysis for a bank or potential investor. They expect specific numbers, financial statements, and charts demonstrating the profitability of your project.

All these elements are available in our business plan template for a car dealership and our financial plan for a car dealership .

Initial expenses for our car dealership include acquiring a suitable showroom location, purchasing an initial inventory of vehicles, obtaining the necessary licenses and insurance, investing in high-quality maintenance equipment, and developing a robust IT system for inventory and sales management. Additionally, we will incur costs related to branding, creating an online presence, and launching targeted marketing campaigns to attract potential customers.

Our revenue assumptions are based on a comprehensive analysis of the local market demand for vehicles, taking into account factors such as population growth, economic trends, and consumer preferences for specific car models and features.

We anticipate a steady increase in vehicle sales, starting with a conservative approach and expanding as our dealership gains recognition and trust within the community.

The projected income statement outlines expected revenues from vehicle sales and services, cost of goods sold (purchase price of inventory, parts, and supplies), and operating expenses (facility lease, marketing, salaries, utilities, etc.).

This results in a forecasted net profit that is essential for assessing the long-term profitability of our car dealership.

The projected balance sheet reflects assets specific to our business, such as vehicle inventory, showroom fixtures, and liabilities including loans and anticipated operational expenses.

It provides a snapshot of the overall financial health of our car dealership at the end of each accounting period.

Our projected cash flow statement details the inflows and outflows of cash, enabling us to predict our financial needs at any given time. This will assist us in managing our finances effectively and preventing cash flow issues.

The projected financing plan identifies the specific sources of funding we intend to utilize to cover our startup and operational expenses.

The working capital requirement for our car dealership will be meticulously managed to ensure we have the necessary funds to support daily operations, including vehicle procurement, inventory management, and employee wages.

The break-even point for our dealership is the level of sales required to cover all our costs, including initial investments, and to begin generating a profit.

It will signal the point at which our business becomes financially sustainable.

Performance indicators we will monitor include the gross profit margin on vehicle sales, the inventory turnover rate to evaluate the efficiency of our stock management, and the return on investment to gauge the profitability of the capital invested in our dealership.

These metrics will aid us in assessing the financial performance and overall success of our car dealership.

If you want to know more about the financial analysis of this type of activity, please read our article about the financial plan for a car dealership business .

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Car Dealership Business Plan

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A Car Dealership Business Plan is a detailed plan that will help you take your business to the next level. Use this template to create your plan.

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Car Dealership Business Plan Template

Created by:

​ [Owner.FirstName] [Owner.LastName] ​

​ [Owner.Company] ​

EXECUTIVE SUMMARY

​ [Owner.Company] is a new car dealership that will offer a wide range of new and used vehicles to customers in the [Owner.City] area. The dealership will be owned and operated by [Owner.FirstName] [Owner.LastName] , who has (insert number) years of experience in the automotive industry. The dealership will be located in a prime location with high visibility and easy access for customers. It will offer a variety of services, including sales, financing, leasing, maintenance, and repair.

COMPANY DESCRIPTION

​ [Owner.Company] will be registered as a(n) (LLC/Corporation) and will employ (insert number) people at the start, including the owner and a team of sales associates and service technicians. The dealership will offer a selection of new vehicles from top manufacturers and a wide range of high-quality used vehicles. The dealership will also offer financing and leasing options for customers, as well as maintenance and repair services for all makes and models of vehicles.

MARKET ANALYSIS

The automotive industry is expected to remain stable over the next five years, with a slight increase in sales projected. The demand for new and used vehicles is driven by population growth, economic development, and the need for reliable transportation. [Owner.Company] will target both individual and commercial customers in the [Owner.City] area, focusing on providing high-quality vehicles and excellent customer service.

MARKETING STRATEGY

​ [Owner.Company] will use a combination of traditional and digital marketing techniques to reach potential customers. This will include advertising in local newspapers and industry publications, as well as utilizing social media platforms and email marketing to promote sales and specials. The dealership will also rely on word-of-mouth referrals from satisfied customers. The dealership will host events and promotions to attract new customers and build brand awareness in the local community.

​ [Owner.Company] will have a modern showroom and service center to showcase vehicles and provide maintenance and repair services. The dealership will have a team of experienced sales associates and service technicians who will assist customers and maintain the dealership's inventory of vehicles. The dealership will have a manager overseeing all operations and ensuring that the dealership is running smoothly. The dealership will maintain a well-stocked parts department to ensure that customers' vehicles are well-maintained and repaired as needed.

FINANCIAL PLAN

​ [Owner.Company] will generate revenue through the sale of new and used vehicles, as well as financing and leasing options. The dealership will also generate revenue through the sale of parts and services. The dealership will have operating expenses, including payroll, rent, utilities, and insurance. The dealership expects to generate (Amount) in revenue in the first year, with a projected growth rate of (Percentage) per year. The dealership will implement strategies to increase profitability, such as offering value-added services and maintaining a high level of customer satisfaction.

​ [Owner.Company] is well-positioned to meet the demand for new and used vehicles in the [Owner.City] area. With a prime location, a wide range of high-quality vehicles and services, and a commitment to customer satisfaction, the dealership is confident that it will be successful in the competitive automotive market.

​ [Client.FirstName] [Client.LastName] ​

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Car Dealership Business Plan Template [Updated 2024]

Car Dealership Business Plan

If you want to start a new car dealership or expand your current dealership, you need a business plan.

The following car dealership business plan template gives you the key elements to include in a winning business plan. In addition to this template, a successful business plan will include market research to support your business concept, help you better understand the car dealership industry, market trends, car prices and your target customers. It will also help you craft a smart marketing plan and a strong financial plan.

You can download our Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

Sample Business Plan For New Car Dealerships

Below are links to each of the key sections of a sample business plan that can be used for all types of car dealerships including a luxury car dealership, an online car dealership, new car dealers, and used car dealerships.

• Executive Summary – The executive summary provides an overview of your business opportunity and summarizes the business plan.
• Company Overview – The company analysis includes information about your business concept, the types of vehicles you plan to sell, car repair and maintenance services and legal structure.
• Industry Analysis – The industry analysis includes market research that supports your business and provides insights into market trends and the automotive industry.
• Customer Analysis – The customer analysis provides an overview of your target market and the purchasing habits of these potential customers.
• Competitive Analysis – The competitive analysis should identify your direct and indirect competitors and highlight your competitive advantage.
• Marketing Plan – The marketing plan includes your marketing strategy, pricing strategy and how you will build brand awareness utilizing social media platforms and other forms of digital marketing.
• Operations Plan – The Operations Plan includes information on your dealership’s day-to-day operations including inventory management and auto sales, and processes in the service department to maintain customer satisfaction.
• Management Team – The management team section includes a profile of the business owner and business management, their experience and company responsibilities.
• Financial Plan – The financial plan includes financial projections, a cash flow statement, profit and loss statement, and balance sheet.

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Car Dealership Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan

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Car Dealership

Back to All Business Ideas

How to Open a Car Dealership and Thrive in the Market

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on December 20, 2021

Investment range

$29,750 - $112,600

Revenue potential

$500,000 - $2 million p.a.

Time to build

1 – 3 months

Profit potential

$200,000 - $300,000 p.a.

Industry trend

Here are the most important considerations when you are starting your car dealership business:

• Location — The location should align with the demographics of your target market. For example, luxury car dealerships might do better in affluent areas, while economy models might sell better in more diverse economic areas.
• Licenses — You will need a dealer license to sell new and used cars. Many states also require car dealers to have a surety bond , which provides financial assurance that the dealer will adhere to state regulations and laws.
• Specialization — Specializing in certain types of vehicles, brands, or service offerings can help your car dealership stand out and attract more customers.
• Insurance — Consider different types of insurance, such as general liability, property, garage keepers, and inventory insurance, to manage the risks associated with car dealerships.
• Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
• Legal business aspects — Register for taxes, open a business bank account, and get an EIN .
• Franchises — Here are some of the best franchises to consider: Ford Motor Company , Toyota Motor Sales, U.S.A., Inc ., and General Motors (GM) .
• Online presence — Take your car dealership business online and create a professional website where you can showcase your vehicles and add specifications.
• Inventory management — Invest in robust inventory management software to track inventory in real-time.

Interactive Checklist at your fingertips—begin your car dealership today!

You May Also Wonder:

Is owning a car dealership profitable?

The new and used car industry in the United States is worth over a trillion dollars, and even a small used car dealership can tap into a share of that. You can markup used cars between 25% and 45% so your profit margins will be healthy.

What car has the highest profit margin?

The Ford F-Series and Range Rover have the highest profit margin. Next is the GMT 800. 

What is the most profitable part of a car dealership?

Used cars tend to be more profitable than new cars. It’s best for car dealerships to bring in revenue from new cars, used cars, and repairs.

What is the growth potential of car dealership?

The growth potential of a car dealership is really unlimited. You can expand to multiple locations in your area, or even across the country. 

Step 1: Decide if the Business Is Right for You

Pros and cons.

Every business, including a car dealership, has pros and cons that you should consider before deciding whether it’s right for you.

• Socializing — You’ll meet and work with a lot of people every day
• Steady demand — Somebody is always in need of a quality ride
• Good money — Cars have big profit potential that can drive growth
• Startup costs — An inventory of cars does not come cheap
• Long hours — Most dealerships are open 10–12 hours six days a week

Car Dealership Industry Trends

Hybrid and electric vehicles are among the hotter trends in the car industry. Tesla and its electric cars have been in the spotlight for years, and seem to be popping up everywhere lately. Market research firm Statista reports that Tesla sales amounted to almost two million in 2023. Eco-friendly auto options such as superior fuel efficiency and lighter-weight cars made of composite materials are in demand, as are digital safety features such as forward-collision warnings and automatic emergency braking.(( https://www.statista.com/statistics/502208/tesla-quarterly-vehicle-deliveries/ ))

Despite a 40% price increase since March 2020, as reported by the US Bureau of Labor Statistics, consumers are flocking to the used car market due to supply chain disruptions for new cars. This presents a significant opportunity for the smart and aggressive entrepreneur.(( https://www.bls.gov/news.release/cpi.t01.htm ))

Another industry trend is the ongoing shift to the online marketplace, which is no longer just for new cars. Shift, Vroom, and Carvana are major online players in this market, selling nearly 250,000 used cars combined in the first half of 2021.(( https://www.bloomberg.com/news/articles/2021-09-28/used-car-sales-vroom-carvana-shift-thrive-during-pandemic#xj4y7vzkg ))

Industry Size and Growth

• Industry size and past growth — Market analyst IBISWorld values the US new car market at an incredible $1.2 trillion(( https://www.ibisworld.com/industry-statistics/market-size/new-car-dealers-united-states/ )) and the used car dealers market at $173.1 billion(( https://www.ibisworld.com/industry-statistics/market-size/used-car-dealers-united-states/ ))  
• Growth forecast — Car sales have yet to recover from the pandemic-driven slump, but are predicted to grow 2.6% in 2024 alone.(( https://www.statista.com/statistics/267128/outlook-on-worldwide-passenger-car-sales/ ))
• Number of businesses — The US is home to almost 70,000 new car dealers(( https://www.ibisworld.com/industry-statistics/number-of-businesses/new-car-dealers-united-states/ )) and more than 130,000 used car dealers.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/used-car-dealers-united-states/ ))
• Number of people employed — New car dealers employ more than 1.1 million people(( https://www.ibisworld.com/industry-statistics/employment/new-car-dealers-united-states/ )), while used car dealers have only around 260,000 employees.(( https://www.ibisworld.com/industry-statistics/employment/used-car-dealers-united-states/ ))

Trends and Challenges

• Hybrids, plug-in hybrids, and pure battery electric vehicles are gaining popularity
• Direct-to-consumer vehicle sales are increasing
• Consumers would rather buy a car online than go physically to a dealership
• Rising car prices due to tight supply and high demand
• Growing consumer preference for ride-sharing apps
• High fuel prices

Consumer Spending

• Average consumer spend — The average American household spends $10,728 a year to own and operate a new vehicle. Most of these costs go towards insurance and car payments.(( https://newsroom.aaa.com/2022/08/annual-cost-of-new-car-ownership-crosses-10k-mark/ ))
• Potential customer base — A majority of US households own at least one car.(( https://www.statista.com/statistics/551403/number-of-vehicles-per-household-in-the-united-states/ ))
• Average prices — Automotive research company Kelley Blue Book says the average price of a new car in the US topped $47,000 for the first time in December 2021(( https://www.kbb.com/car-news/average-new-car-price-tops-47000/ )) and has remained pretty much the same during the last couple of years. According to this company, a used car sells for an average of $25,328.(( https://www.kbb.com/car-news/averaged-used-car-price-down-4-since-last-year/ ))

Price Differences Across the Country

• More expensive — The five states where it’s most expensive to buy a used car are Wyoming, Alaska, Montana, North Dakota, and South Dakota.
• Less expensive — The five states where it’s least expensive to buy a used car are Vermont, New Hampshire, Ohio, Hawaii, and Rhode Island.(( https://www.iseecars.com/used-car-prices-by-state-study ))

What Kind of People Work in Car Dealerships?

• Gender — 71% of car dealers in the US are male, while 29% are female.(( https://www.zippia.com/car-dealer-jobs/demographics/#gender-statistics ))
• Average level of education — 41% of car dealers hold a bachelor’s degree.(( https://www.zippia.com/car-dealer-jobs/demographics/#degree-level-types ))
• Average age — The average age of a car dealer in the US is 41 years old.(( https://www.zippia.com/car-dealer-jobs/demographics/#age-statistics ))

How Much Does It Cost to Start a Car Dealership?

Startup costs for a car dealership range from around $30,000 for a small used car lot to well over $100,000 for a large new car dealership. The biggest expense is, of course, the initial inventory of vehicles, though you can start small with just a handful of used cars and a great website.

How Much Can You Earn From a Car Dealership?

Markups on used cars range from 25% to 45%, while the average markup on a new car is 8% to 13%. You can use our markup calculator to calculate your sale price and how much revenue and profit you will earn with different markup percentages. When you work by yourself, your profit margin should be around 40%. The average price of a used car is about $25,000. But at least initially you will probably be handling lower-priced cars, so let’s assume you start selling used cars for an average price of $10,000.

In your first year or two, you could run your own used car lot and sell 50 cars in a year, bringing in $500,000 in annual revenue. This would mean $200,000 in profit, assuming that 40% margin. As your brand gains recognition, sales could climb to 200 cars a year. But due to your new staff, your margin would fall to around 15%, the industry average. With an expected annual revenue of $2 million, you’d have a pre-tax profit of $300,000.

What Barriers to Entry Are There?

There are a few barriers to entry for a car dealership. Your biggest challenges will be:

• Costs — All those cars will cost a pretty penny, even used
• Competition — You will face competition from physical and online dealers

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Step 2: hone your idea.

Now that you know what’s involved in starting a car dealership, it’s a good idea to hone your concept in preparation to enter a competitive market.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an Opportunity

Research car dealerships in your area to see what they offer. Maybe there’s no used car dealership that offers warranties or focuses on lower-priced used cars. You’re looking for a gap in the market in a particular part of town that you can fill.

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as only used trucks or classic American models like Mustangs and Camaros.

This could jumpstart your word-of-mouth marketing and attract clients right away.

What? Determine What Kind of Cars and Additional Services Your Dealership Will Offer

First, determine what kinds of cars you want to specialize in. You can offer used cars, new cars, or both, but you also need to determine if you’re going to offer value-priced models or higher-end models. Then determine what else you might offer, such as:

• Financing options
• Repair and maintenance services

In addition to a car dealership, you can also incorporate a motorcycle dealership into your business.

How Much Should You Charge for Cars?

The typical markup for used cars ranges from 25% to 45% and the markup for new cars is between 8% and 13%. If you specialize in used cars, your price will depend on what price you can acquire cars for. You’ll need to know the value of various models, so you’ll want to keep the Kelley Blue Book nearby, to provide value estimates. You should purchase cars at below market value so that you can mark them up to a reasonable price. For new cars, you’ll be marking up from the wholesale price offered by the manufacturer.

Once you know your costs, you can use our profit margin calculator to determine your markup and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify Your Target Market

Your target market will depend on what type of cars you decide to specialize in. If you sell used cars that are lower priced, your customers may be younger, so you are more likely to find them on sites like Instagram or TikTok rather than Facebook.

Where? Choose Your Car Dealership Location

You’ll probably want to rent a location that has a big enough lot for you to park your cars, and it should be big enough for you to grow. You can sell cars online, but you still need a lot to store them. It should also have a structure that you can use as an office.

You should choose a location with a lot of road traffic but you also need a great website to make online sales. You can find commercial space to rent in your area on Craigslist , Crexi , and Commercial Cafe .

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Car Dealership Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “cars” or “used cars,” boosts SEO
• Choose a name that allows for expansion: “Premier Automotive Group” over “Electric Car Dealership”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Discover over 300 unique car dealership name ideas here . If you want your business name to include specific keywords, you can also use our car dealership name generator. Just type in a few keywords, hit Generate, and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Car Dealership Business Plan

Here are the key components of a business plan:

• Executive summary — A brief overview outlining the business’s mission, goals, and key highlights to provide a snapshot of the entire car dealership business plan
• Business overview — A comprehensive description of the car dealership, including its history, mission, vision, and key objectives, to give readers a clear understanding of the business
• Product and services — Detailed information on the range of cars and related services offered by the dealership, emphasizing unique selling points and value propositions
• Market analysis — An in-depth examination of the automotive market, identifying target demographics, market trends, and potential opportunities for the car dealership
• Competitive analysis — Evaluation of competitors in the automotive industry, highlighting strengths, weaknesses, and strategies to position the dealership effectively
• Sales and marketing — Strategies for promoting and selling cars, including advertising, promotions, and customer relationship management to drive sales and brand awareness
• Management team — Introduction and background of key individuals responsible for managing and steering the car dealership, emphasizing their expertise and roles
• Operations plan — Details on day-to-day operations, from inventory management to customer service, ensuring a smooth and efficient running of the dealership
• Financial plan — A comprehensive financial overview, including projections, budgets, and funding requirements, providing a clear picture of the dealership’s financial health and sustainability
• Appendix — Supplementary materials such as charts, graphs, and additional data supporting the information presented in the business plan

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose Where to Register Your Company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to a car dealership.

If you’re willing to move, you could really maximize your business! Keep in mind that it’s relatively easy to transfer your business to another state.

Choose Your Business Structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your car dealership will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole proprietorship — The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General partnership — Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) — Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corporation — Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corporation — This refers to the tax classification of the business but is not a business entity. A corporation or an LLC can elect to be an S Corp for tax status. In an S Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number or EIN. You can file for your EIN online, or by mail/fax. Visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund Your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans — This is the most common method, but getting approved requires a rock-solid business plan and a strong credit history.
• SBA-guaranteed loans — The Small Business Administration can act as a guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants — A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital — Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and family — Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding — Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal — Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a car dealership. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Car Dealership Business Licenses and Permits

Starting a car dealership requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You need to meet the requirements of your state to get a dealer license, and you need an Auto Dealer Bond as required by your state.

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your car dealership as a sole proprietorship. Opening a business bank account is quite simple and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability — The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business property — Provides coverage for your equipment and supplies.
• Equipment breakdown insurance — Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation — Provides compensation to employees injured on the job.
• Property — Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto — Protection for your company-owned vehicle.
• Professional liability — Protects against claims from clients who say they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP) — This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential Software and Tools

Being an entrepreneur often means wearing many hats — from marketing to sales to accounting — which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You may want to use industry-specific software, such as CDK Global and vAuto , to manage your inventory and sales.

• Popular web-based accounting programs for smaller businesses include Quickbooks , FreshBooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences of filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop Your Website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.

However, people are unlikely to find your website unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Here are some powerful marketing strategies for your future business:

• Professional branding — Create a consistent and polished brand identity across all marketing channels to establish trust and recognition.
• Local SEO — Optimize your online presence with a user-friendly website and leverage local business platforms like Yelp and Google My Business to boost visibility.
• Direct outreach — Forge partnerships with local businesses and community organizations to tap into corporate sales and local promotions.
• Social media targeting — Engage audiences on platforms like Facebook, Instagram, and LinkedIn with tailored ads showcasing vehicle highlights and customer testimonials.
• Content marketing — Launch an automotive blog and develop useful guides and infographics to position your dealership as an expert in the field.
• Customer testimonials — Feature stories from satisfied customers to enhance credibility and attract potential buyers.
• Experiential marketing — Host test drive events and participate in local community activities to offer direct product experiences and strengthen community ties.
• Referral and loyalty programs — Implement systems to reward loyalty and referrals, encouraging ongoing customer engagement and retention.
• Digital advertising — Employ targeted advertising and pay-per-click campaigns to attract interested buyers effectively.
• Video marketing — Use video content to enhance online visibility and engage a broader audience.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Today, customers are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your car dealership meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its strong USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your car dealership could be:

• Reliable cars for less, guaranteed
• Upscale used cars for your luxury life
• Family cars that keep your family safe

You may not like to network or use personal connections for business gain but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a car dealership, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in a car dealership for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in cars. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting small, you may not need any employees right away. But as your business grows, you will likely need workers to fill various roles. Potential positions for a car dealership would include:

• Salespeople — Selling cars, customer service
• Finance manager — Working with lenders to get customers’ financing
• Marketing lead — SEO, social media strategies
• General manager — Managing staff, ordering inventory

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Car Dealership — Start Making Money!

In good times and bad, people buy cars. It’s a trillion-dollar market, and with hard work and determination, you could grab your share and make a great living. It’s also important to keep up with the trends, such as going digital and maintaining a strong online presence to attract consumers who prefer to shop online.

Start small, build a name, add to your inventory, and grow your business. One day you could be that celebrity local auto dealer with an acre of cars. Now that you have the knowledge you need, you should be off to the races on your entrepreneurial journey!

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Car Dealership Name
• Create a Car Dealership Business Plan
• Register Your Business
• Register for Taxes
• Fund Your Business
• Apply for Car Dealership Business Licenses and Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Run a Car Dealership — Start Making Money!

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Car Dealership Business Plan Template

Launch your car dealership venture with our exhaustive and user-friendly template crafted for ambitious entrepreneurs. From market scrutiny to financial forecasting, our template covers all the requisite elements for creating a sturdy car dealership business plan. Download it today and steer towards automotive business success.

Download the template today!

Features of the car dealership business plan template.

• Market Analysis : Undertake a deep examination of the automotive market, pinpoint target demographics, and evaluate customer needs. Our template provides a methodical approach to market analysis tailored for the car dealership industry.
• Business Model: Establish your car dealership's distinct value proposition, select appropriate business strategies, and pinpoint your target market. Our template provides direction and insights to assist you in choosing the most fitting business model for your dealership.
• Financial Projections : Project your revenue sources, expenses, and profitability with our thorough financial forecasting section. This aids you in making well-informed decisions and setting achievable objectives for your dealership's financial growth.
• Marketing Strategy: Formulate a marketing plan that efficiently advertises your dealership and attracts devoted customers. Our template guides you in constructing a strategic marketing approach, including brand positioning, advertising campaigns, and customer engagement tactics.

Benefits of Using Our Template

• Time and Effort Saving: Make use of our pre-designed template to save valuable time. Concentrate on perfecting your dealership concept and business strategy rather than creating a plan from ground zero.
• Clarity and Direction : Our template offers a lucid route, ensuring you tackle all crucial aspects of your car dealership business plan. Keep your focus on your objectives and avoid missing critical factors of your dealership's success.
• Heightened Chances of Success: A comprehensive and well-structured business plan elevates your odds of success in the competitive car dealership industry. Our template provides the necessary resources to professionally present your dealership concept and appeal to potential investors or lenders.

Car Dealership Business Plan Frequently Asked Questions

Q: why do i need a car dealership business plan.

A: A car dealership business plan is vital as it assists in market evaluation, setting business goals, and forming a strategic method for success in the industry. It functions as a guide for your dealership, informing decision-making and drawing potential investors or lenders.

Q: What are the key parts of a car dealership business plan?

A: A car dealership business plan should encompass a market analysis, business model, financial forecasts, marketing strategy, and operations plan. These elements allow you to understand your target audience, gauge profitability, plan your finances, and create impactful strategies for promoting and expanding your dealership.

Q: How can a car dealership business plan help attract funding?

A: A thoroughly crafted car dealership business plan convinces investors or lenders that you possess an extensive understanding of the industry, a viable business model, and a strategy for profit. Financial forecasts play a pivotal role in illustrating the potential return on investment. Sharing your business plan with potential financiers improves your chances of obtaining the necessary capital for your dealership.

We Know a Good Business Plan When we See One

Collectively, our team has reviewed thousands of business plans and has nearly 20 years of experience making SBA loans. We've also helped more than 50,000 businesses create financial projections across many industries and geographies.

Adam served as Executive Director for a SBA microlender in Indiana for over 10 years helping businesses and reviewing thousands of business plans.

Grace has built hundreds of custom financial models for businesses as well as our projection templates which are used by thousands of businesses every year.

Kyle served as an SBA loan officer for 7 years working directly with startups and business owners to review their business plans, projections, and prepare their loan package.

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Opening a car dealership can be a risky venture without effective planning. It requires a large amount of overhead costs to acquire inventory, insurance coverage, pay structure for salesmen among other things. You’ll likely find yourself looking to apply for a loan to get your business off the ground, which can be difficult to do without a thorough business plan to use in your pitch.

Luckily we have sample business plans to help you get started and successfully launch your new car dealership.

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

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Discover the world’s #1 plan building software

Used Car Dealership Business Plan Template

Written by Dave Lavinsky

Used Car Dealership Business Plan

You’ve come to the right place to create your Used Car Dealership business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Used Car Dealerships.

Below is a template to help you create each section of your Used Car Dealership business plan.

Executive Summary

Business overview.

Reliable Motors is a used car dealership located in Portland, Oregon. We specialize in offering a wide selection of high-quality used vehicles to customers in our local area. With a focus on exceptional customer service and competitive pricing, we aim to become the preferred choice for individuals looking to purchase reliable pre-owned vehicles.

Reliable Motors is run by Otto Masterson. Otto has 12 years of experience in vehicle sales and dealership operations. His customer-centric approach, and strong understanding of the local market will ensure that our firm is successful.

Product Offering

Reliable Motors offers a diverse inventory of used cars, trucks, SUVs, and vans from various makes and models. Our selection includes vehicles that are carefully inspected, tested, and certified to meet our stringent quality standards. We also provide vehicle history reports and offer extended warranties for added peace of mind. Our knowledgeable sales team is committed to assisting customers in finding the right vehicle that suits their needs and budget.

Customer Focus

Our primary target market includes individuals and families in Portland, Oregon who are looking to purchase a reliable used vehicle. We will cater to customers with various budgets, offering a range of price points to accommodate different financial situations. Additionally, we will also establish partnerships with local businesses, such as car rental companies and auto repair shops, to provide them with fleet vehicles and maintenance services.

Management Team

Reliable Motors’ most valuable asset is the expertise and experience of its founder, Otto Masterson. Otto has been in automotive sales for the past 20 years. Throughout his career, he has developed a strong base of repeat customers, many of whom have stated that they will buy their next car from Reliable Motors once the company is established and running. Otto’s customer-centric approach, and strong understanding of the local market will ensure that our firm is successful.

Success Factors

Reliable Motors will achieve success by offering the following competitive advantages:

• Quality Inventory: We will ensure our inventory consists of well-maintained and reliable used vehicles that meet our strict quality standards.
• Competitive Pricing: We will offer competitive prices to attract customers and provide value for their money. Our pricing strategy will consider market trends, vehicle condition, and fair market value.
• Exceptional Customer Service: We will prioritize customer satisfaction by providing a personalized and hassle-free buying experience. Our knowledgeable and friendly sales team will assist customers in finding the right vehicle that meets their needs and budget.
• Transparent Processes: We will establish trust by providing accurate vehicle information, pricing details, and facilitating open communication.
• Strong Industry Partnerships: We will collaborate with reputable suppliers, finance institutions, and service providers to enhance our offerings and provide additional benefits to customers.

Financial Highlights

Reliable Motors is seeking $1,000,000 in funding to establish and grow the business. The funds will be allocated as follows:

• Inventory acquisition: $800,000
• Renovation and setup of the dealership facility: $100,000
• Marketing and advertising expenses: $50,000
• Working capital: $50,000

The projected financials indicate steady revenue growth and profitability within the first three years of operation

Company Overview

Who is reliable motors.

  Reliable Motors is run by Otto Masterson, a 12 year veteran in vehicle sales and dealership operations. After working for several dealerships around town, he surveyed his most loyal customers to see if they would be willing to switch to his new dealership once it is established. Most of his customers responded enthusiastically, which motivated Otto to finally launch his business.

Reliable Motors History

Once he canvassed his loyal customer base and located a potential location, Otto Masterson incorporated Reliable Motors as an S-Corporation in April 2023.

The business is currently being run out of Otto’s home office, but once the purchase of the dealership location is finalized, all operations will be run from there.

Since incorporation, Reliable Motors has achieved the following milestones:

• Found a location and made an offer of purchase
• Developed the company’s name, logo, and website
• Hired an architect to design the lot, the service area, and the office building
• Determined equipment and fixture requirements
• Began recruiting key employees

Reliable Motors Services

Reliable Motors will provide the following services to its customers:

• Vehicle Sales: offer an inventory of used cars, trucks, SUVs, and vans, catering to various customer preferences and budgets.
• Financing Assistance: assistance with financing options through partnerships with local banks and financial institutions.
• Trade-ins: Customers will have the option to trade in their current vehicles, allowing them to apply the value toward their purchase at Reliable Motors.

Industry Analysis

The used car industry is experiencing steady growth, driven by factors such as rising new car prices, improved vehicle reliability, and a growing preference for cost-effective transportation options.

The used car industry is expected to grow over the next several years. According to a recent report by IBISWorld, the used car dealerships industry is expected to grow at a CAGR of 1.2% from now until 2028. This growth is due to increasing environmental consciousness, which has caused many consumers to avoid purchasing new automobiles. This increase in demand and industry growth ensures that Reliable Motors will achieve success.

This industry presents a significant opportunity for Reliable Motors to cater to customers seeking quality used cars at competitive prices.

Customer Analysis

Demographic profile of target market.

Reliable Motors primarily targets individuals in the Portland area who are in the market for a reliable and affordable pre-owned vehicle. By understanding our customers’ needs and providing a personalized buying experience, we aim to build long-lasting customer relationships.

Customer Segmentation

Reliable Motors will primarily target the following customer profiles:

• First-time car buyers
• Professionals
• Individuals

Competitive Analysis

Direct and indirect competitors.

Reliable Motors faces competition from both direct and indirect competitors in the used car dealership industry. Direct competitors include other local dealerships offering similar vehicle options. Indirect competitors include online marketplaces and private sellers.

AutoWheels is a used car dealership that carries a large variety of used cars, trucks, SUVs, and vans. Their line of car brands include Chevrolet, Dodge, Ford, Jeep, and Toyota. AutoWheels’ focus is offering clean, newer model used cars with affordable monthly payments. The dealership offers flexible financing approval for buyers with any credit score or financial situation.

AutoWheels partners with Portland Precision Auto Care for its automotive maintenance and repair needs. This partnership enables AutoWheels to offer services that include Car and Truck care, Electronic Services, Electrical Services, General Services, Heating and Cooling Services, Engine & Transmission, Miscellaneous Services, Transmission Services, Undercar Services, and Brakes.

James Rivers Automotive Outlet

Located in Portland’s Sellwood-Moreland neighborhood, James Rivers Automotive Outlet is a member of the James Rivers Family-Owned and Operated group of dealers in Portland. The dealership carries a large inventory of new, certified pre-owned, and pre-owned line of cars, trucks, SUVs, and vans. Their line of vehicles are in all price ranges and body types. James Rivers Automotive Outlet also offers trade-in evaluations at their other franchised stores – James Rivers Honda, Acura, and Toyota. The dealership also offers affordable financing options.

Eastside Used Cars

Established in 2011, Eastside Used Cars is a family-owned used car dealership. The dealership is fully internet based and all sales are by appointment only, in one of two locations: Sandy and Gresham. The dealership claims to have the best prices in the market, offering wholesale prices to the public. Customers may also expect to receive top dollar for their trade-ins.

The dealership currently offers an inventory of 175 vehicles, ranging in price from $6,990 to $60,800. It offers a variety of finance options for consumers with all levels of credit, but outside financing is welcomed.

Competitive Advantage

Reliable Motors holds the following advantages over the competition:

• Rigorous Vehicle Inspection : Each vehicle in our inventory undergoes a thorough inspection to ensure its mechanical and cosmetic condition, providing customers with peace of mind.
• Customer-Centric Approach : We prioritize customer satisfaction by offering personalized assistance, transparent pricing, and a hassle-free buying experience.
• Extensive Inventory : Our diverse inventory caters to various customer preferences and budgets, ensuring a wide range of options to choose from.

Marketing Plan

Brand & value proposition.

Reliable Motors will offer a unique value proposition to its clientele:

• Client-focused automotive sales, where the customer is treated fairly, with transparent pricing and a variety of financing options
• Service built on long-term relationships
• Top-quality automotive repair and maintenance, at competitive prices

Promotions Strategy

The promotions strategy for Reliable Motors is as follows:

Reliable Motors understands that the best promotion comes from satisfied customers. The Company will encourage its customers to refer other businesses by providing economic or financial incentives for every new customer produced. This strategy will increase in effectiveness after the business has already been established.

Social Media

Reliable Motors will invest heavily in a social media advertising campaign. The company will create social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.

Website/SEO Marketing

Reliable Motors will invest heavily in developing a professional website that showcases current inventory, and provides valuation tools for potential trade-ins. It will also invest heavily in SEO so that the firm’s website will appear at the top of search engine results.

Operations Plan

The following will be the operations plan for Reliable Motors. Operation Functions:

• Otto Masterson is the Owner of Reliable Motors. In addition to providing inventory management and sales, he will also manage the general operations of the business.
• Otto Masterson is joined by a full-time administrative assistant, Mandy Bobo, who will take charge of the administrative tasks for the company. She will also be available to answer incoming calls and make service appointments.
• As the company builds its customer base, Otto will hire more sales professionals to grow our business further.

Milestones:

Reliable Motors will have the following milestones completed in the next six months.

• 6/2023 Finalize location purchase
• 7/2023 Design and build out Reliable Motors
• 8/2023 Hire and train initial staff
• 9/2023 Kickoff of promotional campaign
• 10/2023 Launch Reliable Motors
• 11/2023 Reach break-even

Reliable Motors’s most valuable asset is the expertise and experience of its founder, Otto Masterson. Otto has been in automotive sales for the past 20 years. Throughout his career, he has developed a loyal customer base, many of whom have stated that they will switch to Reliable Motors when it comes time to purchase a new vehicle. Otto’s customer-centric approach, and strong understanding of the local market will ensure that our dealership is successful.

Though he has never run his own business, Otto Masterson worked his way up from automotive sales associate to sales manager, where he gained an in-depth knowledge of the operations (e.g., running day-to-day operations) and the business (e.g., staffing, marketing, etc.) sides of the industry. He also already has a starting customer base that he served while working for other auto dealerships. He will hire several other employees who can help him run the aspects of the business that he is unfamiliar with.

Financial Plan

Key revenue & costs.

Reliable Motors’s revenues will from vehicle sales, with additional income generated through financing options and after-sales services. Key costs include

The notable cost drivers for the company will include inventory acquisition, overhead expenses, marketing expenses, personnel costs, and facility maintenance.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Number of clients:
• Year 1: 400
• Year 2: 500
• Year 3: 750
• Year 4: 1000
• Year 5: 1250

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Used Car Dealership Business Plan FAQs

What is a used car dealership business plan.

A used car dealership business plan is a plan to start and/or grow your used car dealership business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Used Car Dealership business plan using our Used Car Dealership Business Plan Template here .

What are the Main Types of Used Car Dealership Businesses? 

There are a number of different kinds of used car dealership businesses , some examples include: Franchised dealership, Independent dealerships, and “Bad Credit” dealerships.

How Do You Get Funding for Your Used Car Dealership Business Plan?

Used Car Dealership businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Used Car Dealership Business?

Starting a used car dealership business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Used Car Dealership Business Plan - The first step in starting a business is to create a detailed used car dealership business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your used car dealership business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your used car dealership business is in compliance with local laws.

3. Register Your Used Car Dealership Business - Once you have chosen a legal structure, the next step is to register your used car dealership business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your used car dealership business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Used Car Dealership Equipment & Supplies - In order to start your used car dealership business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your used car dealership business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful used car dealership business:

• How to Start a Used Car Business

Where Can I Get a Used Car Dealership Business Plan PDF?

You can download our free used car dealership business plan template PDF here . This is a sample used car dealership business plan template you can use in PDF format.

Automotive Marketing Tips to Boost Your Dealership's Sales

The automotive marketing industry is a competitive place to be and if you’re a car dealership looking to get the word out and move those cars, then perhaps just having the right inventory isn’t enough!

With more and more buyers starting their search online, if you want to sell, your dealership has got to have a marketing strategy that shines just like the cars in your showroom!

So, what goes into a winning car dealership marketing strategy?

We’re glad you asked! Whether you’re looking to attract first-time buyers or boost repeat business, today’s blog is guiding you through the key elements of a marketing strategy that grabs attention, builds trust, and keeps your dealership ahead of the competition!

Buckle up and let’s get started!

The Challenges of Car Dealership Marketing

So, what makes marketing for car dealerships such a tricky landscape to navigate?

Well, for starters:

• High Competition — The automotive market is highly saturated and highly competitive. Many dealerships are selling similar or even the same models of vehicles all in the same zip code, making it a challenge to stand out.
• Price Wars — Intense competition can often lead to price wars, creating a sad, race-to-the-bottom scenario, which can erode your profit margins.
• Customer Trust and Transparency — Buying a car is a big financial decision for most folks and building trust is crucial. Car salesmen have a negative stereotype to begin with, making it a challenge to win over a customer’s trust and purchase.
• Complex Buyer Journey — The car buying process is long and involves several steps, starting from initial research to final purchase. This requires dealerships to keep up consistent engagement and follow up multiple times.
• Digital Transformation — It’s 2024 and most of your customers start their vehicle search online. Adapting to these digital trends requires significant investment in technology to keep up.
• Local SEO Optimization — Making sure your dealership ranks well in local search results is challenging but necessary since most customers search online for dealerships near them before visiting in person.
• Managing Online Reputation — Online reviews and social media can make a huge impact on a dealership's reputation.
• Inventory Management — Marketing both new and used inventory, especially when models are constantly changing, requires a dynamic approach that can adapt as your stock levels shift.
• Seasonal Sales — Car sales can be highly seasonal, with noticeable peaks and dips throughout the year.
• Compliance and Regulation — Navigating the complex regulatory environment around automotive advertising, including truth in lending and disclosure requirements, can be challenging and requires careful attention to detail.

Your Guide to a Winning Car Dealership Marketing Strategy

Need a hand overcoming those marketing hurdles and getting your dealership the attention it deserves?

Here are 6 steps to a winning car dealership marketing strategy. Take a look and see how you can implement this guide into your marketing strategy today!

1. Understand Your Audience

First off, the key to any successful marketing strategy is to have a deep and thorough understanding of who your target audience is.

For car dealerships like yours, this means first identifying whether you’re primarily trying to reach local buyers or casting your net further to hook regional customers. This will help you better tailor your messaging and advertising efforts!

Next, consider segmenting your audience further by vehicle type. 

Will you be targeting families looking for vans or SUVs? The eco-conscious crowd looking for hybrids? Perhaps those in search of a nice luxury sedan?

Whatever crowds your inventory attracts, each segment will require a unique approach that speaks directly to the needs and pain points of that specific audience.

Finally, it’s important to change up your marketing efforts for first-time buyers and repeat customers. A first-time vehicle buyer will likely need more education about what they’re looking for and what you have to offer, as well as more reason to trust you with their money.

Repeat customers, on the other hand, might be drawn in by loyalty programs, special offers, and personalized messaging. Consider creating detailed user personas to represent each segment of your audience so you can better understand where they’re coming from and tailor your messaging accordingly!

*If you need some assistance creating these detailed user personas , check out our recent blog on the subject!

2. The Importance of a Strong Brand Identity

If you really want to differentiate your dealership and stand out from all of the many, many car dealers in your area, then you’re going to need a strong brand identity .

A strong brand identity that’s consistent across all of your dealership locations (if you have more than one) creates a more unified presence, which gives your visitors a better customer experience and allows them to instantly recognize your business, no matter where they happen upon it.

And not only does a strong brand identity make you more memorable and recognizable it also reinforces your visibility and builds trust in your brand, making your dealership seem like the reliable and honest choice for new and returning car shoppers alike.

If applicable, consider making your dealership’s unique history a part of your brand identity and story! Your history can be a powerful tool to boost your reputation.

Highlight your years in business, any involvement you have with your community, and your satisfied customers to show potential buyers that your dealership is the real deal; an established, honest, reputable, and dedicated organization dedicated to customer satisfaction!

3. Building a Strong Online Presence

In today’s Internet-first world, your dealership is going to need a strong online presence if you want to move cars and grow your business.

Here are some important steps to take to build up your dealership’s presence online:

• Optimize Your Website — Make sure your site loads quickly, is mobile-friendly, and easy to navigate. Use high-quality images, have valuable content, and use clear calls to action to guide your visitors, computer and mobile device users alike, toward the car of their dreams.
• Add Vehicle Search and Filtering Features — Make it easy for your visitors to find what they’re looking for by adding search and filtering tools that let them easily browse your inventory.
• Keep up Your Online Reputation — Highlight your positive customer reviews and testimonials (and incentivize your customers to share them with you) on your website and social media to build trust and credibility. Be sure that you respond to any reviews you get on Google to show users that you’re a trustworthy organization that values their opinions and feedback.
• Be Active on the Socials — Social media is a powerful tool. Post photos and videos regularly to attract buyers with new arrivals, special deals, or featured vehicles. Be sure to engage with your audience as well by responding to comments, messages, and reviews!
• Email Marketing Campaigns — Email marketing is a powerful tool to stay connected with your new and returning customers, gather leads, nurture leads, and keep your dealership top of mind. Send special offers, reminders, auto care tips, buying tips, newsletters, and more to keep your audience engaged and informed.

4. Search Engine Optimization

If you want your dealership to be visible to local buyers, you need to boost your SEO strategy.

The websites that are optimized for SEO are the ones that show up in those precious first few rankings and get the most clicks. Get your dealership to the top with the following SEO tips:

• Optimize Your Website for Local SEO — Use location-based keywords like "car dealership in [Your City]" to make sure that your website ranks well for local searches. Be sure to also add your dealership to Google My Business to improve its visibility on local search results and Google Maps.
• Use High-Quality, Relevant Keywords — Use tools like SEMrush or Ahrefs to identify keywords related to the cars you sell and the services you offer. Long-tail keywords like "affordable used SUVs in [City]" or "best car dealership for financing options" can work wonders too. Find these keywords and sprinkle them through your website in places like FAQs, vehicle descriptions, and other content.
• Improve On-Page SEO — Make sure that the pages on your website have optimized meta titles, descriptions, and headings that include relevant keywords. Add alt text to images and create high-quality content that is optimized for search engines.
• Create Quality Backlinks — Encourage partnerships with local automotive blogs, community pages, and other relevant sites to link back to your dealership’s website. Backlinks help build your website’s authority and improve your rankings.
• Optimize for Mobile — Make sure your website is mobile-friendly. Many users will search for dealerships and vehicles for sale on their smartphones and Google prioritizes mobile-first indexing. This means a mobile-friendly site can boost your SEO rankings .

5. Digital Marketing Done Right

Automotive digital marketing is key these days to drive the right kind of traffic to your dealership.

And to do it right and make sure that you’re getting the most ROI on your ad spend, you need to use targeted ads. Targeted ads will help you to zero in on specific audiences based on things like their location, their preferences, what kind of car they’re looking for, and their online behavior. 

This allows you to target your messaging and timing so that those audiences are getting the right messaging at the right time.

Here are some additional tips:

• Targeted Ads — Use your data and some creativity to craft highly targeted ads that reach potential buyers who are already actively searching for vehicles. Tailor your messaging to speak directly to their needs and interests to help your ads cut through the noise and stand out from competitors.
• Geo-targeted Advertising — Focus your efforts on local buyers by using geo-targeting. These ads only appear to users within a specific area to make sure your dealership is attracting the right people in your local or regional market.
• Inventory Retargeting — Keep your inventory top of mind by retargeting users who have already visited your website. Show them the exact vehicles they viewed, reminding them of their previous interest and encouraging them to come back to seal the deal.

Popular Ad Platforms That Are Worth Your Time

Need some ideas on what platform to use for your effective and targeted ads?

Here’s a handy list to get you started:

• Google Ads – For search ads, display ads, and video ads.
• Microsoft Advertising (Bing Ads) – Search and display ads on Bing and Yahoo networks.
• Meta Ads – Highly targeted social media ads on Facebook and Instagram.
• LinkedIn Ads – Ideal for B2B advertising, with targeting options for job title, industry, and more.
• Twitter Ads – Promoted tweets, accounts, and trends.
• Pinterest Ads – Visual ads to promote products and services.
• Snapchat Ads – Snap Ads, story ads, and filters for younger audiences.
• TikTok Ads – In-feed video ads and branded hashtag challenges.
• YouTube Ads – Video ads before, during, or after videos.
• Hulu Ads – Ads on the Hulu streaming platform.
• Cars.com – Display your vehicle inventory and special offers to car shoppers actively browsing for cars.
• Autotrader – A major hub for car buyers, placing ads on Autotrader can target a high-intent audience.
• CarGurus – Another site specifically for car buyers; ads here focus on converting users browsing for their next vehicle.

6. Compelling Content

Having compelling and valuable content can make or break your marketing strategy.

Do it right and you can not only stand out from the competition, but build trust with your potential buyers, drive traffic to your website, improve SEO rankings, and sell more cars.

Do it wrong and, well…

To make sure that isn’t an issue, here are some examples you can use to keep your content engaging and appealing to your audience:

• Video for the Win — Videos are an excellent way to showcase your vehicles and engage your audience. Create walkaround videos that highlight the key features of popular models, giving potential buyers an up-close look from the comfort of their homes.
• Automotive Blog Content — Keep your website fresh and engaging with regular blog posts. Topics like vehicle maintenance tips, how-to guides, and industry trends can position your dealership as an expert and keep visitors coming back for more.
• Seasonal and Event-Specific Campaigning — Timely content around holidays, sales events, or new model releases can create urgency and excitement. Seasonal campaigns can focus on winter vehicle prep or summer road trips, helping connect with your audience at the right time.
• Customer Testimonial Videos — Video testimonials from satisfied customers are a powerful way to build trust with your audience. Potential buyers are more likely to feel confident in their purchase when they hear real experiences from people like them.
• Behind-the-Scenes Content — Show your customers the human side of your dealership. Share videos or photos of your team, service bay, or behind-the-scenes at events. This helps build a more personal connection with your audience.
• Interactive Tools — Offering interactive content, like a car payment calculator or a trade-in value estimator, can keep users engaged while helping them with their purchasing decisions.
• Vehicle Comparison Guides — Create comparison content that shows how different models stack up against one another. This helps potential buyers make informed decisions and positions your dealership as a helpful resource.
• Social Media Stories — Engage with your audience on platforms like Instagram and Facebook by posting short, snappy Stories. Highlight new arrivals, special offers, or give quick tips about car ownership.

7. Tracking Your Data

Tracking your data is essential to understanding how your marketing strategies are performing.

Here are some tips to keep in mind to help you optimize your strategy, stay competitive, and grow your dealership:

• Watch Your Metrics — By keeping a close watch on crucial KPIs like leads, conversions, and customer behavior, you can pinpoint which tactics are driving results and sales and which are potentially wasting your time, allowing you to tweak as needed and make adjustments to boost performance.
• Monitor Leads — Monitoring leads and conversions also helps you identify where your potential buyers are coming from — whether that’s through your website, your social media pages, or paid ads — and what it is that’s converting them into actual customers.
• Customer Behavior — This is another piece of the puzzle. By analyzing how customers are interacting with your site, what vehicles they’re searching for, and how long they spend on specific pages, you can better tailor your content and marketing to speak to their needs and interests.

<div class="c-blog_comp-cta cc-component-1"><div class="c-blog_comp-cta-left"><div class="c-blog_comp-cta-left-wrap"><img src="https://global-uploads.webflow.com/61cdf3c5e0b8155f19e0105b/6369722e59155470b6840033_Potential-clients.png" loading="lazy" alt="" class="c-blog_comp-cta-left-img"></div></div><div class="c-blog_comp-cta-right"><div class="c-blog_comp-content"><div class="c-text-wrapper cc-mb-32"><div class="c-title-4 cc-bold"><strong>Want to save money without sacrificing the quality?</strong></div></div><div class="c-text-wrapper"><div class="c-text-2">Say goodbye to traditional, expensive agencies and unreliable marketplaces. Say hello to Designity.<br></div></div></div><div class="c-blog_comp-wrapper"><a href="/pricing" target="_blank" class="c-button cc-primary cc-inverted w-button"><strong>Get Your 2-Week Trial</strong></a></div></div></div>

Looking for a Winning Marketing Partner to Help You With Your Automotive Marketing Strategies?

If your car dealership is ready and willing to start implementing the above tips into your next automotive marketing campaign, then that’s great! We’re behind you 100%!

And if you’re ready to start implementing the above tips into your next automotive marketing campaign, only you lack the manpower, the creative team, and the time to get it all done and done right, then that’s great!

And we’re still behind you 100%.

Because Designity is an innovative Creative as a Service platform that can give your dealership instant access to the best of the best in fields like graphic design, social media management, copywriting, video production, motion graphics, web design, and more — every skill you need to pull off an effective and attention-grabbing campaign that boosts your visibility and increases your sales.

And with your account led by a designated Creative Director, an automotive marketing and design expert, who acts as your single point of contact, manages your creative team, and makes sure you have the deliverables you need, when you need them, you can get it all done without spreading yourself too thin.

Why not have a look at our automotive marketing services page and portfolio and see how Designity has been just the right answer for automotive brands just like yours?

And if our style vibes with yours, then go ahead and book your demo call. We’ll get you started on your two-week, no-obligation trial so you can test drive our 100+ marketing and design services and see firsthand why Designity is the only marketing partner your dealership will ever need.

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How to Start a Car Dealership

ON THIS PAGE

How To Start a Car Dealership

How to start a car dealership faqs.

• Helpful Slideshows, Videos & Images
• Additional Resources in the Car Dealership Industry

Starting a car dealership can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful car dealership.

Importantly the most important step in starting a car dealership is to complete your business plan. To help you out, you should download Growthink’s Ultimate Car Dealership Business Plan Template here .

Download our Ultimate Car Dealership Business Plan Template here

How to Open a Car Dealership in 17 Steps

• Decide Which Type of Car Dealership To Open
• Choose the Name for Your Car Dealership
• Develop Your Car Dealership Business Plan
• Choose the Legal Structure for Your Car Dealership
• Secure Startup Funding for Your Car Dealership (If Needed)
• Secure a Location for Your Business
• Register Your Car Dealership With the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Car Dealership
• Buy or Lease the Right Car Dealership Business Equipment
• Develop Your Car Dealership Marketing Materials
• Purchase and Setup the Software Needed to Run Your Car Dealership
• Get Inventory
• Hire a Team
• Open for Business

1. Decide Which Type of Car Dealership To Open

The first step in starting a car dealership is deciding whether to open an independent dealership or become part of a franchise.

An independent dealership will allow you to sell a wider range of vehicles since you won’t be signing any contracts with specific automakers. You will also have more flexibility in pricing your inventory since you don’t have to meet manufacturer requirements. On the downside, you won’t have access to special financing options that come directly through automakers, such as Ford Credit, for your customers and will be responsible for coming up with all your own marketing, branding, and other business materials.

A franchise will limit the brand of cars you can sell and you will have to meet specific franchise requirements and pay fees to join. You will, however, be able to offer your customers more financing options through the automakers and have the backing of a larger brand to help guide you.

Make sure to research both options completely to determine which is best for you. Also, remember that joining a franchise may influence what you can do in the following steps when it comes to marketing and other business decisions.

If you are looking to start a used car dealership, you can learn how to start a used car dealership .

2. Choose the Name for Your Car Dealership

The first step to starting a car dealership is to choose your business’ name.

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your car dealership:

• Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
• Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
• Think about marketing. Come up with a name that reflects the desired brand and/or focus of your car dealership.

3. Develop Your Car Dealership Business Plan

One of the most important steps in starting a car dealership is to develop your car dealership business plan . The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

To enhance your planning process, incorporating insights from a  sample car dealership business plan  can be beneficial. This can provide you with a clearer perspective on industry standards and effective strategies, helping to solidify your own business approach.

Your business plan should include the following sections:

• Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your car dealership.
• Company Overview – this section tells the reader about the history of your car dealership and what type of car dealership you operate. For example, do you only sell vehicles or do you also have a service department? Do you sell many different brands or specialize in just a few?
• Industry Analysis – here you will document key information about the car dealership industry. Conduct market research and document how big the industry is and what trends are affecting it.
• Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing vehicles or services like the ones you will offer?
• Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
• Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
• Product : Determine and document what products/services you will offer
• Prices : Document the prices of your products/services
• Place : Where will your business be located and how will that location help you increase sales?
• Promotions : What promotional methods will you use to attract customers to your car dealership? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
• Operations Plan – here you will determine the key processes you will need to run your business operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
• Management Team – this section details the background of your company’s management team.
• Financial Plan – finally, the financial plan answers questions including the following:
• What startup costs will you incur?
• How will your car dealership make money?
• What are your projected sales and expenses for the next five years?
• Do you need to raise funding to launch your business?

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4. choose the legal structure for your car dealership.

Next you need to choose a legal structure for your car dealership and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole Proprietorship

A sole proprietorship is a business entity in which the owner of the car dealership and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a car dealership together. The partners share in the profits and losses of the business.

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a car dealership include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a car dealership is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your car dealership, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

5. Secure Startup Funding for Your Car Dealership (If Needed)

In developing your car dealership plan, you might have determined that you need to raise funding to launch your business.

If so, the main sources of funding for a car dealership to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a car dealership that they believe has high potential for growth.

6. Secure a Location for Your Business

A big step in opening your own car dealership is finding the perfect location for your business. The ideal spot will be visible from the road, have plenty of parking for customers and your inventory, and be in a high-traffic area. Make sure there is enough space to include a reception area, office spaces, and a service department if you plan to add one.

To find the right space, consider:

• Driving around to find the right areas while looking for “for lease” signs
• Contacting a commercial real estate agent
• Doing commercial real estate searches online
• Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space

7. Register Your Car Dealership With the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

8. Open a Business Bank Account

It is important to establish a bank account in your car dealership’s name. This process is fairly simple and involves the following steps:

• Identify and contact the bank you want to use
• Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
• Complete the bank’s application form and provide all relevant information
• Meet with a banker to discuss your business needs and establish a relationship with them

9. Get a Business Credit Card

You should get a business credit card for your car dealership to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

10. Get the Required Business Licenses and Permits

Every state, county and city has different business license and permit requirements.

Nearly all states, counties and/or cities have license requirements including:

• General Business License – You will need to obtain a general business license in order to operate your dealership. This can be done through the Secretary of State’s office in your state.
• Sales Tax License – In order to collect sales tax on the vehicles you sell, you will need to obtain a sales tax license from your state’s tax collecting agency.
• Franchise License – If you wish to sell vehicles from a particular manufacturer as part of a franchise agreement, you will need to obtain a franchise license from that manufacturer.
• New Vehicle Dealer’s License – In order to sell new vehicles, you will need to obtain a new vehicle dealer license from your state’s motor vehicle department.
• Used Vehicle Dealer’s License – In order to sell new vehicles, you will need to obtain a new vehicle dealer license from your state’s motor vehicle department.

Depending on where you operate your car dealership, you will have to obtain the necessary state, county and/or city licenses.

11. Get Business Insurance for Your Car Dealership

Some common types of insurance to consider include:

• General Liability Insurance – This will protect your dealership from any third-party claims of bodily injury or property damage.
• Commercial Property Insurance – Commercial property insurance protects your dealership’s building, as well as any contents inside of it.
• Business Interruption Insurance – his insurance protects your dealership in the event that it is unable to operate due to a covered event, such as a fire.
• Workers’ Compensation Insurance – If you have employees, you will need this type of insurance to protect them in case of a work-related injury or illness.
• Dealer’s Open Lot Insurance – This type of policy will protect any vehicles that are on your dealership’s property.
• Garage Keeper’s Insurance – If you offer any type of repair or maintenance service, you will need this insurance to protect against any damage that may occur to a customer’s vehicle while it is in your care.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

12. Buy or Lease the Right Car Dealership Business Equipment

A car dealership needs some basic office equipment to operate, including computers, printers, phones, fax machines, and general office supplies. You should also plan to have some reception furniture and a break area for your employees. Some car dealerships also offer customers vending areas or free refreshments.

If you plan to offer vehicle services, you will also need to buy a range of mechanic tools and stock your service bays with diagnostic tools, car lifts, and any other equipment needed to service your customer’s vehicles.

13. Develop Your Car Dealership Marketing Materials

Marketing materials will be required to attract and retain customers to your car dealership.

The key marketing materials you will need are as follows:

• Logo – Spend some time developing a good logo for your car dealership. Your logo will be printed on company stationery, business cards, marketing materials, and may even be seen when users load your products. The right logo can increase customer trust and awareness of your brand.
• Website – Likewise, a professional car dealership website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you. If you plan to showcase your inventory online, you will need to update your website regularly.
• Social Media Accounts – Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your car dealership. Social media platforms are also great places to run promotions and advertise new vehicles.

14. Purchase and Setup the Software Needed to Run Your Car Dealership

Car dealerships need software to manage their inventory, customers, and finances. Some common software programs used in car dealerships include AutoTrader, Microsoft Dynamics AX, and Salesforce.

Research the software that best suits your needs, purchase it, and set it up.

15. Get Inventory

Next, you need to make sure you have cars to sell. If you are part of a franchise, you may already have a system set up with your franchisee and certain requirements for the vehicles you need to order. If you are an independent car dealership, you can start collecting inventory by going to auctions and contacting private sellers.

16. Hire Employees

A good car dealership requires a good team to run it. You will need salespeople to sell the cars, managers to keep track of inventory and finances, and mechanics to keep the cars in top condition. Hiring the right employees is essential to the success of your dealership.

To find candidates, post ads on online job boards and in local newspapers. You can also reach out to automotive schools and ask them to recommend graduates who might be a good fit for your business.

When interviewing candidates, be sure to ask about their experience in the automotive industry and their customer service skills. You should also give them a sales test to see how they would do in a real-world selling situation.

17. Open for Business

You are now ready to open your own dealership. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you with how to start a car business.

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Is It Hard To Start a Car Dealership?

No, it's not hard to start a car dealership. Your biggest challenges at first will be funding your new business and buying enough inventory to launch. Depending on your area, you might also struggle to find employees to build out your team. If you can overcome those challenges, you will be well on your way to running your own car dealership successfully. Following the steps outlined above will help you get started.

How Can I Open a Car Dealership With No Experience?

If you're looking to get into the car business but have no experience, don't worry. It is possible to start a successful dealership without any prior experience in the industry. However, it will require some hard work and dedication.  You should be certain to do as much research as you can into the car industry in general and how successful dealerships are run. It would also be helpful to familiarize yourself with the licensing, permits, and other legal requirements for buying and selling vehicles. Finally, finding a professional who has experience managing car dealerships to talk with can be very helpful.

What Type of Car Dealership Is Most Profitable?

In general, new car dealerships are more profitable than used car dealerships. Deciding which brands or styles of vehicles will make your dealership the most money comes down to industry trends and demand in your area.

How Much Does It Cost To Start a Car Dealership?

Estimate start-up costs for a new car dealership are approximately $100,000 – $1,000,000.

What Are the Ongoing Expenses For A Car Dealership?

• Purchases – An overwhelming majority of revenue by new car dealers is spent on inventory purchases. These are vehicles held for sale.
• Wages – New car dealerships require salespeople, technicians and office workers to operate. Labor costs have slowly declined over the past five years, reflecting the increasing use of automation by industry operators. Parts and repair service workers account for a growing share of revenue and payroll.
• Marketing and Advertising – Beyond wages and purchases, new car dealers must maintain substantial advertising efforts to draw in customers. According to the NADA, the average advertising cost per vehicle sold was $654.00.

How Does a Car Dealership Make Money?

The general car dealership business model is to sell and service motor vehicles. The main sources of revenue for a dealership are vehicle sales and service, but many dealerships also generate income from financing, parts sales, and other ancillary businesses.

Is Owning a Car Dealership Profitable?

Owning a car dealership can be a profitable venture but, as with most industries, comes with a lot of ups and down. Since cars are fairly big-ticket items, economic changes can greatly impact how many cars get sold. If you can navigate those changes effectively, owning a car dealership can be a great financial decision.

How Much Do Car Dealership Operators Make?

New car dealers typically make around two or three percent of either the invoice or the sticker price of the car.

Why Do Car Dealerships Fail?

The main reason car dealerships fail is due to poor management. Many dealerships are started by people who are great at selling cars, but don't have experience running a business. They may be great at negotiating with manufacturers and getting good prices for their vehicles, but they don't have training in things like inventory management, marketing, or even bookkeeping.

Another common reason for failure is not properly understanding the customer. Too many dealerships focus on selling to people who are looking for a bargain, when in reality, most car buyers are willing to pay full price if they feel they're being treated well. Great customer service is the key to success in any business, but it's especially important in the car business where customers have a lot of choices.

Finally, many dealerships fail because they're not able to adapt to changing market conditions. The car business is constantly evolving, with new technologies, new models, and new competitors entering the market all the time. Dealerships that can't keep up with the changes will quickly find themselves falling behind.

How Big Is the Car Dealership Industry?

There are 18,391 car dealerships in the U.S.with revenues of $834.4 billion.

What External Factors Affect the Car Dealership industry?

A number of factors affect the performance of the car dealership industry. These drivers include:

• Consumer Confidence Index – It is expected that the consumer confidence index will increase as the economy recovered and unemployment reduced making consumers willing to make big purchases like a new vehicle resulting in potential opportunity for the industry.
• Average Age of Vehicle Fleet – An increase in the age of vehicles means suppressed demands for new vehicles. When a rise in disposable income and demand for affordable fuel-efficient vehicle increases, the average age of vehicle decrease all at the same time. But since the quality of vehicles has improved and they can now last longer in running condition it is then expected that the average age of the fleet will shoot up.
• Yield on 10-year Treasury Note – The yield on 10-year treasury note is expected to increase as automobiles are usually financed, therefore the need will likely regress and interest rate is expected to flow and change. The reason behind financing vehicles becomes costly due to high interest rates.
• Per Capita Disposable Income – When there’s a high disposable income expect high discretionary spending however this is also the time when consumers’ are confident to go and get debt-funded consumption such as buying new vehicle. It is then expected that per capita disposable income will as well increase at any time.

Who Are the Key Competitors in the Car Dealership Industry?

In the U.S. there are only two major competitors in the car dealership industry and they are as follows:

• AutoNation Inc.
• Penskie Automotive Group Inc.

Where Can I Download a Car Dealership Business Plan PDF?

You can download our car dealership business plan PDF template here. This is a business plan template you can use in PDF format.

For additional information on the car dealership market, consider these industry resources:

• Detroit Free Pres:  www.freep.com
• Edmunds.com: www.edmunds.com
• National Automobile Dealers Association: www.nada.org

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