In the UK biker trade, dealers come in all shapes and sizes. From large franchised and used dealer groups to the one man band flipping bikes on social media. These groups or individuals focus on retailing motorcycles to the general public. But there is another often overlooked way of dealing in bikes which can work especially well as a side hustle. You can become a “Trader”.
What is a motorcycle trader?
The term ”trader” in the context of the UK bike trade denotes an individual who sources and buys used motorcycles at below trade value and then sells (trades) them to a dealer or garage instead of retailing the bike to the general public. This form of selling is known as a trade sale.
Most successful used dealers and garages are always struggling to find quality motorcycles for stock, so are more than happy to buy bikes from traders. Making it easy to build a relationship as a trader and set up a good little side hustle with very little capital or overheads.
Trading motorcycles can be profitable and has some advantages over actually dealing in motorcycles. Trading, should not be confused with the practice of franchised garages picking stock from another franchise to fill a customers order, that is known as a dealer trade.
How do motorcycles trader work?
Car traders act as a middleman focusing almost all their time on finding motorcycles. Once found a bike can either be bought there and then or a trader will try and sell the bike before they even buy it. More experienced and confident traders will always buy a cheap car knowing that a buyer will easily be found.
The motorcycles is then offered around to dealers and sold to the highest bidder. If a trader is less experienced or a motorcycles desirability is in doubt a trade buyer is normally found before the deal is agreed with the seller.
Some traders do carry out repairs on bikes before they trade them on. It is also common for traders to valet bikes before offering them to a dealer or garage. Most of the time a detailed and mechanically sound bike in forecourt ready condition will sell for a premium.
But equally some traders just sell the bikes on in the same condition as they buy them. Both strategy’s work well and often depend on the relationship between the traders and dealer.
What do you need to become a motorcycle trader?
Lots of bike traders are retired or ex bike salesman or mechanics. So some experience in the bike or motor trade is preferable, but it’s not essential. As all the information you need on motorcycle valuations is available from services such as Cap. These services offer motorcycle valuations apps on a subscription service and are the most common way of valuing a bike in the trade.
In addition to the valuation services the only other things required are insurance and some working capital. As you aren’t going to be selling to the general public and don’t have a premises of stock to insure the cost of insurance shouldn’t be high.
But it is essential you are covered at the very least for road risk on any motorcycle and your insurers are aware you are using it for motor trade business. But a good insurance adviser can talk you through whats required.
The amount of working capital you will need will obviously depend on the motorcycles you buy. But unlike being a motorcycle dealer who need have large sums of money tied up in stock, a bike trader is normally only siting on a few motorcycles at most. So you can start a trading business with very little money.
It’s not something I would advise but you could even put a motorcycle on a credit card if you already have it sold or are confident of being able to sell it in the nest few days or weeks.
The only other items you will need are some confidence and a mobile phone. If you end up buying bikes that need improving before you trade them all of this can be outsourced. Motorcycles trading doesn’t require any form of premises, licence or any other expensive overhead. Even if you operate from home no actual business will be occurring at that location so no additional permissions are required. Making it an idea side hustle.
Where do traders find motorcycles?
Most traders scour local classified adverts both on and offline, Gumtree, eBay and Facebook groups are popular places to find undervalued bikes as well local newspapers.
Some traders also find motorcycles at franchised dealers. Most used dealers will already have relationships with franchised dealerships, but you can still find opportunities. Dealer part-exchanges are normally found around the back of the premises. These bikes maybe high mileage or be to old for a garage to stock. So can be bought cheaply and traded.
Developing a good relationship with sales staff and managers at larger dealers can be key to making big profits when trading motorcycles. These relationships can take time to develop but can be worth the effort.
Trade motorcycles can also be bought at auction. It is much harder to buy auction motorcycles at trade money these days. But cars sold at smaller local auctions are sometimes missed by the masses and can be bought cheaply.
If you are serious about trading motorcycles advertising for bikes is great option. A simple motorcycles wanted for cash adverts placed online and in local papers and publications can be a great source of stock.
Which motorcycles should you buy?
In theory you can trade in any motorcycle regardless of age or type. But the focus here needs to be on what you can sell and what your dealer base are looking to buy. In an idea world you will have a buyer lined up for a car or have a good idea of who you can sell the car too.
Where do traders sell their motorcycles?
Most traders target medium sized used bike dealers. The reason being is that these size businesses are reliable buyers and are always looking for stock. Normally this size operation is run with a manager/owner and one or more salesman. The owner/manager is normally the decision maker and its easy to build a relationship with him or her and the staff.
These operations also aren’t big enough to employ a buyer or buying team. So you can be a useful and important part of their buying strategy and in some cases they will actively chase you for motorcycles. If you develop several relationships with dealers in your local area it can turn into a very good business opportunity.
Another option is to trade specialist motorcycles. These can require a more specialist knowledge and are harder to fine. But the opportunity for a larger profit margin can be tempting. There are lots of specialist dealers all over the UK that you can trade motorcycles to and most will pay a premium for the right bike.
Specialist dealers often have an in-house buyer who will give you a firm offer subject to inspection and will often be willing to travel and arrange collection.
Franchised dealers shouldn’t be overlooked. While some aren’t interested in buying motorcycles for cash even at trade money, some operate used lots and are keen to buy own brand motorcycles. The are also often interested in buying motorcycles that have waiting lists that are selling for a premium. So even if you are offered a nearly new bike it might be a trading opportunity.
How much profit do motorcycles traders make
Profit margins can vary massively and are largely dependent on how good you are at buying motorcycles. But on a normal touring or sports bike a trader can normally expect to make between £500 and a £1,000 on average as a net pre tax profit. If you are trading higher end motorcycles the margins can be much larger, the same is true of classic motorcycles.
Ideally you would be supplying a good mix of motorcycles to a large network of buyers, giving yourself a good consistent income. But it may take years to build a network and gain the buying experience needed. But if you can do this and if you have a good reputation you can make a lot of money trading motorcycles.
Pros and cons of motorcycles trading
- You don’t have to hold a large number of motorcycles in stock.
- Not holding stock means you avoid depreciation and ongoing repairs.
- You can often get the motorcycle sold before you have agreed to buy it.
- You don’t have to deal with the general public.
- You don’t have to warranty a motorcycle.
- Low startup costs.
- Quick turnover of money and motorcycles.
- Low funding costs.
- Lack of stock can mean inconsistent profits.
- Smaller profit margins than when you retail a bike.
- You are reliant to a certain extent on the success of the dealers you trade too.
- Building a trading network can take time.
- The low cost on entry can mean lots of competition for motorcycles.
Motorcycle trading tips
- Only buy motorcycles you are sure you can trade.
- NEVER reveal where you buy motorcycles from.
- Remember when trading motorcycles relationships are often more valuable than profits.
- Never misdescribe a motorcycle, always give an honest appraisal.
- Always do your homework and inspect a motorcycle before agreeing to buy it.
- Don’t buy or bid on motorcycles without first seeing it.
- Always HPI a motorcycle or insist on the supplying dealer supplying an up to date certificate.
- Never overpay for a motorcycle.
- Buying motorcycles in job lots can result in greater margins.
- Remember in motorcycle trading often the first deal is the best deal.
Done correctly motorcycle trading can be highly profitable. Done on either full-time basis or as a side hustle. It can take a while to build up relationships and to fully understand the market. But once you have built up these relationships it can be a highly profitable business. Trading can also be a good sideline if your a motorcycle dealer or flipper, allowing you to shift stock you can’t sell or make a small profit on a motorcycle you otherwise wouldn’t buy.
However you approach motorcycle trading you cant go to far wrong if you follow the tips above and take a practical common-sense approach.