Buying and selling cars is a good business. It has a high paying potential if you become a car dealer or trader and is one way you can earn a six-figure income, even if you don’t have a degree or higher education.
I have been dealing in cars for 23 years so I have some experience in the industry and setup my own operation 20 years ago after learning the nuances of the industry working for other dealers.
After spending three years operating from a small 20 car garage I moved the business to a larger 80 unit site. This move paved the way for further expansion and it was around this time that the business started to move towards focusing on more specialist cars and selling cars online. In 2009 we left our site and became one of the first web based used car dealers, a move that not only allowed even further expansion but also greater flexibility in the products and services that we could offer. Apart from a brief period operating from another garage we still operate purely from our website.
The business was started with twelve cars bought with cash that I’d saved plus a few cars on consignment. I have never borrowed to expend instead I simply reinvested the profits after wages and continue to do so to this day. The business was profitable from the first month. I only sold 8 cars in the first 30 days but we made a good four figure profit and the business swiftly established itself in the local car market and has expanded every month and year since.
I know many now well established dealers that started in the same way which makes a strong case for the car trade being a good business model for anyone with a passion for cars and the motor trade.
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Is running a used car business easy?
Starting a used car business wasn’t at all easy and I genuinely think I would have quit or failed if it wasn’t for the relentless interest I have in anything to do with cars. Running any business and be stressful and the car business is no different and the business has had many ups and downs over the years. The 2008 financial crisis was particularly hard at the time and many of our competitors went out of business during that period. Blaming the loss of affordable car finance and unsustainable overheads.
Another downside or the car business is the long hours. When I started out I was hoping I could operate the business on a 9 to 5 basis and have Sundays off. But the reality is I was probably working 15 hours a day and I can’t remember having a Sunday off for the first few years. The business took up all of my time and energy and I would definitely have burnt out if it wasn’t for my passion and the support of my family and friends.
However I now have a successful business and a great lifestyle so the short term sacrifices were worth it for me. But running a small business is life changing and it will effect your relationships with friends and family. You will need your family and friends there to give you the emotional support you need, as your small business takes its first steps and begins to grow.
So starting up as a car dealer is a huge undertaking, which shouldn’t be approached with a half-baked attitude. In most cases you will need a fair amount of capital and a good knowledge of the cars you will be selling, covering both the sales and the repair side of the business and in some areas you will also need a dealers licence. But it really is a good business if you have an interest in cars and want to start out for yourself.
How much can you earn as a car dealer?
Most used dealers I know take home a six-figure income per year. However these dealers are established and experiences. But you should easily make forty to sixty thousand in your first year of trading if you have a bit of experience. Obviously trading conditions can cause trading profits to vary massively, location and business models also play a huge part.
How should I start a used car business?
There are many ways to get started and the path I took was only one option. You could start by simply flipping a few cars ( we cover how to get started flipping cars in our article Car flipping business plan.) or you could get a job working as a salesman for a used or franchised dealer to gain some experience. You should also consider the size of the business you want to create, a small scale car dealing business can generate a good profit for a owner operator without the need for large premises or any additional staff. You could also make a six-figure income operating from home. But again all these things can vary according to the skill and experience of the dealer.
It takes a great deal of time and effort to become successful car dealer, and it’s not always an easy business to be in or setup. But it most definitely is a good business and has the potential to make big profits. The barriers to entry are low and you don’t require any specific qualifications. All you need its a lot of passion, commitment, drive and a bit of seed money to become successful.