Although becoming a car trader is a process that requires the investment of money and time, it is also a highly profitable one. As a car trader or car dealer, you have the privilege to operate in a range of modes in order to make money. You can decide to sell used cars, buy or sell wholesale cars or invest in a franchise branch of an already-established car dealership. In whichever way you go, you can be guaranteed of making huge profits at the end of the day.
The good part is that you don’t need to be formally educated before you can become a car trader or car dealer. You only need to undergo a few training. In this article, we have provided the steps you need to take in order to become a successful auto dealer.
Steps to Becoming a Car Trader
#1: Save up for the business
No doubt, becoming a car trader will cost you lots of money. Your cost can run anywhere from $30k to $1m depending on your business model and the amount of inventory you plan to hold. So, before you even think of becoming an auto dealer, make sure you have enough money to start.
#2: Research the market and get familiar with the motor trade industry
The next step after having enough money to kick-start your car trading business is researching the market in your area. Get familiar with the industry and understand what type of business you would like to create. What type of cars would people love to buy in your area? Are you going to be selling new or used cars? What is the news saying at the moment that might influence your business? All these are what you should know before jumping out to buy your first car to sell.
#3: Decide what business model you like
Being a car trader means you are your own boss and you have total control over how you run your business. So you need to consider many things, including:
- Would you be operating alone?
- Would you prefer to own a lot and hire salespeople?
- Would you be selling new or used cars?
- How many employees do you need, and what type?
- How much do you have to invest?
- What will your marketing strategy look like?
All these are what will influence the type of business you will create.
#4: Write a business plan
Once you know what type of business model you are opting for, the next thing is taking the time to put everything into writing. A solid business plan will help you stay on track with priorities and get you prepared for any surprises.
#5: Get motor trade insurance
The next thing is to get yourself some Motor Trade Insurance. This insurance will offer protection for all the cars in your possession so you won’t have to spend extra costs insuring them individually. Unlike private insurance, Motor Trade Insurance allows you to add and remove as many cars as you like without the need to pay additional costs. Motor Trade Insurance could be road risk; third-party; third party, fire, and theft; or comprehensive insurance.
#6: Apply for trade plates
After getting your Motor Trade Insurance, the next thing is to apply for trade plates. This is a temporary number plate car traders use temporarily for vehicles in their possession. With the trade plates, they wouldn’t have to register and tax every vehicle in their possession. To get trade plates for your auto dealership business, you will need to fill a trade license form and provide a copy of your Motor Trade Insurance Certificate.
#7: Get your surety bond
This is often given by the state where you intend to run your business. It is given as a guarantee that a car trader will operate in compliance with the state regulations. The bond amount varies from state to state. So depending on your state, it can run anywhere from $5000 to $10,000 but you will only have to pay about 10% of the amount.
#8: Buy a car to sell
Now that you have everything ready about your car dealership, you can now go ahead to buy your first car to sell. There are a variety of ways to go about that. You can use auction and listing sites like eBay or car selling sites like Autotrader. However, when purchasing your car, make sure it is in good condition and also conduct a background check on the sellers before making a deal with them.
#9: Market your car trade business
Lots of car traders out there market their business through word of mouth recommendations and social media listings. But since you are new to the trade, you might need some time before you get established in the business.
You can go ahead to create a website for your business or use a car sales forum like AutoTrader to get things going. You can also sell your cars on eBay. Just ensure you have a good marketing strategy because your business success depends on it.
Conclusion
These are the steps you need to become a car trader. They are easy and straightforward. However, you can also check out our article on how to start a car repair business. It will make a lot of sense to you if you are the type that has a passion for repairing vehicles.
