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Tips for growing a small independent car lot
Hi,
I have been in the car business since 1999 in Las Vegas. I recently opened my own small lot and we are doing just 'ok' ...Any advice on how to grow from 5-7 cars which we have been doing, to 10-15, eventually 20. We offer BHPH, put it's a hell of a balancing act, so we have pulled back on it for now. Not trying to be the next Bill Heard or Findlay, but we do want to get more business.
Thanks
Clem
Replies to This Discussion
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Permalink Reply by Harlene Doane on -
Clem, Glad to hear you don't want to be the next Bill Heard, that's a lot of legal hot water that I'm sure you want to stay out of ... welcome to the site
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Permalink Reply by Frank on -
I have been a car dealer since 1974 and I have lasted that long because I am always improving my business model . I am doing better right now than I ever have . Always be looking for ways to improve your business. Do not try and do more with your business than your capital will allow. The biggest reason for divorce in the car business is that car dealers get over extented with their credit ( just kidding, but you get the point).For more information see my as yet un-written book "I have been lied to, cheated , cussed at but I keep coming here each day to see what will happen next". Maybe I need a shorter title !!
Frank Blair
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Permalink Reply by Clem Muhammad on -
Thank you Frank
That was helpful info.
God Bless
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Permalink Reply by Nash Kabbara on -
Hi Clem,
I started a dealership in Houston in 2006. Just like you, we grew from 5 cars to 70 cars.
Each stage is completely different than the other. The biggest variables will always be managing people and overhead.
If you want to grow, you'll have 2 immediate limitations.
1) Capital. You'll need the money to buy cars. If you don't have your own money, you can:
a) Get a personal loan from a bank. Needs to be more than 50k to make a difference.
b) Get a floorplan (special loan for car dealers) from your local bank. This will give you the best rates.
c) Use MAFS, DSC or AFC as a floorplan.
The best I believe is some combination of the above depending on your situation.
2) After solving #1 you'll need to buy cars. Car buyers. By far, for a used car lot, this is what will make you or break you. Your growth is limited by the amount of cars you can buy. A good buyer, one that can buy you a car that will make more than 20% back, can comfortably buy between 5 to 15 cars a week. This is highly dependent on his or her connections (with franchises) and the auctions they go to.
When you resolve those two limitation, you'll be ready for the next stage...
Good luck and let me know if I can help in some way.
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Permalink Reply by Clem Muhammad on
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Thanks TREMENDOUSLY,
That info is very true and extremely helpful...
God Bless
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Permalink Reply by Nash Kabbara on
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My pleasure!
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Permalink Reply by Ben Misra (secondarypro) on -
Advertising - no bodies- no sales
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Permalink Reply by Sheldon Wolff on -
Clem,bhph is a cash cow drain, unless you have substantial capital to leave out there until your in the black , forget it. However it could be an very lucrative business. It's very tuff to find good vehicles for inventory at this point. The capital cost is high. You can track the price point of your clientele to build your inventory. Are you selling more 2-3 th or 10-12th cars? Your pricing will dictate your travel rate. In this economy if your still around and growing you're doing the right things. Good luck!
Sheldon
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Permalink Reply by Tom 1TeamSynergy Wiegand on -
I just spent a few minutes on your website, likely more time than most prospects will spend. You are not relating with customers, period! If you intend to grow you better relate to them.
1. Nothing about you, no picture, no nothing!
2. No phone number
3. No email.
Conclusion: You're wanting to win by trying to fail. Engage them and they just may engage you!
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Permalink Reply by Philip Zelinger on
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Hi Clem,
In the absence of knowing what you don't know I am concerned that my reply might appear to be overly simplistic. That said, the foundation of your business must be sound before you build on it so just to be safe I will start there.
The following list of "basics"are hopefully already part of your plan - if not - add them ASAP!
Location: Natural traffick patterns - pedestrian or vehicular - supplement hard advertising dollars and provide the eyeballs it takes to sell your vehicles. Fortunately, your online address can be built after the fact and the rent is considerably less expensive.
Marketing: If your lot is positioned well, both real and virtual, then the next step is to recognize that first impressions are irretrievable. A clean, well lit and easily accessible facility - again, both real and virtual - is critical. Investing money or efforts to drive traffick to your facilities will be wasted if visitors don't instantly feel welcome and see what they came to see - cars and or trucks that fit their needs!
As far as media, the message matters as does your intended audience so the first step is to decide who you are and then who your customers are. Your "brand" must be clear, consistent and targeted and your message, facility, inventory and process must match.
Buy Here Pay Here customers and cars don't play we'll with Luxury car buyers or late model inventory. Frankly, BHPH customers and the lots that service them are more in line with the banking business than the retail auto business and they require a very different product and process to service them.
Finally, deficient capital and cash flow kills more dealerships than any other element, however, controlled growth and managed expenses can overcome most issues. Throwing money at a bad business plan and process will sink your ship faster so lay out a plan based on the funds you have and stick to your budget.
A one man band operating online with consigned inventory can be more profitable than a new car facility selling hundreds of vehicles per month. Your goal must be to make money and friends vs. volume sales and all that requires is a plan that is thought out and consistent.
After all, what are friends for.
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Permalink Reply by Nash Kabbara on
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Awesome breakdown Philip.
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Permalink Reply by Rob Hagen on -
Inexpensive marketing idea that has worked well for me over the years: Buy a BK list, roll up your sleeves and do an in house mailer. What I have always used is bright colored construction paper that you tri fold. It looks compeltetly different than anything else that comes in the mail so it gets opened. Takes some time to fold, staple and stamp but it gets a lot response. Tip: Great way to get kids to earn their allowance!
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