New Dealer opening up in Seattle, any advice or suggestions for me?

Hey everyone,

My name is Fin, and I am in the process of opening my dealer, which is also my first business.  I just had my dealer inspection today, and am waiting for my license number so I can get started!

My background is in auto sales, I started at 20 years old, worked at Honda for almost 7 years before deciding to start my own dealer.  This is a small operation, just me in the beginning, and a small lot, but with room to expand. I plan to start off with maybe 10 cars on the lot, then grow from there. I love cars and the car business, and so the best job is doing what you love is the mentality I have.

I wanted to put what I've done out here, and see if you guys have any suggestions on anything that I missed or should do or improve on in order to be successful.  There wasn't much training available from the state about starting your own dealer, so I'm playing much of it by ear right now.  Any input from WA state dealers would be especially helpful!

I'm really excited about starting my own gig and looking forward to serving the community!

Here's where I am so far:

-Lot with 30 car capacity, gated, fenced with video/motion sensor security systems.

-Office space with one internal office, space in the open area to divide out two cubicles for future salespeople, waiting area with sofas/refresments, 2 restrooms, a/c.

-Business bank account with separate account for deposits

-Bonding $30k as required by wa state

-Garage keepers for building and inventory

-Facebook and Google+ pages, still need to generate traffic.

Working on:

-sign up with lenders once I have my dealer number. I'm thinking westlake, ACA, credit acceptance.  Which lenders are newbie friendly, and have low costs?

-sign up with auctions once I have my dealer number.

-sign up with e-permitting once I have my dealer number.

-sign up for flooring plans, will only floor less than half my inventory at max

Thanks for any input you guys have!

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Biggest piece of advice I can give you is to keep overhead/expenses as low as possible and put as much money as you can back into the company every month for growth and expansion. Avoid paying yourself all the profit and splurging. It can be tempting, but it won't benefit you in the long run.

Best wishes!

Thank you for your input Randy!  I am definitely going to try to keep overhead as low as possible.  My wife and I haven't eaten out at a nice restaurant in months! Haha that's just the cost of taking a risk and starting your own I guess! Yes I'm only going to pay myself just enough to pay all our bills and reinvesting all profit back into the business.


How's it going? Now that you've been up and running for a few weeks, are you seeing more business come through the door? And have you got the answers you were seeking to help you get started?

Hi Mike,

Thanks for checking up on me!  I barely made it last month!  I sold 3 cars, and barely made enough profit to cover my overhead and my own personal bills, so I dodged a bullet and did not have to go into my savings to cover my operating costs, but I basically worked for free haha.  I don't mind as long as I'm not negative!

I think I did ok, considering I sold 3 cars, with only 8 on the lot!  My flooring came through, and I picked up 7 units last thursday, and so my inventory is up to 12 units right now, and I'm planning on getting more this week at auction.  I want to focus on a bit newer cars which will be easier to get financed.

I just got set up with Credit Acceptance, and am waiting on Reliable, for financing.  I'm having trouble with older units though, like the 91 miata and 98 camry I have.  They're both very nice and worth their asking price market wise, but people want to finance those and I've had to turn them away as the bank fees at CA were crazy high for those cars.

Anyway, I've listed cars on craigslist, facebook, and I've gotten more interest every week, I think I need to get more varying types of inventory to appeal to more people.  I still need to figure out ways to drive more traffic to my location, especially with 4th of July weekend coming up!

I've also priced my units lower than almost all other dealers in my area, except for units where I'm better on features or miles.  I've got them almost at private party so I'm hoping I'll generate more sales this way.

Please check my inventory and let me know what you think!  Any input or criticisms will help!

Fin, I've been where you are now. First of all, you have to decide if you're going to be a "like new" used car dealer (meaning you sell newer cars), or a more "affordable" used car dealer (older cars). It will be very difficult to sell both types of cars on your lot. You have to understand your target market first of all. Are you trying to appeal to the buy here pay here customers (since you did sign up with Credit Acceptance) or are you wanting to go into a "sub prime" to "prime" market. I will tell you that it is really difficult for a new small independent dealer to really tap into the "sub prime" to "prime" market. Not saying that it can't be done, but it's going to be more difficult than a buy here pay here deal. This is not saying that BHPH is easy because it's totally not. There's a lot of moving parts in BHPH that I won't get into. But good luck and find out your target market.

Thanks for your input Ken,  I'm still in between on where I want to be.  I've got a range of cars now, and I'm trying to see what works best.  I am not sure if I want to do BHPH right now, as I do not have the capital to invest in that yet.  All the cars I've sold now, I have had to refer them to BECU our local credit union to get a check and bring it back.  I'm trying to connect with a CU or bank to do financing for good credit customers, but as you probably know, they don't want to deal with small dealers.

I'm also worried about my business's reputation if I'm to sell the older cars ($2-4k).  I don't want a customer to get a car and have it break down on them and then they proceed to ruin us online!

But all the cars I've sold so far have all been under $6k, but they've all been gems so I've been lucky!

I believe the money for me now is on the under $7k cars, so I'm going to get as many as I can that are gems!

 With the older cars like your Miata and '98 Camry you need to find a local loan company that will do a loan for loan or trade value. Then get the customer to put the balance down. CAC isn't going to work on a car like this where you can't cover the fee. Westlake may work on that Camry if you are getting folks with decent credit. They lovvveeee Toyotas. 

Westlake does work very well on some older cars (mostly imports) that you wouldn't expect, hard part is getting someone to agree to the price Westlake's Deal Wizard will put on the older units.

I started out small like you in 2006, what I didn't have was any experience in the car business so I had a big uphill battle there. While you may have the target market you'd like to go after, you don't always get to dictate that and it seems every car lot has it's own organic ways of working regardless of how hard you fight it. To keep the money moving you should keep a small handful of cheaper, older cars and turn them for small grosses. I always have cheap cars that I price VERY right for a quick cash deal. Many dealers scoff at the idea of only grossing $500-$800 on cars but it adds up quick and the cars virtually sell themselves.

Hi Mark,

Thanks for your input!  I agree with the very cheap cars, I don't mind making small grosses, as I'd rather have that than not sell a car that day.  I just picked up a couple cheap cars and sold both already, both under $2k.  Even if making $500 or less, its a better use of your money than anything else I can think of, buying a car at auction for $700, then selling for $1200, you're almost doubling your investment!

In Seattle I would look for inventory you can make big grosses on which means you need to buy cars as far back of book as humanly possible ...(easy to say right?) Here is my advice to you of how and where you can do that. Copart has at least 2 maybe 3 auctions in Washington State and 2 of them are up just outside Seattle. Washington is NOT a public bid state so cars can really go cheap. You can do all of your buying online because their weekly auctions are all cyber auctions. You won't believe the volume of cars these guys move every week and their biggest problem which is your biggest advantage is one of branding ...everyone thinks they only sell salvage vehicles and insurance wrecks ...40%+ of their cars on any given week are Clean Title vehicles ...with all great rewards comes a higher level of risk so read this next line as many times as it takes until you believe it and never stray from it ...DONOT make sure you start and check out every car you bid on exceptions ...go out there with a mechanic and do your homework on every car you are going to bid on and do a thorough job ...if you do that and stick to the good ones you will be able to buy cars at huge discounts to book...

Thanks Roger!  I'll definitely look into into that!  Yes, at Adesa and Manheim, these guys are bidding on cars like there's no tomorrow, some cars way over book.

That's good advice for Fin, Mark.

Fin, I see you're receiving some great advice from members here. It shows you the value of this forum and the community that is active in it.


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