Are you considering starting a used car dealership business in Ontario? If so, there are some important things to keep in mind before getting started.
Crunch the Numbers
The amount of startup capital required to open a new or used car dealership depends on a wide variety of factors. It could range from a few hundred thousand dollars to a couple of million, depending on the type of inventory you’re planning to stock.
Some of these costs are one-time, while others are ongoing. There is also likely to be huge variances depending on where in Ontario you are, but these figures should act as a rough guide.
Of course, you’ll also need to factor in the size of your dealership in how much you’ll need to spend on overhead costs like rent or mortgage payments, utilities, and insurance.
That said, here are just some of the startup costs you will likely face:
- Rent (car lot, indoor showroom, business office and service centre): Starting at anything from $1 per square feet.
- Early inventory: Starting from $100,000.
- Technology (computers, phones, printers and coffee machine): $5,000.
- Employees: Generally three months’ of initial salary.
- Licensing Fees: A few thousand dollars.
Once you have a good understanding of the costs involved in opening a car dealership, you can start to work on a business plan and raising the necessary capital.
Perform Market Research
Market research is an essential part of opening a new dealership. You need to know what kind of demand there is for your products and services, and you need to be aware of any potential competitors. There are a few different ways to gather this information.
- Figure out the number of vehicles sold per month on average in your area over the last 12 to 18 months.
- Calculate the dollar amount of sales for your types of vehicles.
- Determine the types of cars most sold in your area (sedans, trucks, sports cars, etc.).
- Determine the Makes and models of cars most sold in your area
- How many existing car dealers do business in your market?
- Identify either your ideal customer, or a typical consumer in your area (age, gender, employment and income level).
- Decide how you will advertise your dealership and what kind of marketing campaigns you will initiate.
When conducted properly, market research can be a valuable tool for dealerships of all sizes. It can help you understand the needs and wants of your target customers, identify opportunities for new products and services, and make better-informed decisions about their marketing and advertising initiatives.
Satisfy the Legal Requirements
Here are just some of the regulatory requirements you must complete:
- Register a Business (Corporation, Sole Proprietorship, General Partnership, or a Limited Partnership)
- Register a Business Name Registration/Master Business Licence.
- Obtain a Business bank account
- Obtain a GST/HST registration
- Pass a mandate Georgian College Course
- Apply for a Dealer Licence with Omvic
- Register Salespeople with Omvic
- Pass a criminal background check .
- Submit a Business plan
- Municipal permit/letter.
- Submit copy of your lease agreement
- Apply for several dealer plates and pay the necessary fees.
- Submit copies of your insurance policy
Establish an Online Presence
It is crucial in today’s environment to have an online presence – and even more so in the automobile industry. This is because the first port of call for many potential buyers is social media “buy and sell” pages, online marketplaces such as Facebook, and other assorted specialist car sales forums and message boards. Many customers prefer to review the key specifications of vehicles such as their odometer, engine size, and history) online before deciding to see them in person, and you are far more likely to drive sales this way.
An effective way to get started in online car sales is to create a dealership website. This will give you a space to post photos and information about the cars you have for sale. You can then use social media to drive traffic to your site and generate interest in your cars.
Another important aspect of online car sales is search engine optimization (SEO). This is the process of making sure your site appears as high up as possible on search engine results pages (SERPs) so that potential customers can easily find you.
If you’re not sure where to start, At Zop Dealer we offer services to help you build and optimize your site for maximum visibility. With little effort, you can soon be reaping the rewards of increased car sales thanks to your online presence.
By following these steps, you’ll be well on your way to starting a successful used car dealership business in Ontario. Good luck!