Car Sales Website Startup

[autovantaofficial]

I'm sorry but I'm getting confused.
So, If a car sells in 3 days.
3 x $0.50 = $1.50
for $1.50 the vehicle is covered for 2 years of extended warranty?

Why did you bring up a month of pricing?

is this dealer car insurance for when the car is sitting on the dealer lot?

How does this relate to guru, cars, or trader?

No problem, here's the explanation, answering your questions:

Yes. For $1.50, the car would be covered for 2 years. Business model relies on a large amount of cars. (One dealership would add 500ish cars...250/Day =$7.5K/Month.) Every car on the lot is paid for. That's how the warranties are maintained. Sure, the price adds up in the end, but when you have 500ish cars in a facility, prices add up. One Single Car would be roughly $15/Month, until sold or taken down from the website. For a two year warranty, that's a killer deal.


It's not insurance, it's a warranty. For the consumer.


Relates in this way: all these websites sell the cars with nothing like these benefits. I can sell the exact same car for a warranty. Therefore, more consumers buy from me. So I want to make that website, but have these neat quirks. The business is not a warranty business. It's a car selling website. The Warranty business is just a USP.



Now, on a side note, of course the warranties will be capped and differ on cars. If its a 2003 BMW with 100,000 miles on it, it's not getting a 2 Year Warranty.




My main concern is this: what is a fair price where I can build profits high enough to maintain a warranty, as well as encourage dealers/individuals to post on my site.



I appreciate your commitment to helping me out. Please let me know if you have any further concerns.

 

[Carsten]

This isn't my area of expertise. Let's see what the comments regarding dealers not liking a cut of their sale disappearing say.

 

[AlexCaradonna]

I too am not a dealer, but I do know they may not be thrilled the business model cuts into the backend of their deal with your extended warranty model. Think the FRONT-END being the retail vehicle sale and the revenue associated with that whereas the BACK-END being financing, extended warranties, etc. Dealers make a good chunk of money on the back-end of a deal.

The bigger value add in my opinion would be the business development model you mention of your team doing outreach trying to help move the units for the dealer. The longer a vehicle sits on the lot the more floor plan may start to eat into overall gross so if you can help dealers move their units faster then your pricing model shouldn't be an issue imo. Let's see if any dealers pop in and share their thoughts as I am just sharing insight based on my childhood growing up around dealerships but now work on the automotive vendor side!

Nonetheless I would say go for it. Based on what you shared (I think I saw you were 17) you should do it for experience alone. Had my fair share of random things I tried to build fresh out of school and that taught me more than anything learned in school.

 

[jscole86]

Part of the reason we are in business, is to sell extended service contracts and products, not just from a gross perspective, but also from a reinsurance company profit perspective. I'm sure that's your profit stream as well in this scenario, but I would have to imagine that's going to be a tough sell.

 

[Chris Cachor]

I'm also confused -- is this a self insurance product? Are you wholesaling through warranty companies? But I agree, these are products that are important to gross profit. If it's a peer to peer buying site I can see this being a model that works but tough sell to dealers IMO.

 

[autovantaofficial]

Hi,

Thanks for your feedback everyone. Based of what you're saying, it seems to be that it's hard to sell to dealers.

Here's a couple questions:

I too am not a dealer, but I do know they may not be thrilled the business model cuts into the backend of their deal with your extended warranty model. Think the FRONT-END being the retail vehicle sale and the revenue associated with that whereas the BACK-END being financing, extended warranties, etc. Dealers make a good chunk of money on the back-end of a deal.

The bigger value add in my opinion would be the business development model you mention of your team doing outreach trying to help move the units for the dealer. The longer a vehicle sits on the lot the more floor plan may start to eat into overall gross so if you can help dealers move their units faster then your pricing model shouldn't be an issue imo. Let's see if any dealers pop in and share their thoughts as I am just sharing insight based on my childhood growing up around dealerships but now work on the automotive vendor side!

Nonetheless I would say go for it. Based on what you shared (I think I saw you were 17) you should do it for experience alone. Had my fair share of random things I tried to build fresh out of school and that taught me more than anything learned in school.

Would a commission on the cars sold be any better/worse? (Regarding being on the front end of things instead)

I'm also confused -- is this a self insurance product? Are you wholesaling through warranty companies? But I agree, these are products that are important to gross profit. If it's a peer to peer buying site I can see this being a model that works but tough sell to dealers IMO.

No, I provide the warranties.


If the consumer is charged for the warranty instead....is that a better deal? It would be....like $14 dollars if the car sat for two weeks; for two additional years of Warranty.

 

[Chris Cachor]

[No, I provide the warranties.]

 

[Ryan Everson]

The auto industry sure seems to attract dozens of people every year who want to launch a new third-party marketplace!

99% fail.

The one new entrant that has actually experienced some level of success is CarEdge - they put a unique spin on the traditional marketplace.

 

[joe.pistell]

The one new entrant that has actually experienced some level of success is CarEdge - they put a unique spin on the traditional marketplace.

Caredge youtube channel was a hit that they morphed into a shopper's assistant site. It's the new biz model that you could emulate.

 

[BillKVMotorCo]

The one new entrant that has actually experienced some level of success is CarEdge - they put a unique spin on the traditional marketplace.

How do they pull inventory? I see mine on there. I love that (for now) they have no paid listings. Also, I love that they don't have any complicated algorithms at work. Simple filters. I think all 3rd party searches should default to closest first.