PT Used Car Dealer in NJ

[cthomasparr]

Hello,

Looking for some advice about getting started as a used car dealer on a very small scale (part time) in NJ.

NJ seems reasonable in terms of requirements. Probably the most expensive part is having a physical location. I was considering downsizing and possibly moving to something mixed residential/light industrial. I believe that, and a sign out front, might meet one of the major requirements.

My basic plan would be to get all the necessary paperwork/licenses/insurance and then attend a few auctions throughout the year. I really don't know the money that can be made on an auction vehicle, although it must be good because I have had a hard time in the past finding a used vehicle on Craigslist that wasn't for sale by a dealer.

I know there is a wealth of experience here, and I would appreciate any advice as I learn about this possibility.

Thanks!

 

[Tallcool1]

Hello,

Looking for some advice about getting started as a used car dealer on a very small scale (part time) in NJ.

NJ seems reasonable in terms of requirements. Probably the most expensive part is having a physical location. I was considering downsizing and possibly moving to something mixed residential/light industrial. I believe that, and a sign out front, might meet one of the major requirements.

My basic plan would be to get all the necessary paperwork/licenses/insurance and then attend a few auctions throughout the year. I really don't know the money that can be made on an auction vehicle, although it must be good because I have had a hard time in the past finding a used vehicle on Craigslist that wasn't for sale by a dealer.

I know there is a wealth of experience here, and I would appreciate any advice as I learn about this possibility.

Thanks!

Hey Chris

First of all, you can do whatever type of location that your budget can tolerate. I have friends that operate out of what looks like a garden shed on a gravel lot...and they make money. I have friends that operate out of a warehouse type of metal building in the industrial part of their town, and they make money. Guys that bought or leased abandoned new car dealerships, strip malls, body shops, you name it. Complying with your state or local regulations is the key here.

This is a link to the New Jersey Independent Auto Dealer's Association. I believe this association handles both NY and NJ, but I could be wrong.

New Jersey IADA ::

www.newjerseyiada.org

Get in touch with these people. They can help you navigate the process of becoming a dealer.

As far as the auction thing goes, it is really tough right now. Auction prices are extremely high but they will settle down pretty soon. The thing that I believe is important for you to understand going in is that your competitors have so many profit centers in their dealership. They make money in the finance business, selling warranties, other products, etc.. They can be profitable without relying on the vehicle sale exclusively.

I don't know what your background is (have you been in the car business). Share your background with the group and someone in here will be able to help you build on your strong points. There is SOMETHING that everyone does really well, and you can build a successful business around that.

The thing that I would urge you to do is figure out what kind of car dealer you want to be. Do you want to sell $5,000 cars? Do you want to buy mechanical problem vehicles and fix them up? Just a couple things to think about.

Welcome to Dealer Refresh!

 

[cthomasparr]

Tallcool1,

Thanks for taking the time in your reply. Lots of good information there.

My background is kind of hands on with cars. I enjoy getting something simple and making it better. I have swapped engines and transmissions. I don't care much for body work, so I wouldn't touch a wreck except to part it out. I have taken on a bunch of projects over the years, but I would just as much enjoy going to pick up a car or two and reselling them without having to do a lot of rehab. I prefer reliable over exotic... Toyota over Porsche. I would probably be the guy flipping cars that have already lived good lives and have lots of life left, but probably in the 5-10,000 range.

I currently have a 9-5 that pays the bills, so I can do this at my leisure. I hope to up front pay expenses, maybe pass on a few good deals to people while I get more familiar.

I get your point about offering other services and it makes sense. That always seemed like the way new car dealers made money. I would definitely stick to the cars only, but if this affords me a better garage setup, maybe get involved in some repairs too if that falls into place.

I was always under the impression that auctions, like Manheim, must be offering pretty good deals. Even the post-auction prices of some of the small dealers here are very competitive. Kind of makes sense that there is money to be made on the backs of people who trade a car in for a new vehicle. I have been there and you always leave feeling like you got thousands less than you should have.

As far as the auctions that sell damaged vehicles, I think in NJ you might need yet another type of license and from what I have seen, the prices there seem steep, especially with fees bundled in. It definitely works for some people though.

I will check into the NJ IADA link you sent.