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Small Dealer Needs Advice

Ron Wynn

Full Sticker
Apr 3, 2020
13
8
First Name
Ronald
Good morning All! I was very pleased when I found this forum this morning and I am hoping to get some great feedback.

I am a struggling small dealer trying to find the right formula to just make a profit. I've been in business two years and, not only did I not make money, I literally LOST money both years.

I am 59 years old and passionate about cars. I retired at the end of 2016 from a career in construction. I am independent financially, so I'm lucky from that regard. My retirement plan did however include that I would generate SOME small income from some venture. I always thought I would start a small dealership and that is what I did. I took $120,000 from my savings and started the business. If it weren't for the loss of money, I'd be having a blast because I love doing this.

I've been searching online for some type of service to help someone like me. A person or company with current used car business savvy that can look at what I'm doing and tell me where I'm falling short. I keep telling myself "its just buying and selling cars, how hard can this be?"

Real estate if very expensive here. Any lot worth having will cost about $3,000 a month. I currently rent a small warehouse where I keep my cars for $725. I rent a small office suite two blocks from my house as my business address but I can't display or store cars there. I show my cars by appointment only because I don't have a public car lot with regular hours.

I have accounts with Black Book, Carfax, CarGurus and Autotrader. These are very expensive. I have good insurance and it is also very expensive. I am a one man shop and I do everything myself (my wife helps too) including detailing the cars.

Last year, I sold about 40 cars. Not factoring in overhead, I averaged around 700 in profit for each car (that does account for direct expenses/repairs on the car). But 3.5 cars a month doesn't cover my overhead and I worked my butt off just to have the privilege to cover the loss.

Deals so far have all been cash deals. Not really interested in BHPH. I have started building relationships with a couple of lendors though.

I hate to close it down. I love doing it. I love keeping busy. I love the cars. I love meeting new people and dealing with customers. I have gotten very positive feedback on my personal attention to the customer. I can't justify continuing to lose money doing this. It is starting to feel like an expensive hobby.

I have an idea to buy a piece of commercial property and put a small metal building on it. It would be a physical location dealership, but small in scale. To make it work, I'd have to sell about 20 - 25 cars a month at a better profit (+/- $1,000). It will have to hire staff. To build the lot, I'm figuring around $500K (the land would cost $250K). I hesitate to go through with this plan given my profitability so far and my lack of experience in the car business, but on the other hand, I can always sell this building if things didn't work out. Still, not something to go into lightly.

It might be helpful to have a mentor or even a paid service to help guide me on what I need to do. Any comments or advice would be deeply appreciated.

Thanks.

Ron
 
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Jeff Kershner

Founder
May 1, 2005
3,718
1,289
First Name
Jeff
Ron, that's one hell of a loaded question. Reading your post and reviewing your website, it's obvious that you're very passionate about this.

Reviewing your website, do you only have 4 cars in stock?
 

Ron Wynn

Full Sticker
Apr 3, 2020
13
8
First Name
Ronald
Jeff it is great to get a message from you, being the founder of the site. Thanks so much.

Yes I guess it is! I figure...how hard can this be? Why can I not make this work?

And yes I am a certifiable car nut. Before being a dealership I had as many as 4 "hobby" cars but I have pared that down to two. My 1978 VW Bus Camper and my 1996 Porsche 911.

You are correct, I have four cars ready to go and two being prepped at the moment. That is a little light for me...about two or three less than normal.

Your insights, advice or generally pointing in the right direction would be awesome.
 

Jeff Kershner

Founder
May 1, 2005
3,718
1,289
First Name
Jeff
How much are you spending with AutoTrader and Cars if you don't mind me asking. I hope you're on those sites for free.
 

ryan.leslie

One of the good guys
Apr 20, 2009
609
540
First Name
Ryan
Welcome to the Forum @Ron Wynn. @Tallcool1 has offered great advice in the past. You may want to use the search bar and look for posts by him. Here are a few to get you started:

https://forum.dealerrefresh.com/thr...ependent-dealers-help-please.6652/#post-56400 <--- this is a great thread that may be helpful to you if you haven't seen it.

I'd strongly suggest that you follow DealerRefresh on Facebook and watch/participate in Refresh Fridays at 1pm East. Full Disclosure: Today's guest is CarStory's President @chad.bockius. He'll be sharing data that we are closely monitoring on stock levels and pricing that may be of interest to you as you consider post-COVID operations.

Ryan
 
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Reactions: Jeff Kershner

Ron Wynn

Full Sticker
Apr 3, 2020
13
8
First Name
Ronald
How much are you spending with AutoTrader and Cars if you don't mind me asking. I hope you're on those sites for free.
Jeff I pay $300 per month for CarGurus, $150 per month for Carfax (limited to 10 per month); $150 for Autotrader and $80 for Black Book. My DMS is Wayne Reaves and I pay $100 per month for the DMS and website.
 
  • 1
Reactions: Jeff Kershner

Ron Wynn

Full Sticker
Apr 3, 2020
13
8
First Name
Ronald
Welcome to the Forum @Ron Wynn. @Tallcool1 has offered great advice in the past. You may want to use the search bar and look for posts by him. Here are a few to get you started:

https://forum.dealerrefresh.com/thr...ependent-dealers-help-please.6652/#post-56400 <--- this is a great thread that may be helpful to you if you haven't seen it.

I'd strongly suggest that you follow DealerRefresh on Facebook and watch/participate in Refresh Fridays at 1pm East. Full Disclosure: Today's guest is CarStory's President @chad.bockius. He'll be sharing data that we are closely monitoring on stock levels and pricing that may be of interest to you as you consider post-COVID operations.

Ryan
Thanks Ryan I will definitely check these out!

Ron
 
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Reactions: ryan.leslie
Mar 21, 2012
330
372
First Name
Ryan
Jeff I pay $300 per month for CarGurus, $150 per month for Carfax (limited to 10 per month); $150 for Autotrader and $80 for Black Book. My DMS is Wayne Reaves and I pay $100 per month for the DMS and website.
Those all sound like pretty good deals! I would recommend considering a switch to CarGurus free package though once this COVID ordeal passes.

Are you utilizing Facebook marketplace? That's a great free way to drive quite a bit of action.
 

Ron Wynn

Full Sticker
Apr 3, 2020
13
8
First Name
Ronald
Those all sound like pretty good deals! I would recommend considering a switch to CarGurus free package though once this COVID ordeal passes.

Are you utilizing Facebook marketplace? That's a great free way to drive quite a bit of action.
I have dabbled/experimented with Facebook marketplace. You're right it is a great value. Hasn't driven much traffic so far though. I've used it on a case by case basis and haven't really considered it as one of my default selling platforms where I use it on every car, partly because I am still a bit unfamiliar with it and how it works. But I agree, why not use it since its basically free?
 

Jeff Kershner

Founder
May 1, 2005
3,718
1,289
First Name
Jeff