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Small Dealer Needs Advice

Ron Wynn

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Apr 3, 2020
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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
 
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.
 
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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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.
 
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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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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.
 
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?