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Car Dealership

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How to Open a Car Dealership and Thrive in the Market

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on December 20, 2021 Updated on July 1, 2024

Investment range

$29,750 - $112,600

Revenue potential

$500,000 - $2 million p.a.

Time to build

1 – 3 months

Profit potential

$200,000 - $300,000 p.a.

Industry trend

Here are the most important considerations when you are starting your car dealership business:

• Location — The location should align with the demographics of your target market. For example, luxury car dealerships might do better in affluent areas, while economy models might sell better in more diverse economic areas.
• Licenses — You will need a dealer license to sell new and used cars. Many states also require car dealers to have a surety bond , which provides financial assurance that the dealer will adhere to state regulations and laws.
• Specialization — Specializing in certain types of vehicles, brands, or service offerings can help your car dealership stand out and attract more customers.
• Insurance — Consider different types of insurance, such as general liability, property, garage keepers, and inventory insurance, to manage the risks associated with car dealerships.
• Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
• Legal business aspects — Register for taxes, open a business bank account, and get an EIN .
• Franchises — Here are some of the best franchises to consider: Ford Motor Company , Toyota Motor Sales, U.S.A., Inc ., and General Motors (GM) .
• Online presence — Take your car dealership business online and create a professional website where you can showcase your vehicles and add specifications.
• Inventory management — Invest in robust inventory management software to track inventory in real-time.

Interactive Checklist at your fingertips—begin your car dealership today!

You May Also Wonder:

Is owning a car dealership profitable?

The new and used car industry in the United States is worth over a trillion dollars, and even a small used car dealership can tap into a share of that. You can markup used cars between 25% and 45% so your profit margins will be healthy.

What car has the highest profit margin?

The Ford F-Series and Range Rover have the highest profit margin. Next is the GMT 800. 

What is the most profitable part of a car dealership?

Used cars tend to be more profitable than new cars. It’s best for car dealerships to bring in revenue from new cars, used cars, and repairs.

What is the growth potential of car dealership?

The growth potential of a car dealership is really unlimited. You can expand to multiple locations in your area, or even across the country. 

Step 1: Decide if the Business Is Right for You

Pros and cons.

Every business, including a car dealership, has pros and cons that you should consider before deciding whether it’s right for you.

• Socializing — You’ll meet and work with a lot of people every day
• Steady demand — Somebody is always in need of a quality ride
• Good money — Cars have big profit potential that can drive growth
• Startup costs — An inventory of cars does not come cheap
• Long hours — Most dealerships are open 10–12 hours six days a week

Car Dealership Industry Trends

Hybrid and electric vehicles are among the hotter trends in the car industry. Tesla and its electric cars have been in the spotlight for years, and seem to be popping up everywhere lately. Market research firm Statista reports that Tesla sales amounted to almost two million in 2023. Eco-friendly auto options such as superior fuel efficiency and lighter-weight cars made of composite materials are in demand, as are digital safety features such as forward-collision warnings and automatic emergency braking.(( https://www.statista.com/statistics/502208/tesla-quarterly-vehicle-deliveries/ ))

Despite a 40% price increase since March 2020, as reported by the US Bureau of Labor Statistics, consumers are flocking to the used car market due to supply chain disruptions for new cars. This presents a significant opportunity for the smart and aggressive entrepreneur.(( https://www.bls.gov/news.release/cpi.t01.htm ))

Another industry trend is the ongoing shift to the online marketplace, which is no longer just for new cars. Shift, Vroom, and Carvana are major online players in this market, selling nearly 250,000 used cars combined in the first half of 2021.(( https://www.bloomberg.com/news/articles/2021-09-28/used-car-sales-vroom-carvana-shift-thrive-during-pandemic#xj4y7vzkg ))

Industry Size and Growth

• Industry size and past growth — Market analyst IBISWorld values the US new car market at an incredible $1.2 trillion(( https://www.ibisworld.com/industry-statistics/market-size/new-car-dealers-united-states/ )) and the used car dealers market at $173.1 billion(( https://www.ibisworld.com/industry-statistics/market-size/used-car-dealers-united-states/ ))  
• Growth forecast — Car sales have yet to recover from the pandemic-driven slump, but are predicted to grow 2.6% in 2024 alone.(( https://www.statista.com/statistics/267128/outlook-on-worldwide-passenger-car-sales/ ))
• Number of businesses — The US is home to almost 70,000 new car dealers(( https://www.ibisworld.com/industry-statistics/number-of-businesses/new-car-dealers-united-states/ )) and more than 130,000 used car dealers.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/used-car-dealers-united-states/ ))
• Number of people employed — New car dealers employ more than 1.1 million people(( https://www.ibisworld.com/industry-statistics/employment/new-car-dealers-united-states/ )), while used car dealers have only around 260,000 employees.(( https://www.ibisworld.com/industry-statistics/employment/used-car-dealers-united-states/ ))

Trends and Challenges

• Hybrids, plug-in hybrids, and pure battery electric vehicles are gaining popularity
• Direct-to-consumer vehicle sales are increasing
• Consumers would rather buy a car online than go physically to a dealership
• Rising car prices due to tight supply and high demand
• Growing consumer preference for ride-sharing apps
• High fuel prices

Consumer Spending

• Average consumer spend — The average American household spends $10,728 a year to own and operate a new vehicle. Most of these costs go towards insurance and car payments.(( https://newsroom.aaa.com/2022/08/annual-cost-of-new-car-ownership-crosses-10k-mark/ ))
• Potential customer base — A majority of US households own at least one car.(( https://www.statista.com/statistics/551403/number-of-vehicles-per-household-in-the-united-states/ ))
• Average prices — Automotive research company Kelley Blue Book says the average price of a new car in the US topped $47,000 for the first time in December 2021(( https://www.kbb.com/car-news/average-new-car-price-tops-47000/ )) and has remained pretty much the same during the last couple of years. According to this company, a used car sells for an average of $25,328.(( https://www.kbb.com/car-news/averaged-used-car-price-down-4-since-last-year/ ))

Price Differences Across the Country

• More expensive — The five states where it’s most expensive to buy a used car are Wyoming, Alaska, Montana, North Dakota, and South Dakota.
• Less expensive — The five states where it’s least expensive to buy a used car are Vermont, New Hampshire, Ohio, Hawaii, and Rhode Island.(( https://www.iseecars.com/used-car-prices-by-state-study ))

What Kind of People Work in Car Dealerships?

• Gender — 71% of car dealers in the US are male, while 29% are female.(( https://www.zippia.com/car-dealer-jobs/demographics/#gender-statistics ))
• Average level of education — 41% of car dealers hold a bachelor’s degree.(( https://www.zippia.com/car-dealer-jobs/demographics/#degree-level-types ))
• Average age — The average age of a car dealer in the US is 41 years old.(( https://www.zippia.com/car-dealer-jobs/demographics/#age-statistics ))

How Much Does It Cost to Start a Car Dealership?

Startup costs for a car dealership range from around $30,000 for a small used car lot to well over $100,000 for a large new car dealership. The biggest expense is, of course, the initial inventory of vehicles, though you can start small with just a handful of used cars and a great website.

How Much Can You Earn From a Car Dealership?

Markups on used cars range from 25% to 45%, while the average markup on a new car is 8% to 13%. You can use our markup calculator to calculate your sale price and how much revenue and profit you will earn with different markup percentages. When you work by yourself, your profit margin should be around 40%. The average price of a used car is about $25,000. But at least initially you will probably be handling lower-priced cars, so let’s assume you start selling used cars for an average price of $10,000.

In your first year or two, you could run your own used car lot and sell 50 cars in a year, bringing in $500,000 in annual revenue. This would mean $200,000 in profit, assuming that 40% margin. As your brand gains recognition, sales could climb to 200 cars a year. But due to your new staff, your margin would fall to around 15%, the industry average. With an expected annual revenue of $2 million, you’d have a pre-tax profit of $300,000.

What Barriers to Entry Are There?

There are a few barriers to entry for a car dealership. Your biggest challenges will be:

• Costs — All those cars will cost a pretty penny, even used
• Competition — You will face competition from physical and online dealers

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Step 2: hone your idea.

Now that you know what’s involved in starting a car dealership, it’s a good idea to hone your concept in preparation to enter a competitive market.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an Opportunity

Research car dealerships in your area to see what they offer. Maybe there’s no used car dealership that offers warranties or focuses on lower-priced used cars. You’re looking for a gap in the market in a particular part of town that you can fill.

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as only used trucks or classic American models like Mustangs and Camaros.

This could jumpstart your word-of-mouth marketing and attract clients right away.

What? Determine What Kind of Cars and Additional Services Your Dealership Will Offer

First, determine what kinds of cars you want to specialize in. You can offer used cars, new cars, or both, but you also need to determine if you’re going to offer value-priced models or higher-end models. Then determine what else you might offer, such as:

• Financing options
• Repair and maintenance services

In addition to a car dealership, you can also incorporate a motorcycle dealership into your business.

How Much Should You Charge for Cars?

The typical markup for used cars ranges from 25% to 45% and the markup for new cars is between 8% and 13%. If you specialize in used cars, your price will depend on what price you can acquire cars for. You’ll need to know the value of various models, so you’ll want to keep the Kelley Blue Book nearby, to provide value estimates. You should purchase cars at below market value so that you can mark them up to a reasonable price. For new cars, you’ll be marking up from the wholesale price offered by the manufacturer.

Once you know your costs, you can use our profit margin calculator to determine your markup and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify Your Target Market

Your target market will depend on what type of cars you decide to specialize in. If you sell used cars that are lower priced, your customers may be younger, so you are more likely to find them on sites like Instagram or TikTok rather than Facebook.

Where? Choose Your Car Dealership Location

You’ll probably want to rent a location that has a big enough lot for you to park your cars, and it should be big enough for you to grow. You can sell cars online, but you still need a lot to store them. It should also have a structure that you can use as an office.

You should choose a location with a lot of road traffic but you also need a great website to make online sales. You can find commercial space to rent in your area on Craigslist , Crexi , and Commercial Cafe .

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Car Dealership Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “cars” or “used cars,” boosts SEO
• Choose a name that allows for expansion: “Premier Automotive Group” over “Electric Car Dealership”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Discover over 300 unique car dealership name ideas here . If you want your business name to include specific keywords, you can also use our car dealership name generator. Just type in a few keywords, hit Generate, and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

Powered by GoDaddy.com

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Car Dealership Business Plan

Here are the key components of a business plan:

• Executive summary — A brief overview outlining the business’s mission, goals, and key highlights to provide a snapshot of the entire car dealership business plan
• Business overview — A comprehensive description of the car dealership, including its history, mission, vision, and key objectives, to give readers a clear understanding of the business
• Product and services — Detailed information on the range of cars and related services offered by the dealership, emphasizing unique selling points and value propositions
• Market analysis — An in-depth examination of the automotive market, identifying target demographics, market trends, and potential opportunities for the car dealership
• Competitive analysis — Evaluation of competitors in the automotive industry, highlighting strengths, weaknesses, and strategies to position the dealership effectively
• Sales and marketing — Strategies for promoting and selling cars, including advertising, promotions, and customer relationship management to drive sales and brand awareness
• Management team — Introduction and background of key individuals responsible for managing and steering the car dealership, emphasizing their expertise and roles
• Operations plan — Details on day-to-day operations, from inventory management to customer service, ensuring a smooth and efficient running of the dealership
• Financial plan — A comprehensive financial overview, including projections, budgets, and funding requirements, providing a clear picture of the dealership’s financial health and sustainability
• Appendix — Supplementary materials such as charts, graphs, and additional data supporting the information presented in the business plan

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose Where to Register Your Company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to a car dealership.

If you’re willing to move, you could really maximize your business! Keep in mind that it’s relatively easy to transfer your business to another state.

Choose Your Business Structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your car dealership will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole proprietorship — The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General partnership — Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) — Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corporation — Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corporation — This refers to the tax classification of the business but is not a business entity. A corporation or an LLC can elect to be an S Corp for tax status. In an S Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2024

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number or EIN. You can file for your EIN online, or by mail/fax. Visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund Your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans — This is the most common method, but getting approved requires a rock-solid business plan and a strong credit history.
• SBA-guaranteed loans — The Small Business Administration can act as a guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants — A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital — Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and family — Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding — Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal — Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a car dealership. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Car Dealership Business Licenses and Permits

Starting a car dealership requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You need to meet the requirements of your state to get a dealer license, and you need an Auto Dealer Bond as required by your state.

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your car dealership as a sole proprietorship. Opening a business bank account is quite simple and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability — The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business property — Provides coverage for your equipment and supplies.
• Equipment breakdown insurance — Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation — Provides compensation to employees injured on the job.
• Property — Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto — Protection for your company-owned vehicle.
• Professional liability — Protects against claims from clients who say they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP) — This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential Software and Tools

Being an entrepreneur often means wearing many hats — from marketing to sales to accounting — which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You may want to use industry-specific software, such as CDK Global and vAuto , to manage your inventory and sales.

• Popular web-based accounting programs for smaller businesses include Quickbooks , FreshBooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences of filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop Your Website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.

However, people are unlikely to find your website unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Here are some powerful marketing strategies for your future business:

• Professional branding — Create a consistent and polished brand identity across all marketing channels to establish trust and recognition.
• Local SEO — Optimize your online presence with a user-friendly website and leverage local business platforms like Yelp and Google My Business to boost visibility.
• Direct outreach — Forge partnerships with local businesses and community organizations to tap into corporate sales and local promotions.
• Social media targeting — Engage audiences on platforms like Facebook, Instagram, and LinkedIn with tailored ads showcasing vehicle highlights and customer testimonials.
• Content marketing — Launch an automotive blog and develop useful guides and infographics to position your dealership as an expert in the field.
• Customer testimonials — Feature stories from satisfied customers to enhance credibility and attract potential buyers.
• Experiential marketing — Host test drive events and participate in local community activities to offer direct product experiences and strengthen community ties.
• Referral and loyalty programs — Implement systems to reward loyalty and referrals, encouraging ongoing customer engagement and retention.
• Digital advertising — Employ targeted advertising and pay-per-click campaigns to attract interested buyers effectively.
• Video marketing — Use video content to enhance online visibility and engage a broader audience.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Today, customers are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your car dealership meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its strong USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your car dealership could be:

• Reliable cars for less, guaranteed
• Upscale used cars for your luxury life
• Family cars that keep your family safe

You may not like to network or use personal connections for business gain but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a car dealership, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in a car dealership for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in cars. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting small, you may not need any employees right away. But as your business grows, you will likely need workers to fill various roles. Potential positions for a car dealership would include:

• Salespeople — Selling cars, customer service
• Finance manager — Working with lenders to get customers’ financing
• Marketing lead — SEO, social media strategies
• General manager — Managing staff, ordering inventory

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Car Dealership — Start Making Money!

In good times and bad, people buy cars. It’s a trillion-dollar market, and with hard work and determination, you could grab your share and make a great living. It’s also important to keep up with the trends, such as going digital and maintaining a strong online presence to attract consumers who prefer to shop online.

Start small, build a name, add to your inventory, and grow your business. One day you could be that celebrity local auto dealer with an acre of cars. Now that you have the knowledge you need, you should be off to the races on your entrepreneurial journey!

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Car Dealership Name
• Create a Car Dealership Business Plan
• Register Your Business
• Register for Taxes
• Fund Your Business
• Apply for Car Dealership Business Licenses and Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Run a Car Dealership — Start Making Money!

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Car Dealership Business Plan Template & PDF Example

• August 27, 2024
• Business Plan

Creating a comprehensive business plan is crucial for launching and running a successful car dealership. This plan serves as your roadmap, detailing your vision, operational strategies, and financial plan. It helps establish your car dealership’s identity, navigate the competitive market, and secure funding for growth.

This article not only breaks down the critical components of a car dealership business plan, but also provides an example of a business plan to help you craft your own.

Whether you’re an experienced entrepreneur or new to the retail industry, this guide, complete with a business plan example, lays the groundwork for turning your car dealership business concept into reality. Let’s dive in!

Our car dealership business plan is meticulously organized to encompass all key components necessary for a comprehensive strategic framework. It details our dealership’s operations, marketing strategies, market environment, competitors, leadership team, and financial outlook.

• Executive Summary : Offers an overview of your Car Dealership’s business concept, including the range of new and pre-owned vehicles, market analysis , management team, and financial strategy.
• Car Dealership & Location: Describes the dealership’s prime location, accessibility, and facility features, including the showroom and service area.
• Vehicles & Rates: Lists the types of vehicles offered, from economical compact cars to luxury SUVs, including pricing and financing options.
• Key Stats: Shares industry size , growth trends, and relevant statistics for the car dealership market.
• Key Trends: Highlights recent trends affecting the car dealership sector, such as the surge in Electric Vehicle (EV) sales and the shift towards Built-to-Order sales.
• Key Competitors: Analyzes main competitors in the area and how your dealership differentiates itself, focusing on vehicle selection, customer service, and additional services like maintenance and repairs.
• SWOT : Strengths, weaknesses, opportunities, and threats analysis tailored to the car dealership business.
• Marketing Plan : Strategies for promoting your dealership and attracting customers, including online presence, targeted promotional campaigns, and community engagement.
• Timeline : Key milestones and objectives from the initial setup through the first year of operation and beyond.
• Management: Information on who manages the Car Dealership, detailing their roles, experience in the automotive industry, and business management.
• Financial Plan: Projects the dealership’s 5-year financial performance, including revenue from vehicle sales, profit and loss statements, cash flow analysis, and balance sheet.

Car Dealership Business Plan

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Executive Summary

The Executive Summary introduces your car dealership’s business plan, providing a succinct overview of your dealership and its offerings. It should describe your market positioning, the range of vehicles you offer—including new and pre-owned cars, financing options, and after-sales services—its location, size, and an overview of daily operations.

This section should also delve into how your car dealership will establish itself within the local market, including the number of direct competitors in the area, identifying who they are, along with your dealership’s unique selling points that set it apart from these competitors.

Moreover, you should include information about the management and founding team, detailing their roles and contributions to the dealership’s success.

Additionally, a summary of your financial projections, including revenue and profits over the next five years, should be included here to provide a clear picture of your dealership’s financial strategy.

Car Dealership Business Plan Executive Summary Example

Business Overview

An effective executive summary starts with a concise yet informative  business overview . This includes spotlighting the dealership’s name, its prime location, and an insight into its daily operations.

Highlighting the  unique selling proposition  ( USP ) is vital. Whether it’s the dealership’s commitment to customer service excellence, a diverse inventory offering various vehicle brands, or personalized after-sales services, this distinct factor sets the dealership apart in a competitive automotive market.

Example: “[Your Company Name],” situated in the heart of [City/Region], operates as a premier car dealership. Spanning a spacious facility, it offers various vehicles catering to diverse customer preferences, ranging from economical compact cars to luxury SUVs. Our dealership’s USP lies in delivering an extensive selection of top-tier vehicle brands such as Toyota, Ford, BMW, and Tesla, combined with a commitment to comprehensive after-sales support, financing options, and access to a state-of-the-art service center.

Market Overview

A compelling executive summary includes an insightful market overview. It should encompass  market size , growth trends, and an analysis of the  competitive landscape  within the automotive dealership industry.

Example: The US car dealership market represents $614 billion in total vehicle sales in 2022. Notably, the average yearly revenue per dealership stands at approximately $36.5 million, emphasizing the significance of each dealership’s role in the market. Recent trends illustrate a surge in Electric Vehicle (EV) sales, doubling in 2022, while a shift towards Built-to-Order sales aligns with evolving consumer preferences for personalized vehicles. The market is characterized by a mix of national dealership chains and independent local dealers, with [Your Company Name] poised to carve a niche by providing a diverse vehicle inventory and unparalleled customer service.

Management Team

The proficiency and expertise of the management team are integral to the success of your car dealership. This section aims to spotlight the qualifications and experiences of key team members, emphasizing their pivotal roles in steering the dealership toward success.

Highlighting the team’s expertise in managing financial operations, budgeting, financial analysis, and ensuring the dealership’s financial stability and growth builds credibility and assures potential investors and partners of the dealership’s capability.

Example: [Your Company Name] is led by a proficient management team with a wealth of experience in overseeing financial operations, budgeting, and analysis. Their expertise in identifying cost-saving  opportunities , ensuring financial stability, and driving sustained growth for the dealership forms the backbone of our operations.

Financial Plan

The financial plan section encapsulates the strategic fiscal objectives and projections of your car dealership. It offers a concise overview of revenue targets and profit margins and outlines the trajectory guiding the dealership’s financial growth.

Example: As part of our strategic growth plan, [Your Company Name] aims to attain a significant milestone by achieving $38 million in yearly revenue and a commendable  operating profit  margin ( EBITDA ) by 2028. This strategic trajectory involves maintaining competitive pricing structures, a relentless focus on operational efficiency, and an unwavering commitment to delivering unparalleled customer service. These strategies, coupled with the dedication of our adept team, aim to ensure consistent growth and profitability for the dealership in the years ahead.

For a Car Dealership, the Business Overview section can be effectively divided into 2 main categories:

Car Dealership & Location

Describe the dealership’s physical setup, focusing on its design, layout, and overall ambiance that welcomes customers. Mention features such as the showroom’s size, the display arrangement of vehicles, and any customer-friendly areas like waiting lounges or consultation spaces.

Next, highlight the dealership’s location, emphasizing its accessibility and the convenience it offers to customers, such as proximity to major roads or highways and the ease of parking. Also, explain why this location is strategically chosen to attract your target customer base, considering factors like local traffic flow, visibility, and the presence of nearby complementary businesses.

Vehicles & Rates

Detail the variety of vehicles offered, including new and pre-owned models, different brands, and vehicle types (such as sedans, SUVs, trucks, and electric vehicles). Emphasize any unique or highly sought-after models that could attract customers.

Outline your pricing strategy for the vehicles, ensuring it reflects the value offered and aligns with the market segment you’re targeting. Discuss any financing options, leasing deals, or special promotions that make purchasing more accessible and appealing to customers.

Industry Size & Growth

In the Market Overview of your car dealership business plan, begin by analyzing the size of the automotive industry and its growth potential. This examination is essential for grasping the market’s breadth and pinpointing opportunities for expansion.

Key Market Trends

Next, delve into current market trends , such as the growing consumer interest in electric and hybrid vehicles, advanced safety features, and digital sales platforms. Highlight the demand for vehicles that cater to evolving lifestyle needs and environmental concerns, along with the shift towards online purchasing and personalized buying experiences.

Competitive Landscape

A  competitive analysis  is not just a tool for gauging the position of your car dealership in the market and its key competitors; it’s also a fundamental component of your business plan. This analysis helps in identifying your car dealership’s unique selling points, essential for differentiating your business in a competitive market.

In addition, the competitive analysis is integral in laying a solid foundation for your business plan. By examining various operational aspects of your competitors, you gain valuable information that ensures your business plan is robust, informed, and tailored to succeed in the current market environment.

Identifying Your Competitors in the Car Dealership Industry

The initial step towards understanding your dealership’s position involves identifying and analyzing the key competitors within the automotive market. Start by mapping out local car dealerships, both independent and franchised, specializing in similar vehicle types or brands.

For instance, if your dealership specializes in luxury vehicles, your direct competitors might include other luxury dealerships within your vicinity, as well as larger franchised dealerships offering similar high-end car models. Additionally, consider indirect competitors such as online car sales platforms or used car dealerships, as they may cater to overlapping customer segments.

Leverage online tools and platforms such as dealership locators on automotive brand websites, Google Maps, and industry-specific platforms like Edmunds or Cars.com to gain insights into competitor locations and their inventory offerings. 

Analyzing customer reviews and ratings on platforms like Yelp or DealerRater can provide valuable information about competitor  strengths and weaknesses . For instance, positive reviews praising the customer service or wide vehicle selection at a rival dealership highlight aspects crucial for comparison.

Car Dealership Competitors’ Strategies

An in-depth analysis of your competitors’ strategies involves scrutinizing various facets of their operations:

• Vehicle Inventory:  Evaluate the range and variety of vehicles offered by competitors. If a nearby dealership gains traction with electric or hybrid models, it signifies an emerging  market trend  towards eco-friendly vehicles that might influence consumer preferences.
• Sales and Financing Approach:  Consider the sales tactics and financing options employed by competitors. A dealership offering flexible financing plans or exclusive warranty packages may attract customers seeking added value.
• Customer Service and Support:  Assess the quality of customer service and post-sale support provided by competitors. A dealership known for its responsive customer service or efficient maintenance services may have a competitive edge.
• Marketing and Promotion:  Study competitors’  marketing strategies , whether they rely on digital marketing, traditional advertising, or exclusive promotional events. A dealership leveraging social media influencers or hosting test-drive events could have a unique marketing approach.
• Technological Integration:  Observe if competitors embrace innovative technologies in their operations, such as virtual showrooms or online vehicle customization tools. A dealership utilizing augmented reality for virtual car tours might stand out in enhancing the customer experience.

What’s Your Car Dealership’s Value Proposition?

Reflect on your dealership’s distinct  value proposition . Perhaps your dealership specializes in rare vintage car collections or offers personalized concierge services for clients. Identifying gaps in the market through customer feedback and emerging industry trends is crucial.

For instance, the increasing demand for electric vehicles or the emphasis on contactless transactions could signify opportunities for differentiation if competitors have yet to fully cater to these preferences.

Consider your dealership’s location and target demographic. A dealership situated in a bustling urban area might prioritize convenience and streamlined services, while one in a suburban setting might emphasize family-oriented vehicle options and comprehensive safety features.

Begin with a SWOT analysis for the car dealership , identifying Strengths (such as a diverse vehicle inventory and strong customer service), Weaknesses (like limited market presence or competitive pressure), Opportunities (for instance, the growing demand for electric vehicles and online sales channels ), and Threats (such as economic fluctuations affecting consumer spending on big-ticket items).

Marketing Plan

Then, craft a marketing plan that details strategies to attract and retain customers through targeted advertising campaigns, promotional financing offers, a dynamic online presence, and community engagement events.

Marketing Channels

Marketing channels for a car dealership serve as pathways to communicate your brand and vehicle offerings to potential buyers. These channels are vital for establishing brand awareness, engaging with customers, and driving foot traffic to your showroom.

Digital Marketing

In today’s digital era, a robust online presence is imperative. This includes:

• Social Media : Utilize platforms like Instagram and Facebook to showcase your inventory, share informative car-related content, and engage with users through comments and direct messages.
• Website and SEO:  Develop a user-friendly website displaying your inventory, customer testimonials, and blog posts about car buying tips and industry updates. Implement SEO strategies to enhance your dealership’s online visibility.
• Email Marketing:  Build an email list by offering incentives like exclusive previews of new vehicle arrivals or maintenance tips. Send regular newsletters with updates on promotions, vehicle features, and industry news.

Local Advertising

Connecting with your local community can yield substantial results:

• Radio and TV Ads:  Utilize local radio stations or television channels to broadcast ads highlighting special deals, seasonal promotions, or unique vehicle models.
• Community Involvement:  Sponsor local events, charity drives, or sports teams to boost brand visibility and forge community connections.
• Partnerships:  Collaborate with complementary businesses like insurance agencies or car maintenance centers to offer bundled services or joint promotional deals.

Promotional Activities

Captivate potential buyers with compelling offers:

• Special Promotions:  Launch seasonal sales events such as ‘Year-End Clearance’ or ‘Summer Road Trip Deals.’ Offer discounts or incentives for test drives.
• Referral Programs:  Incentivize existing customers to refer friends and family by offering discounts on services or accessories for successful referrals.
• Customer Appreciation Events:  Organize exclusive events or workshops showcasing vehicle features, safety tips, or new technological advancements.

Sales Channels

Sales channels  are instrumental in selling vehicles and additional services to customers. These channels optimize revenue and ensure customer satisfaction.

In-Showroom Upselling

Maximize sales opportunities during customer visits:

• Additional Features:  During test drives or vehicle selection, highlight premium features or upgrades available for specific models.
• Service Packages:  Offer bundled maintenance packages or extended warranties to add value to the purchase.
• Finance and Insurance Services:  Educate customers about financing options and insurance packages available through the dealership.

Online Sales and Services

Leverage technology for efficient sales processes:

• Online Inventory Access:  Enable customers to browse your inventory, check vehicle specifications, and schedule test drives through your website or dedicated mobile application.
• Virtual Showroom Experience:  Offer virtual tours or interactive presentations of vehicles, providing a comprehensive experience for online buyers.
• E-Commerce:  Facilitate online transactions for accessories, spare parts, or merchandise associated with the vehicles you sell.

Customer Retention Programs

Encourage repeat business and foster loyalty:

• Maintenance Plans:  Offer subscription-based maintenance plans for regular servicing and upkeep of purchased vehicles.
• Customer Support and Engagement:  Establish a customer service department for addressing queries, and feedback, and providing ongoing support post-purchase.
• Exclusive Benefits: I mplement membership or loyalty programs offering discounts on future purchases, priority servicing, or VIP events. These programs foster a sense of belonging and incentivize customers to continue their relationship with your dealership.

Strategy Timeline

Lastly, establish a comprehensive timeline that marks key milestones for the dealership’s launch, marketing initiatives, customer base development, and growth goals, ensuring the business progresses with clarity and focus.

The Management section focuses on the car dealership business’s management and their direct roles in daily operations and strategic direction. This part is crucial for understanding who is responsible for making key decisions and driving the car dealership toward its financial and operational goals.

For your car dealership business plan, list the core team members, their specific responsibilities, and how their expertise supports the business.

The Financial Plan section is a comprehensive analysis of your financial projections for revenue, expenses, and profitability. It lays out your car dealership’s approach to securing funding, managing cash flow, and achieving breakeven.

This section typically includes detailed forecasts for the first 5 years of operation, highlighting expected revenue, operating costs , and capital expenditures.

For your car dealership business plan, provide a snapshot of your financial statement (profit and loss, balance sheet, cash flow statement), as well as your key assumptions (e.g. number of customers and prices, expenses, etc.).

Make sure to cover here _ Profit and Loss _ Cash Flow Statement _ Balance Sheet _ Use of Funds

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Building a Profitable Car Dealership Business from Scratch: A Step-by-Step Guide

• November 16, 2023
• Automotive Lead Generation

If you are passionate about cars and have a strong entrepreneurial spirit, starting your own car dealership business can be an exciting and lucrative venture. However, building a profitable car dealership business from scratch requires careful planning, market understanding , and a solid financial foundation. In this step-by-step guide, we will explore the key aspects of starting a car dealership business and provide valuable insights to help you succeed.

Understanding the Car Dealership Business

Starting a car dealership business requires a comprehensive understanding of the industry and its dynamics. The car dealership industry involves the buying and selling of new and used vehicles to consumers or other businesses. It encompasses various segments, such as passenger cars, commercial vehicles, and luxury automobiles.

As a car dealer, your primary goal is to acquire vehicles at wholesale prices and sell them at a profit. However, this is just the tip of the iceberg. To succeed in this competitive market, you will need to establish strong relationships with suppliers, manage your inventory effectively, negotiate prices, and provide exceptional customer service .

Let’s delve deeper into the key aspects of the car dealership business.

The Basics of the Car Dealership Industry

The car dealership industry is a complex and multifaceted sector that requires a deep understanding of market trends and consumer preferences. It is essential to keep up with the latest developments and technological advancements in the automotive industry to stay ahead of the competition.

When it comes to the types of vehicles you can sell, the possibilities are vast. From compact cars to SUVs, from electric vehicles to hybrid models, the choices are endless. Understanding the different vehicle segments and their unique characteristics will help you cater to a wide range of customer preferences.

Moreover, the car dealership business is not limited to just selling vehicles. Many dealerships offer additional services such as maintenance and repairs, financing options, and extended warranties. These value-added services can significantly enhance customer satisfaction and loyalty.

Key Players in the Car Dealership Market

To navigate the car dealership market successfully, it is crucial to be aware of the key players in the industry. Understanding their roles and characteristics will help you identify opportunities and develop a competitive edge.

Franchise Dealerships are one of the major players in the market. These dealerships have exclusive rights to sell new vehicles from a specific brand or manufacturer. They often offer additional services like maintenance and repairs, making them a one-stop-shop for customers.

Independent Dealerships, on the other hand, are not affiliated with any particular brand. They typically specialize in selling used vehicles and have more flexibility in terms of inventory selection and pricing. This flexibility allows them to cater to a broader range of customer budgets and preferences.

In recent years, online car marketplaces have gained significant popularity. These platforms connect buyers and sellers, facilitating transactions and providing extensive vehicle listings. Online car marketplaces offer convenience and a vast selection of vehicles, making them a preferred choice for many customers.

By understanding the strengths and weaknesses of these key players, you can position your dealership strategically and differentiate yourself from the competition.

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Profitability Factors in the Car Dealership Business

While the car dealership business can be profitable, several factors contribute to your success. It is essential to consider these factors and implement effective strategies to maximize profitability .

Market Demand plays a crucial role in determining the success of your dealership. Assess the demand for vehicles in your target market. Are there specific vehicle types or brands that are highly sought after? Understanding market trends and consumer preferences will help you make informed decisions regarding your inventory selection.

Location is another critical factor. Choose a strategic location that ensures visibility, accessibility, and proximity to potential customers. A well-chosen location can significantly impact foot traffic and customer reach.

Pricing Strategy is a delicate balance. Set competitive prices that attract buyers while still allowing for a reasonable profit margin. Conduct market research and analyze your competitors’ pricing strategies to determine the optimal pricing for your vehicles.

Effective Inventory Management is essential to minimize holding costs and maximize turnover rate. Keep track of your inventory, analyze sales data, and adjust your purchasing decisions accordingly. Maintaining a diverse inventory that caters to different customer preferences can also help attract a wider customer base.

Customer Experience is a key differentiator in the car dealership business. Provide exceptional customer service and build long-term relationships with buyers. A satisfied customer is more likely to become a repeat customer and refer your dealership to others.

By considering these factors and implementing effective strategies, you can increase the profitability of your car dealership business. Remember, success in this industry requires continuous adaptation to changing market dynamics and a relentless focus on customer satisfaction.

Planning Your Car Dealership Business

Identifying your target market.

It is essential to identify your target market before launching your car dealership business. Consider factors such as demographics, income levels, preferences, and local competition. By understanding your target market’s needs and preferences, you can tailor your inventory and marketing efforts to attract the right customers.

Moreover, conducting market research will help you identify trends, predict demand, and adjust your business strategy accordingly.

Choosing the Right Location

The location of your car dealership can significantly impact your success. Look for areas with high foot traffic, easy access, and visibility. Consider the proximity to major roads, commercial hubs, and residential neighborhoods.

Additionally, check local zoning laws and regulations to ensure that your chosen location allows for car dealership activities. Consult with a real estate professional to find the best-fit location for your business.

Deciding on New or Used Cars

Another critical decision is whether to focus on selling new or used cars . Both options have their advantages, and your choice will depend on factors like market demand, available resources, and competition in your area.

Selling new cars might require establishing partnerships with specific manufacturers, meeting certain sales quotas, and complying with brand guidelines. On the other hand, selling used cars allows for more flexibility in terms of pricing, selection, and sourcing.

Legal Considerations for Car Dealerships

Necessary licenses and permits.

Before opening your car dealership, you must obtain the necessary licenses and permits to operate legally. Consult with your local licensing agency or business regulatory authority to identify the specific requirements for your area.

Common licenses and permits typically include a dealer license, salesperson license, and potentially additional permits for vehicle storage, display, and vehicle registration.

Understanding Zoning Laws

Car dealerships are subject to zoning laws, which regulate the types of activities that can take place in specific areas. Ensure that your chosen location is zoned for car dealership activities or obtain the necessary permits or variances.

Consult with a legal professional or local zoning authorities to navigate the zoning regulations and avoid any potential issues.

Insurance Requirements for Car Dealerships

Obtaining comprehensive insurance coverage is crucial to protect your car dealership business from potential risks and liabilities. Insurance requirements may vary depending on your location and the type of vehicles you sell.

Common insurance policies for car dealerships include general liability insurance, inventory insurance, garage liability insurance, and workers’ compensation insurance. Consult with an insurance professional to design an insurance package that suits your specific needs.

Financing Your Car Dealership Business

Startup costs for a car dealership.

Starting a car dealership requires a significant upfront investment to cover various expenses. These may include:

• Property or lease costs for your dealership location.
• Initial inventory purchase.
• Licensing and permit fees.
• Office equipment, furniture, and signage.
• Marketing and advertising expenses.
• Insurance premiums.

Ensure you have a detailed business plan and secure adequate funding to cover these startup costs and sustain your business until it becomes profitable.

Securing Financing for Your Business

If you don’t have the necessary capital to finance your car dealership business, securing financing options can be a viable solution. Explore traditional banking options, government-backed loans, or private investors who specialize in financing car dealership startups.

Prepare a comprehensive business plan, financial projections, and supporting documents to increase your chances of obtaining financing. Demonstrate your knowledge of the industry, market analysis, and strategies for profitability to instill confidence in potential lenders or investors.

Managing Cash Flow in the Car Dealership Business

Effective cash flow management is vital in the car dealership business to ensure ongoing operations and sustained growth. Some key practices include:

• Implementing a robust accounting system to track revenue, expenses, and inventory.
• Regularly reviewing financial statements to identify trends, bottlenecks, and areas for improvement.
• Establishing relationships with reliable suppliers and negotiating favorable terms.
• Minimizing holding costs by optimizing inventory turnover.
• Being diligent with expenses and prioritizing cost control measures.

By continuously monitoring and managing your cash flow, you can navigate potential challenges and position your car dealership for long-term profitability.

Starting a profitable car dealership business from scratch requires careful planning, market understanding, and financial preparedness. By following this step-by-step guide, you can make informed decisions, overcome challenges, and build a successful car dealership enterprise. Remember to continuously adapt to market trends, provide exceptional customer service, and prioritize profitability to thrive in the competitive car dealership industry.

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Opening a car dealership can be a risky venture without effective planning. It requires a large amount of overhead costs to acquire inventory, insurance coverage, pay structure for salesmen among other things. You’ll likely find yourself looking to apply for a loan to get your business off the ground, which can be difficult to do without a thorough business plan to use in your pitch.

Luckily we have sample business plans to help you get started and successfully launch your new car dealership.

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Car Dealership Business Plan

A car dealership is a company that sells new or used vehicles to the general public under the terms of a dealership agreement with a carmaker or its sales subsidiary. Car dealerships are rewarding because they are connected to both the wholesale and retail markets.

Are you looking to start writing a business plan for your car dealership business? Creating a business plan is essential to starting, growing, and securing funding for your business. We have prepared a car dealership business plan template for you to help in start writing yours.

Free Business Plan Template

Download our free car dealership business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

• Fill in the blanks – Outline
• Financial Tables

How to Write a Car Dealership Business Plan?

Writing a car dealership business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section of the business plan intended to provide an overview of the whole business plan. Generally, it is written after the entire business plan is ready. Here are some components to add to your summary:

• Start with a brief introduction: Start your executive summary by introducing your idea behind starting a car dealership business and explaining what it does.
• Market opportunity: Describe the target market in brief, and explain the demographics, geographic location, and psychographic attributes of your customer. Explain how your car dealership business meets its needs. Clearly describe the market that your business will serve.
• Mention your services: Briefly describe the services that a client can expect from your business like new and used cars, maintenance and repairs of the car, car rental services, etc.
• Management team: Name all the key members of your management team with their duties, responsibilities, and qualifications
• Financial highlights: Provide a summary of your financial projections for the company’s initial years of operation. Include any capital or investment requirements, startup costs, projected revenues, and profits.
• Call to action: After giving a brief about your business plan, end your summary with a call to action, for example; inviting potential investors or readers to the next meeting if they are interested in your business.

Ensure you keep your executive summary concise and clear, use simple language, and avoid jargon.

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2. Business Overview

Depending on what details of your business are important, you’ll need different elements in your business overview. Still, there are some foundational elements like business name, legal structure, location, history, and mission statement that every business overview should include:

• The name of the car dealership business and the concept behind it: new car dealership, used car dealership, small car dealership, luxury car dealership, private seller, online retailer, or something else.
• Company structure of your car dealership business whether it is a sole proprietorship, LLC, partnership firm, or others.
• Location of your car dealership and the reason why you selected that place.
• Ownership: Describe the owners of your dealership business and mention their roles in running it. Whose shares in the corporation are they, and how each owner helps in the business?
• Mission statement: Add a mission statement that sums up the objectives and core principles of your business. This statement needs to be memorable, clear, and brief.
• Business history: If you are already running this business, including an outline of the business’s history and how it came to be in its current position. If you can, add some personality and intriguing details, especially if you got any achievements or recognitions till now for your incredible services.
• Future goals: It’s crucial to convey your aspirations and your vision. Include the vision of where you see your business in the near future and if you have any plans of opening a new franchise of your business in the same city in the future.

This section should provide an in-depth understanding of your car dealership business. Also, the business overview section should be engaging and precise.

3. Market Analysis

Market analysis provides a clear understanding of the market in which your car dealership business will run along with the target market, competitors, and growth opportunities. Your market analysis should contain the following essential components:

• Target market: Identify your target market and define your ideal customer. Know more about your customers and which services or cars they prefer.
• Market size and growth potential: Provide an overview of the industry. It will include market size, trends, growth potential, and regulatory considerations. Highlight the competitive edge and how your car dealership business is different from the rest.
• Competitive analysis: Identify and analyze all other dealerships in the local market, including direct and indirect competitors. Evaluate their strengths and weaknesses, and explain how your business can offer qualitative services.
• Market trends: Analyze current and emerging trends in your industry, such as changes in technology or customer preference as in the shift towards automatic cars. Explain how your business will cope with all the trends.
• Regulatory environment: Describe any regulations or licensing requirements that affect the car dealership, such as insurance, dealer’s license, zoning permits, or safety codes.

Some additional tips for writing the market analysis section of your business plan:

• Use a variety of sources to gather data, including industry reports, market research studies, and surveys.
• Be specific and provide detailed information wherever possible.
• Include charts and graphs to help illustrate your key points.
• Keep your target audience in mind while writing the business plan.

4. Products And Services

The product and services section of a car dealership business plan should describe the specific services and products that will be offered to customers. To write this section should include the following:

• Create a list of the services that your car dealership will offer, which may luxury cars, new cars, used cars, maintenance, repairs, etc.
• Describe each product and service: For each service, provide a detailed description of what it entails, and the qualifications of the professionals who will provide the service.
• Emphasize safety and quality: In all descriptions of services and products, emphasize the importance of safety and quality. Explain how your car dealership will ensure that all services and products are delivered with the highest standards of safety and efficacy.

Overall, a business plan’s product and services section should be detailed, informative, and customer-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

• Develop your unique selling proposition (USP): Clearly define your unique selling proposition – it might be your pricing, the range of vehicles you offer, after-sales service, digital experience, specialization in vintage, hybrid, or sports cars, or any other aspect that distinguishes you from the competition.
• Determine your pricing strategy: Develop a pricing strategy that is competitive and affordable, yet profitable. Consider offering promotions, discounts, or packages to attract new customers.
• Marketing strategies: Develop a marketing strategy that includes a mix of online and offline marketing tactics. Consider social media, email marketing, content marketing, brochures, print marketing, and affiliating with online car buying/selling options.
• Sales strategies: Mention your sales strategy as in – offer incentives and promotions to attract new customers, or partner with other businesses to establish referral programs that can help you generate more business. Consider offering incentives for referrals or special discounts for partnerships.

Overall, the sales and marketing strategies section of your business plan should outline your plans to attract and retain customers and generate revenue. Be specific, realistic, and data-driven in your approach, and be prepared to adjust your strategies based on feedback and results.

6. Operations Plan

When writing the operations plan section, it’s important to consider the various aspects of your business processes and procedures involved in operating a business. Here are the components to include in an operations plan:

• Hiring plan: Tell the staffing requirements of your car dealership, including the number of employees needed, their qualifications, and the duties they will perform. Also mention the perks you will provide to your employees.
• Operational process: Outline the processes and procedures that you will use to run your car dealership business. It includes the scheduling of appointments, meeting with clients, and everything else.
• Inventory management: Provide details on how frequently new vehicles will be purchased, how the inventory will be cycled, and how the dealership will make sure it has a variety of automobiles to suit the demands of its clients in your inventory management plan.

By including these key elements in your operations plan section, you can create a comprehensive plan that outlines how you will run your car dealership business.

7. Management Team

The management team section provides an overview of the individuals responsible for running the car dealership business. This section should provide a detailed description of the experience and qualifications of each manager, as well as their responsibilities and roles.

• Key managers: Describe the key members of your management team, their roles, and their responsibilities. It should include the owners, and senior management including their education, professional background, and any relevant experience in the industry.
• Organizational structure: Describe the organizational structure of the management team, including reporting lines and how decisions will be made.
• Compensation plan: Describe your compensation plan for the management team and staff, including salaries, bonuses, and other benefits.
• Board of advisors: If you have a board of advisors for your business, then mention them along with their roles and experience.

Describe the key personnel of your company and highlight why your business has the fittest team.

8. Financial Plan

When writing the financial plan section of a business plan, it’s important to provide a comprehensive overview of your financial projections for the first few years of your business.

• Profit & loss statement: Create a projected profit & loss statement that describes the expected revenue, cost of products sold, and operational costs. Your business’s anticipated net profit or loss should be computed and included.
• Cash flow statement: Estimate your cash inflows and outflows for the first few years of operation. It should include cash receipts from clients, payments to vendors, loan payments, and any other cash inflows and outflows.
• Balance sheet: Prepare a projected balance sheet, which shows the assets, liabilities, and equity.
• Break-even point: Determine the point at which your car dealership business will break even, or generate enough revenue to cover its operating costs. This will help you understand how much revenue you need to generate to make a profit.
• Financing needs: Estimate how much financing you will need to start and operate your car dealership business. It should include both short-term and long-term financing needs, such as loans or investment capital.

Remember to be realistic with your financial projections, and to provide supporting evidence for all of your estimates.

9. Appendix

When writing the appendix section, you should include any additional information that supports the main content of your plan. This may include financial statements, market research data, legal documents, and other relevant information.

• Include a table of contents for the appendix section to make it easy for readers to find specific information.
• Include financial statements such as income statements, balance sheets, and cash flow statements. These should be up-to-date and show your financial projections for at least the first three years of your business.
• Provide market research data, such as statistics on the size of the industry, consumer demographics, and trends in the industry.
• Include any legal documents such as permits, licenses, and contracts.
• Provide any additional documentation related to your business plans, such as marketing materials, product brochures, and operational procedures.
• Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your car dealership business should only include relevant and important information that supports the main content of your plan.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

This car dealership business plan sample will provide an idea for writing a successful business plan, including all the essential components of your business.

After this, if you are still confused about how to write an investment-ready business plan to impress your audience, then download our car dealership business plan pdf .

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Frequently asked questions, why do you need a car dealership business plan.

A business plan is essential for anyone looking to start or run a successful car dealership. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your car dealership business.

How to get funding for your car dealership business?

There are several ways to get funding for your car dealership business, but one of the most efficient and speedy funding options is self-funding. Other options for funding are:

• Bank loan – You may apply for a loan in government or private banks.
• Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
• Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your car dealership, usually online.
• Angel investors – Getting funds from angel investors is one of the most sought options for startups.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your car dealership business?

There are many business plan writers available, but no one knows your business and idea better than you, so we recommend you write your car dealership business plan and outline your vision as you have in your mind.

What is the easiest way to write your car dealership business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any car dealership business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Car Dealership Business Plan

Used 4,959 times

A Car Dealership Business Plan is a detailed plan that will help you take your business to the next level. Use this template to create your plan.

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Car Dealership Business Plan Template

Created by:

​ [Owner.FirstName] [Owner.LastName] ​

​ [Owner.Company] ​

EXECUTIVE SUMMARY

​ [Owner.Company] is a new car dealership that will offer a wide range of new and used vehicles to customers in the [Owner.City] area. The dealership will be owned and operated by [Owner.FirstName] [Owner.LastName] , who has (insert number) years of experience in the automotive industry. The dealership will be located in a prime location with high visibility and easy access for customers. It will offer a variety of services, including sales, financing, leasing, maintenance, and repair.

COMPANY DESCRIPTION

​ [Owner.Company] will be registered as a(n) (LLC/Corporation) and will employ (insert number) people at the start, including the owner and a team of sales associates and service technicians. The dealership will offer a selection of new vehicles from top manufacturers and a wide range of high-quality used vehicles. The dealership will also offer financing and leasing options for customers, as well as maintenance and repair services for all makes and models of vehicles.

MARKET ANALYSIS

The automotive industry is expected to remain stable over the next five years, with a slight increase in sales projected. The demand for new and used vehicles is driven by population growth, economic development, and the need for reliable transportation. [Owner.Company] will target both individual and commercial customers in the [Owner.City] area, focusing on providing high-quality vehicles and excellent customer service.

MARKETING STRATEGY

​ [Owner.Company] will use a combination of traditional and digital marketing techniques to reach potential customers. This will include advertising in local newspapers and industry publications, as well as utilizing social media platforms and email marketing to promote sales and specials. The dealership will also rely on word-of-mouth referrals from satisfied customers. The dealership will host events and promotions to attract new customers and build brand awareness in the local community.

​ [Owner.Company] will have a modern showroom and service center to showcase vehicles and provide maintenance and repair services. The dealership will have a team of experienced sales associates and service technicians who will assist customers and maintain the dealership's inventory of vehicles. The dealership will have a manager overseeing all operations and ensuring that the dealership is running smoothly. The dealership will maintain a well-stocked parts department to ensure that customers' vehicles are well-maintained and repaired as needed.

FINANCIAL PLAN

​ [Owner.Company] will generate revenue through the sale of new and used vehicles, as well as financing and leasing options. The dealership will also generate revenue through the sale of parts and services. The dealership will have operating expenses, including payroll, rent, utilities, and insurance. The dealership expects to generate (Amount) in revenue in the first year, with a projected growth rate of (Percentage) per year. The dealership will implement strategies to increase profitability, such as offering value-added services and maintaining a high level of customer satisfaction.

​ [Owner.Company] is well-positioned to meet the demand for new and used vehicles in the [Owner.City] area. With a prime location, a wide range of high-quality vehicles and services, and a commitment to customer satisfaction, the dealership is confident that it will be successful in the competitive automotive market.

​ [Client.FirstName] [Client.LastName] ​

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Business Plan Template for Car Dealerships

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Thinking of starting or expanding your car dealership business? You're going to need a solid plan to drive your success. Luckily, ClickUp has the perfect solution for you - our Business Plan Template for Car Dealerships!

With this template, you can:

• Craft a comprehensive business strategy that covers all aspects of your dealership, from marketing to operations.
• Create accurate financial projections to impress investors and secure the funding you need to grow.
• Conduct in-depth market analysis to identify your target audience and stay ahead of the competition.
• Develop operational plans to streamline your processes and maximize efficiency.

Don't let your dreams of running a successful car dealership stay parked. Get started with ClickUp's Business Plan Template for Car Dealerships today and accelerate your path to success!

Business Plan Template for Car Dealerships Benefits

When using the Business Plan Template for Car Dealerships, you can expect the following benefits:

• Streamline the process of creating a comprehensive business plan for your car dealership
• Clearly outline your mission, vision, and goals to attract investors and secure funding
• Conduct a thorough analysis of your target market and competition to identify opportunities for growth
• Develop detailed financial projections and budgets to ensure the financial viability of your dealership
• Create a roadmap for the operational aspects of your business, including sales strategies, inventory management, and customer service protocols
• Stay organized and focused on your dealership's growth and success with a structured and professional business plan.

Main Elements of Car Dealerships Business Plan Template

ClickUp's Business Plan Template for Car Dealerships provides a comprehensive framework to help car dealership owners and entrepreneurs create a winning business plan. Here are the main elements of this template:

• Custom Statuses: Track the progress of different sections of your business plan with statuses like Complete, In Progress, Needs Revision, and To Do.
• Custom Fields: Add important details to your plan using custom fields like Reference, Approved, and Section, allowing you to organize and categorize your information.
• Custom Views: Access different perspectives of your business plan, including Topics, Status, Timeline, Business Plan, and Getting Started Guide, to ensure that every aspect of your dealership's strategy is thoroughly covered.
• Financial Projections: Utilize ClickUp's built-in reporting and analytics features to create and analyze financial projections, providing a clear picture of your dealership's financial performance and potential.
• Collaboration Tools: Collaborate with your team, assign tasks, and set due dates to ensure everyone is working together towards your dealership's success.
• Integration: Seamlessly integrate with other tools and software, such as accounting software, CRM systems, and marketing platforms, to streamline your dealership's operations and improve efficiency.

With ClickUp's Business Plan Template for Car Dealerships, you'll have all the tools you need to create a comprehensive and effective business plan that will set your dealership up for success.

How To Use Business Plan Template for Car Dealerships

If you're a car dealership owner looking to create a comprehensive business plan, the Business Plan Template in ClickUp can help you get started. Follow these steps to ensure you cover all the essential elements for a successful car dealership business plan:

1. Analyze the market and competition

Begin by conducting thorough market research to understand the current trends and customer preferences in the automotive industry. Identify the target market segment for your dealership and analyze your competitors to determine your unique selling proposition (USP).

Use the Goals feature in ClickUp to set objectives for market research and competitor analysis.

2. Define your business goals and objectives

Clearly define your short-term and long-term business goals. These may include sales targets, customer satisfaction goals, expansion plans, or specific objectives related to inventory management or customer retention. Establishing clear goals will help guide your decision-making and keep your dealership on track.

Utilize the Board view in ClickUp to visualize and track your business goals and objectives.

3. Develop a marketing and sales strategy

Create a comprehensive marketing and sales strategy that outlines how you will attract customers, promote your dealership, and increase sales. This may include digital marketing tactics, traditional advertising methods, partnerships with local businesses, or special promotions and events.

Use the Automations feature in ClickUp to set up automated marketing campaigns and track their performance.

4. Create a financial plan

Develop a detailed financial plan that includes projected revenue, expenses, and profitability. This should encompass various aspects such as inventory costs, employee salaries, marketing expenses, and overhead costs. Additionally, consider incorporating financial projections for the next 3-5 years to demonstrate the long-term sustainability of your dealership.

Use the Table view in ClickUp to organize and analyze financial data, including revenue projections, expense tracking, and profitability calculations.

By following these steps and utilizing the Business Plan Template in ClickUp, you can create a comprehensive and well-structured business plan for your car dealership. Remember to regularly review and update your plan to adapt to changes in the market and ensure the continued success of your dealership.

Get Started with ClickUp’s Business Plan Template for Car Dealerships

Car dealership owners and entrepreneurs can use the Business Plan Template for Car Dealerships to create a comprehensive plan that outlines their strategies and financial projections.

To get started, hit “Add Template” to sign up for ClickUp and add the template to your Workspace. Make sure you designate which Space or location in your Workspace you’d like this template applied.

Next, invite relevant members or guests to your Workspace to start collaborating.

Now you can take advantage of the full potential of this template to create a successful business plan:

• Use the Topics View to organize your plan into different sections such as Executive Summary, Market Analysis, Financial Projections, and more
• The Status View will help you track the progress of each section, with statuses like Complete, In Progress, Needs Revision, and To Do
• The Timeline View will allow you to set deadlines and milestones for each section of your business plan
• Use the Business Plan View to get a bird's-eye view of your entire plan and easily navigate between sections
• The Getting Started Guide View will provide you with step-by-step instructions on how to use the template and create a compelling business plan
• Customize the template by adding custom fields like Reference, Approved, and Section to provide additional information and track important details
• Update statuses and custom fields as you work on your plan to keep team members informed of progress
• Monitor and analyze your business plan to ensure it aligns with your goals and objectives
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Navigate to Prosperity: Building a Winning Car Dealership Business Plan

Starting a Car Dealership

Starting a car dealership can be an exciting venture for entrepreneurs looking to enter the automotive industry. The potential for profitability, the chance to work with a wide range of vehicles, and the opportunity to serve customers in their car-buying journey make the car dealership business appealing.

The Appeal of the Car Dealership Business

The car dealership business offers various advantages that make it an attractive industry to enter. One of the main appeals is the potential for profitability . Car dealerships have the potential to generate significant revenue, especially when considering the profit margins that can be achieved through successful sales and efficient operations. Check out our article on car dealership profit margins for more information.

Additionally, the car dealership business allows entrepreneurs to work with a wide range of vehicles , catering to different customer preferences and needs. This diversity can provide opportunities to specialize in specific vehicle types or serve a broader market, depending on the business strategy.

Another aspect that makes the car dealership business appealing is the ability to build relationships with customers and assist them in finding the right vehicle. Being part of the car-buying journey, from initial exploration to final purchase, can be rewarding and fulfilling for those passionate about cars and helping people make informed decisions.

Understanding the Importance of a Business Plan

While the appeal of the car dealership business is evident, it’s important to approach it with a well-thought-out business plan . A business plan acts as a roadmap for your car dealership, guiding you through the various stages of starting and running the business.

A comprehensive business plan should include key components that provide a clear understanding of your business and its potential. These components may include:

• Executive Summary : A concise overview of your car dealership and its objectives.
• Company Description : Detailed information about your business, its structure, and ownership.
• Market Analysis : Research on the target market, including customer demographics, competitors, and market trends. Check out our article on how to start a car dealership for guidance.
• Organization and Management : Description of your management team and organizational structure.
• Products and Services : Details about the vehicles you plan to sell, financing options, and any additional services offered.
• Marketing and Sales Strategy : Strategies for promoting your dealership, attracting customers, and generating leads. Visit our article on car dealership marketing strategies .
• Financial Projections : Financial forecasts, including projected revenue, expenses, and profitability. This helps you determine the feasibility of your business and secure financing if needed.

By developing a thorough and well-researched business plan, you can gain a deeper understanding of the car dealership industry, identify potential challenges, and set realistic goals for your business. It also serves as a valuable tool when seeking funding from investors or financial institutions.

Starting a car dealership requires careful planning and consideration. Understanding the appeal of the car dealership business and recognizing the importance of a business plan are crucial steps towards building a successful venture in the automotive industry.

Components of a Car Dealership Business Plan

To successfully start and operate a car dealership, it’s essential to have a well-structured business plan in place. This plan serves as a roadmap that outlines the goals, strategies, and financial projections for your dealership. The following are key components to include in your car dealership business plan:

Executive Summary

The executive summary provides an overview of your entire business plan. It highlights the key points and objectives of your dealership, giving readers a clear understanding of your vision and mission. This section should be concise yet compelling, grabbing the attention of potential investors and lenders. It’s important to emphasize the unique selling proposition of your dealership and showcase the opportunities it presents.

Company Description

The company description section outlines the background and structure of your car dealership. It should include details such as the legal structure (sole proprietorship, partnership, corporation, etc.), location, target market, and the types of vehicles you plan to sell. This section helps readers understand the nature of your business and the value it brings to customers. For more information on starting a car dealership, check out our article on how to start a car dealership .

Market Analysis

A thorough market analysis is crucial for understanding the competitive landscape and identifying target customers. In this section, you should analyze factors such as market size, customer demographics, and buying behavior. Assessing competitors and their offerings is also important to determine your dealership’s unique positioning. Our article on car dealership profit margins provides insights into industry trends and financial considerations.

Organization and Management

The organization and management section highlights the structure of your dealership’s team and their roles and responsibilities. It should introduce key personnel, their qualifications, and their experience in the automotive industry. This section demonstrates that your dealership has a capable team in place to manage day-to-day operations and ensure smooth functioning. Additionally, it’s important to discuss any partnerships or strategic alliances that may contribute to the success of your dealership.

Products and Services

Provide detailed information about the products and services your dealership will offer. This includes the types of vehicles you plan to sell, their makes, models, and features. Highlight any unique selling points that differentiate your dealership from competitors. If your dealership offers additional services such as financing options, warranties, or after-sales support, be sure to include those details as well. For more information on managing inventory, check out our article on car dealership inventory management .

Marketing and Sales Strategy

The marketing and sales strategy section outlines how you plan to promote and sell your vehicles. Describe the marketing channels you will utilize, such as traditional advertising, digital marketing, or social media marketing. Discuss strategies for lead generation and customer acquisition, as well as how you will build your brand and maintain customer relationships. Our articles on car dealership marketing strategies and car dealership social media marketing can provide you with insights and tips to enhance your marketing efforts.

Financial Projections

The financial projections section is crucial for demonstrating the feasibility and profitability of your car dealership. It should include projected revenue, expenses, and cash flow for a specified period, usually three to five years. This section helps potential investors or lenders evaluate the financial viability of your business. It’s important to create realistic projections based on thorough research and analysis. Our article on car dealership insurance can also provide insights into insurance considerations for your dealership.

By including these key components in your car dealership business plan, you’ll have a comprehensive document that guides your operations and showcases the potential of your dealership. Remember to regularly review and update your business plan as your dealership evolves and grows.

Conducting a Market Analysis

Before starting a car dealership, it’s crucial to conduct a thorough market analysis to understand the dynamics of the industry and identify opportunities for success. This section will guide you through the key components of a market analysis: identifying your target market , analyzing the competition , and evaluating market trends and opportunities .

Identifying Your Target Market

To effectively market and sell cars, it’s essential to identify your target market. Consider factors such as demographics, psychographics, and purchasing behavior of potential customers. Determine the types of cars that are in demand within your target market segment and tailor your inventory accordingly. By understanding your target market, you can develop marketing strategies that resonate with your audience and meet their specific needs. For more information on how to start a car dealership, visit our article on how to start a car dealership .

Analyzing the Competition

Analyzing the competition is a critical step in understanding the market landscape. Identify other car dealerships in your area and assess their strengths, weaknesses, and market positioning. Analyze their product offerings, pricing strategies, customer service, and marketing tactics. This analysis will help you identify gaps in the market that you can capitalize on, as well as areas where you can differentiate your dealership. Understanding the competitive landscape will enable you to develop strategies that set your dealership apart.

Evaluating Market Trends and Opportunities

To stay ahead in the car dealership industry, it’s important to stay abreast of market trends and identify potential opportunities. Keep an eye on industry reports, market research, and consumer trends to understand changing customer preferences and behaviors. For example, with the growing popularity of electric vehicles, there may be opportunities to focus on selling and servicing electric cars. Additionally, consider emerging technologies, such as autonomous vehicles, and evaluate how they may impact the market in the future. By identifying trends and opportunities, you can position your dealership to take advantage of evolving customer needs and preferences.

By conducting a comprehensive market analysis, you can gain valuable insights into your target market, competitors, and emerging trends. This knowledge will inform your business decisions and help you build a strong foundation for your car dealership. Remember to regularly update your market analysis to stay informed about changes in the industry and adapt your strategies accordingly.

Developing a Marketing and Sales Strategy

To succeed in the competitive car dealership industry, it’s crucial to develop a strong marketing and sales strategy . This section will discuss key aspects of building your brand, effective advertising and promotion, and sales techniques with a focus on customer relationship management.

Building Your Brand

Building a strong brand is essential for establishing credibility and attracting customers to your car dealership. Start by defining your brand identity, including your mission, values, and unique selling proposition. Develop a compelling brand story that resonates with your target audience and sets you apart from competitors.

A well-designed car dealership website can serve as the cornerstone of your brand’s online presence. It should reflect your brand image, provide comprehensive information about your inventory and services, and be optimized for mobile devices. Utilize professional photography and engaging content to showcase the quality and variety of vehicles you offer.

In addition to your website, leverage other marketing channels such as social media platforms, online advertising, and traditional marketing methods to increase brand visibility. Consistently reinforce your brand message across all channels to create a cohesive and memorable brand experience for potential customers.

Effective Advertising and Promotion

To reach your target market, develop a comprehensive advertising and promotion strategy. Conduct market research to identify the most effective advertising channels for your specific audience. Consider using a mix of online and offline advertising methods, such as search engine marketing, social media advertising, radio and television commercials, and print media.

When creating advertisements, focus on highlighting the unique features and benefits of your dealership. Use compelling visuals and persuasive language to capture the attention of potential customers. Consider offering special promotions, discounts, or incentives to attract new buyers and encourage repeat business.

Utilize customer testimonials and positive reviews to build trust and credibility. Positive word-of-mouth can be a powerful advertising tool, so encourage satisfied customers to share their experiences with others.

Sales Techniques and Customer Relationship Management

A successful car dealership relies on effective sales techniques and customer relationship management (CRM). Train your sales team to be knowledgeable about your inventory, attentive to customer needs, and skilled in negotiation techniques.

Implement a CRM system to track customer interactions, manage leads, and nurture relationships. A car dealership CRM software can help automate tasks, streamline processes, and enhance customer communication. Regularly follow up with potential buyers to stay top-of-mind and provide personalized assistance throughout the purchasing process.

Focus on delivering exceptional customer service to create a positive buying experience. Provide transparent information about pricing, financing options, and warranties. Offer test drives and allow customers to thoroughly inspect vehicles. Building long-term relationships with customers can lead to repeat business and referrals.

By developing a robust marketing and sales strategy, you can effectively promote your car dealership, build a strong brand, and attract customers. Remember to continuously monitor and adjust your strategies based on market trends, customer feedback, and the performance of your campaigns.

Financial Projections and Funding

When developing a car dealership business plan, it is crucial to include comprehensive financial projections and funding strategies . These elements will help you assess the financial feasibility of your business and secure the necessary resources to get started. In this section, we will explore three key aspects: creating realistic financial projections, determining start-up costs and financing options, and managing cash flow and budgeting.

Creating Realistic Financial Projections

Creating realistic financial projections is essential for understanding the potential profitability and growth of your car dealership. This involves estimating your revenue, expenses, and profit margins based on market research and industry benchmarks. By analyzing factors such as car dealership profit margins , sales volume, and operating costs, you can develop a clear picture of your financial outlook.

In your financial projections, include details such as projected sales revenue, cost of goods sold, operating expenses, and net profit. Use tables or charts to present this information clearly. It is important to be conservative in your estimates to ensure you have a realistic perspective on your financial performance. Properly forecasting your financials will help you make informed decisions and attract potential investors or lenders.

Determining Start-up Costs and Financing Options

Determining the start-up costs of your car dealership is crucial for securing the necessary capital to establish your business. Start-up costs may include expenses such as acquiring a suitable location, purchasing inventory, obtaining car dealership licenses , and investing in necessary equipment and technology. It is important to conduct thorough research to accurately estimate these costs.

Once you have determined your start-up costs, you can explore various financing options. This may include self-funding, seeking investment from partners or investors, or applying for loans from financial institutions. Each option has its own advantages and considerations. Consider consulting with a financial advisor or accountant to determine the most suitable financing strategy for your specific circumstances.

Managing Cash Flow and Budgeting

Effective cash flow management is vital for the success of your car dealership. Cash flow refers to the movement of money in and out of your business. It is crucial to monitor and control your cash flow to ensure you have sufficient funds to cover expenses and meet financial obligations.

Developing a comprehensive budget is an important aspect of cash flow management. A budget helps you plan and allocate your financial resources effectively. It should include projected revenues, fixed and variable expenses, and anticipated cash inflows and outflows. Regularly review and update your budget to reflect any changes in your business operations or market conditions.

Consider utilizing car dealership CRM software or financial management tools to streamline your cash flow management and budgeting processes. These tools can help you track sales, expenses, and financial performance, providing valuable insights for decision-making.

By including realistic financial projections, determining start-up costs and financing options, and implementing effective cash flow management strategies, you can lay a strong foundation for your car dealership business. Remember to regularly review and update your financial projections and adjust your strategies as needed to ensure the financial health and success of your venture.

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How to Start a Profitable Car Dealership Business [11 Steps]

By Nick Cotter Updated Feb 05, 2024

Business Steps:

1. perform market analysis., 2. draft a car dealership business plan., 3. develop a car dealership brand., 4. formalize your business registration., 5. acquire necessary licenses and permits for car dealership., 6. open a business bank account and secure funding as needed., 7. set pricing for car dealership services., 8. acquire car dealership equipment and supplies., 9. obtain business insurance for car dealership, if required., 10. begin marketing your car dealership services., 11. expand your car dealership business..

Starting a car dealership business requires a deep understanding of the current market to identify opportunities and anticipate challenges. A thorough market analysis is a crucial first step to gauge demand, competition, and economic conditions that will influence your business. Follow these guidelines to perform your market analysis effectively:

• Research the local and national automotive market to understand the latest trends, including which car models and types are in high demand.
• Analyze your competitors by looking at their inventory, pricing strategies, and market positioning to identify gaps or areas for improvement.
• Study your target audience by considering demographics, purchasing power, preferences, and behaviors to tailor your inventory and marketing efforts.
• Examine the economic environment, including interest rates, employment rates, and consumer confidence, as these factors can greatly affect car sales.
• Assess the regulatory landscape to understand the requirements for operating a dealership, including licensing, taxes, and environmental regulations.
• Utilize industry reports, online databases, and local government resources to gather accurate and relevant data for your analysis.

Are car dealership businesses profitable?

Car dealership businesses can be highly profitable if managed well. The profitability of a car dealership depends on a variety of factors, including the size and location of the operation, the quality and quantity of vehicles sold, and the cost of overhead. Additionally, competition from other dealerships and access to financing for customers are critical components that determine a dealership's success.

Starting a car dealership requires meticulous planning and a clear vision of how your business will operate, grow, and succeed. A well-drafted business plan is your roadmap to success and will help you outline the specifics of your dealership, as well as attract potential investors. Here are the key components you should include in your car dealership business plan:

• Executive Summary: Provide a concise overview of your dealership, including your mission statement, business goals, and the products and services you’ll offer.
• Market Analysis: Research and describe your target market, local demand, competitor analysis, and how your dealership will fit into the current market landscape.
• Organizational Structure: Detail the management team, employee roles, and the operational workflow of your dealership.
• Services and Inventory: Explain the types of vehicles you plan to sell, any additional services you’ll provide, such as maintenance, and your inventory sourcing strategy.
• Marketing and Sales Strategy: Outline how you will attract and retain customers, including advertising, promotions, and sales tactics.
• Financial Projections: Present detailed financial forecasts, including startup costs, projected income, cash flow statements, and a break-even analysis.
• Funding Request: If seeking financing, specify the amount needed, how it will be used, and the proposed terms for repayment.

How does a car dealership business make money?

Car dealerships make money by buying and selling cars. They generate profit from the difference between what they purchased the vehicle for, and what they sell it for. Additionally, car dealerships usually offer services such as repair, parts, and financing options that can also be a source of income. An example of a target audience for a car dealership business is middle class families who need an affordable, reliable car to commute to work or school.

Creating a strong brand for your car dealership is crucial in setting yourself apart in a competitive market. Your brand is the promise you make to your customers—it represents your dealership's identity, values, and the experience you offer. Here are some key steps to help you develop a compelling car dealership brand:

• Define Your Unique Selling Proposition (USP): Determine what makes your dealership unique. It could be exceptional customer service, a wide range of vehicles, exclusive warranties, or community involvement.
• Identify Your Target Audience: Understand who your customers are, what they value, and what they are looking for in a car dealership. Tailor your brand to meet their specific needs and desires.
• Create a Memorable Logo and Tagline: Design a logo that reflects your dealership's personality and a catchy tagline that encapsulates your USP and brand promise.
• Develop a Consistent Brand Voice and Personality: Whether professional, friendly, or adventurous, ensure your brand voice and personality are consistent across all marketing materials and customer interactions.
• Implement Branding Across All Touchpoints: Apply your branding consistently across your dealership, including signage, website, social media, advertising, and customer service.

How to come up with a name for your car dealership business?

Coming up with a name for a car dealership business can be a difficult task. However, the perfect name can make all the difference in the success of your ventures. The ideal name should be creative, eye-catching, and professional, as well as easy to understand and remember. Consider using an acronym that is unique and relevant to your business, or using words that evoke strength, quality, and success, such as ‘Assured Automotive’ or ‘Precision Motors.' Research brand names similar to yours and make sure your name is original and distinct from existing businesses. Ultimately, whatever name you choose should capture the essence of your business.

Formalizing your business registration is a critical step in establishing your car dealership. This process involves legalizing your business entity, which can vary depending on your location and the structure of your business. Follow these guidelines to ensure your business is properly registered:

• Choose a legal structure for your business, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Each has its own implications for liability, taxes, and ongoing requirements.
• Register your business name with the appropriate state authorities. If you're using a name other than your personal name, you'll need to file a 'Doing Business As' (DBA) registration.
• Obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for tax purposes, especially if you will have employees or if your business is incorporated.
• Apply for any specific licenses and permits required for car dealerships in your area, which may include a dealer's license, sales tax permit, and zoning permits.
• Make sure to check with your local DMV or equivalent agency for additional requirements specific to car dealerships, such as surety bonds and insurance.

Resources to help get you started:

Explore key resources designed to empower car dealership entrepreneurs with market trends, operational strategies, and growth insights:

• NADA (National Automobile Dealers Association): Offers comprehensive industry reports, dealership operational guides, and market analysis. https://www.nada.org
• Automotive News: A leading publication for automotive industry news, analysis, and dealership best practices. https://www.autonews.com
• Dealer Marketing Magazine: Provides marketing strategies and tools for the modern car dealer. https://www.dealermarketing.com
• WardsAuto: Delivers global auto industry insights, including dealership operations and vehicle market trends. https://www.wardsauto.com
• Automotive Digital Marketing: A community forum offering digital marketing strategies specifically for car dealerships. https://www.automotivedigitalmarketing.com

Starting a car dealership requires thorough compliance with various legal requirements. Acquiring the necessary licenses and permits is a crucial step to ensure your business operates legally and avoids any potential fines or legal issues. Here's a guide to help you navigate this process:

• Check with your local Department of Motor Vehicles (DMV) or equivalent state agency to determine the specific dealer license you need, as it can vary by state and the type of vehicles you plan to sell.
• Obtain a business license from your city or county clerk's office. This is a basic requirement for any new business operation.
• Apply for a Sales Tax Number or Permit through your state's Department of Revenue to legally collect sales tax from customers.
• Secure a surety bond, which serves as a guarantee of your dealership's adherence to state laws and regulations.
• Ensure you have all required environmental permits if your dealership will include a service department that deals with hazardous materials.
• Research and apply for additional local permits, which may include signage permits, zoning and land-use permits, and any other permits specific to your location and business operations.

What licenses and permits are needed to run a car dealership business?

In order to run a car dealership business, you will need to obtain the following licenses and permits:

• Business license
• Sales Tax Permit
• Vehicle Dealer License
• Motor Vehicle Salvage Dealer License (if offering salvage vehicles)
• Motor Vehicle Broker License (if selling vehicles on behalf of other dealers)
• Safety Inspection Certificate

Opening a business bank account and securing funding are crucial steps in establishing your car dealership's financial infrastructure. A dedicated bank account will help you manage your business finances effectively, while obtaining the necessary funding will enable you to cover initial costs such as inventory, facility, and licensing. Here's how to approach this step:

• Research banks and credit unions that offer business banking services. Compare fees, services, and lending options to find the best fit for your car dealership.
• Prepare the required documents—business plan, EIN (Employer Identification Number), incorporation documents, and ownership agreements—to open a business bank account.
• Consider applying for a business credit card to help with cash flow and building your business's credit history.
• Explore various funding options such as small business loans, lines of credit, SBA loans, or seeking investors who are interested in the automotive industry.
• Be ready to present a solid business plan and financial projections to potential lenders or investors to demonstrate the viability of your car dealership.
• Understand the terms and conditions of any financing you accept, including interest rates, repayment schedules, and any potential impacts on your business operations.

Setting the right prices for your dealership services is critical to attract customers and ensure a healthy profit margin. It requires a careful analysis of the market, your costs, and the value you offer. Follow these guidelines to establish competitive pricing for your dealership's services:

• Analyze the market: Research what competitors are charging for similar services. Ensure your prices are competitive but also reflect the quality and value you provide.
• Consider costs: Calculate all costs associated with your services, including parts, labor, overhead, and any additional expenses. Your prices should cover these costs while allowing for a reasonable profit.
• Value-based pricing: Set prices not just based on cost, but also on the value the service provides to the customer. If you offer premium or specialized services, your prices should reflect this.
• Flexible pricing strategy: Be prepared to adjust your prices based on market changes, seasonal demand, or promotional offers. Flexibility can help you stay competitive and respond to market trends.
• Transparency: Clearly communicate the pricing to your customers, breaking down the costs and the benefits they receive. Transparency builds trust and helps justify your pricing structure.

What does it cost to start a car dealership business?

Initiating a car dealership business can involve substantial financial commitment, the scale of which is significantly influenced by factors such as geographical location, market dynamics, and operational expenses, among others. Nonetheless, our extensive research and hands-on experience have revealed an estimated starting cost of approximately $277500 for launching such an business. Please note, not all of these costs may be necessary to start up your car dealership business.

Starting a car dealership requires not just a strategic location and a collection of vehicles, but also the right equipment and supplies to operate effectively. This step is crucial for ensuring that your dealership runs smoothly, and your customers enjoy a positive experience. Below is a list of essential equipment and supplies you will need to acquire:

• Vehicle Inventory Software: To manage your stock of cars efficiently.
• Office Furniture and Supplies: Desks, chairs, filing cabinets, computers, phones, and stationery for administrative tasks.
• Showroom Supplies: Display stands, price tags, promotional materials, and vehicle information sheets.
• Service Area Equipment: If offering maintenance, include lifts, tools, diagnostic machines, and service bays.
• Detailing Supplies: Cleaning products, waxes, polishes, vacuums, and microfiber cloths for vehicle preparation.
• Lot Maintenance Tools: Snow removal equipment, lawn mowers, and parking lot striping machines for premises upkeep.
• Security System: Surveillance cameras, alarms, and lighting to protect your inventory and facility.
• Signage: Outdoor and indoor signs to guide customers and promote sales.

List of software, tools and supplies needed to start a car dealership business:

• Car dealership software: $500-1000
• Point of Sale System: $500-1000
• Payment Processing Software: $200-500
• Inventory Management System: $200-500
• Accounting Software: $100-300
• Customer Relationship Management (CRM) Software: $50-200
• Quoting Software: $200-300
• Automotive Digital Marketing Solutions/Software: $100-300
• Phone and Internet Services: $50+ per month
• Office Supplies: Depending on the quantity, anywhere from a few dollars to hundreds of dollars.

Securing the right insurance is a crucial step in protecting your car dealership from unexpected events and financial risks. It not only safeguards your inventory but also covers liabilities that may arise from daily operations. Here's what you need to consider:

• General Liability Insurance: This is a must-have to protect against potential lawsuits and claims that can arise from accidents or injuries on your property.
• Property Insurance: Safeguard your physical assets, such as the dealership building, office equipment, and the vehicles on the lot, from fire, theft, or natural disasters.
• Inventory Insurance: Also known as floor plan insurance, it covers the cars that you have in stock against damage or theft.
• Workers' Compensation: If you have employees, this insurance is typically required and covers them in case they are injured on the job.
• Commercial Auto Insurance: For the cars that are used for business purposes, such as test drives or employee use, this insurance provides coverage in case of accidents.
• Errors and Omissions Insurance: This can protect your dealership from claims of negligence or failure to perform professional services.
• Umbrella Insurance: This provides additional liability coverage beyond the limits of your other policies.

Ensure you consult with a licensed insurance agent who specializes in commercial policies to tailor coverage that meets the specific needs of your dealership.

Marketing is a crucial step to ensure that potential customers are aware of your car dealership and the services you offer. A well-crafted marketing strategy can help you stand out in a competitive market and draw in a steady stream of buyers. Here are some effective ways to begin marketing your car dealership services:

• Develop a strong online presence by creating a professional website that showcases your inventory and includes customer testimonials. Utilize search engine optimization (SEO) techniques to improve visibility on search engines.
• Engage with customers on social media platforms by sharing engaging content, promotions, and interacting with followers to build a loyal community.
• Create targeted advertising campaigns using Google Ads or social media ads to reach potential customers based on their interests and search behavior.
• Network with local businesses and community organizations to establish partnerships that can lead to referrals and joint marketing efforts.
• Implement a customer referral program that rewards existing customers for bringing in new clients, thereby leveraging word-of-mouth marketing.
• Organize and participate in local events, car shows, and charity functions to increase brand visibility and connect with the community.

Once your car dealership business is well-established and profitable, it's time to consider expansion to increase your market share and revenue. Here are some strategies to grow your business effectively:

• Open additional locations: Research and identify new markets with demand for vehicles. Choose strategic locations that offer visibility and accessibility.
• Diversify inventory: Expand your range of vehicles to include different makes, models, and categories such as electric or hybrid cars to attract a broader customer base.
• Enhance online presence: Invest in digital marketing and an interactive website where customers can view inventory, schedule test drives, and access financing options.
• Partner with other businesses: Collaborate with local businesses for cross-promotion or with financial institutions for better financing options for your customers.
• Improve customer service: Train staff in customer service excellence and implement a customer loyalty program to encourage repeat business and referrals.
• Consider franchising: If your brand is strong, franchising can be a way to expand quickly by allowing others to invest in and manage new locations.

Used Car Dealership Business Plan Template

Written by Dave Lavinsky

Used Car Dealership Business Plan

You’ve come to the right place to create your Used Car Dealership business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Used Car Dealerships.

Below is a template to help you create each section of your Used Car Dealership business plan.

Executive Summary

Business overview.

Reliable Motors is a used car dealership located in Portland, Oregon. We specialize in offering a wide selection of high-quality used vehicles to customers in our local area. With a focus on exceptional customer service and competitive pricing, we aim to become the preferred choice for individuals looking to purchase reliable pre-owned vehicles.

Reliable Motors is run by Otto Masterson. Otto has 12 years of experience in vehicle sales and dealership operations. His customer-centric approach, and strong understanding of the local market will ensure that our firm is successful.

Product Offering

Reliable Motors offers a diverse inventory of used cars, trucks, SUVs, and vans from various makes and models. Our selection includes vehicles that are carefully inspected, tested, and certified to meet our stringent quality standards. We also provide vehicle history reports and offer extended warranties for added peace of mind. Our knowledgeable sales team is committed to assisting customers in finding the right vehicle that suits their needs and budget.

Customer Focus

Our primary target market includes individuals and families in Portland, Oregon who are looking to purchase a reliable used vehicle. We will cater to customers with various budgets, offering a range of price points to accommodate different financial situations. Additionally, we will also establish partnerships with local businesses, such as car rental companies and auto repair shops, to provide them with fleet vehicles and maintenance services.

Management Team

Reliable Motors’ most valuable asset is the expertise and experience of its founder, Otto Masterson. Otto has been in automotive sales for the past 20 years. Throughout his career, he has developed a strong base of repeat customers, many of whom have stated that they will buy their next car from Reliable Motors once the company is established and running. Otto’s customer-centric approach, and strong understanding of the local market will ensure that our firm is successful.

Success Factors

Reliable Motors will achieve success by offering the following competitive advantages:

• Quality Inventory: We will ensure our inventory consists of well-maintained and reliable used vehicles that meet our strict quality standards.
• Competitive Pricing: We will offer competitive prices to attract customers and provide value for their money. Our pricing strategy will consider market trends, vehicle condition, and fair market value.
• Exceptional Customer Service: We will prioritize customer satisfaction by providing a personalized and hassle-free buying experience. Our knowledgeable and friendly sales team will assist customers in finding the right vehicle that meets their needs and budget.
• Transparent Processes: We will establish trust by providing accurate vehicle information, pricing details, and facilitating open communication.
• Strong Industry Partnerships: We will collaborate with reputable suppliers, finance institutions, and service providers to enhance our offerings and provide additional benefits to customers.

Financial Highlights

Reliable Motors is seeking $1,000,000 in funding to establish and grow the business. The funds will be allocated as follows:

• Inventory acquisition: $800,000
• Renovation and setup of the dealership facility: $100,000
• Marketing and advertising expenses: $50,000
• Working capital: $50,000

The projected financials indicate steady revenue growth and profitability within the first three years of operation

Company Overview

Who is reliable motors.

  Reliable Motors is run by Otto Masterson, a 12 year veteran in vehicle sales and dealership operations. After working for several dealerships around town, he surveyed his most loyal customers to see if they would be willing to switch to his new dealership once it is established. Most of his customers responded enthusiastically, which motivated Otto to finally launch his business.

Reliable Motors History

Once he canvassed his loyal customer base and located a potential location, Otto Masterson incorporated Reliable Motors as an S-Corporation in April 2023.

The business is currently being run out of Otto’s home office, but once the purchase of the dealership location is finalized, all operations will be run from there.

Since incorporation, Reliable Motors has achieved the following milestones:

• Found a location and made an offer of purchase
• Developed the company’s name, logo, and website
• Hired an architect to design the lot, the service area, and the office building
• Determined equipment and fixture requirements
• Began recruiting key employees

Reliable Motors Services

Reliable Motors will provide the following services to its customers:

• Vehicle Sales: offer an inventory of used cars, trucks, SUVs, and vans, catering to various customer preferences and budgets.
• Financing Assistance: assistance with financing options through partnerships with local banks and financial institutions.
• Trade-ins: Customers will have the option to trade in their current vehicles, allowing them to apply the value toward their purchase at Reliable Motors.

Industry Analysis

The used car industry is experiencing steady growth, driven by factors such as rising new car prices, improved vehicle reliability, and a growing preference for cost-effective transportation options.

The used car industry is expected to grow over the next several years. According to a recent report by IBISWorld, the used car dealerships industry is expected to grow at a CAGR of 1.2% from now until 2028. This growth is due to increasing environmental consciousness, which has caused many consumers to avoid purchasing new automobiles. This increase in demand and industry growth ensures that Reliable Motors will achieve success.

This industry presents a significant opportunity for Reliable Motors to cater to customers seeking quality used cars at competitive prices.

Customer Analysis

Demographic profile of target market.

Reliable Motors primarily targets individuals in the Portland area who are in the market for a reliable and affordable pre-owned vehicle. By understanding our customers’ needs and providing a personalized buying experience, we aim to build long-lasting customer relationships.

Customer Segmentation

Reliable Motors will primarily target the following customer profiles:

• First-time car buyers
• Professionals
• Individuals

Competitive Analysis

Direct and indirect competitors.

Reliable Motors faces competition from both direct and indirect competitors in the used car dealership industry. Direct competitors include other local dealerships offering similar vehicle options. Indirect competitors include online marketplaces and private sellers.

AutoWheels is a used car dealership that carries a large variety of used cars, trucks, SUVs, and vans. Their line of car brands include Chevrolet, Dodge, Ford, Jeep, and Toyota. AutoWheels’ focus is offering clean, newer model used cars with affordable monthly payments. The dealership offers flexible financing approval for buyers with any credit score or financial situation.

AutoWheels partners with Portland Precision Auto Care for its automotive maintenance and repair needs. This partnership enables AutoWheels to offer services that include Car and Truck care, Electronic Services, Electrical Services, General Services, Heating and Cooling Services, Engine & Transmission, Miscellaneous Services, Transmission Services, Undercar Services, and Brakes.

James Rivers Automotive Outlet

Located in Portland’s Sellwood-Moreland neighborhood, James Rivers Automotive Outlet is a member of the James Rivers Family-Owned and Operated group of dealers in Portland. The dealership carries a large inventory of new, certified pre-owned, and pre-owned line of cars, trucks, SUVs, and vans. Their line of vehicles are in all price ranges and body types. James Rivers Automotive Outlet also offers trade-in evaluations at their other franchised stores – James Rivers Honda, Acura, and Toyota. The dealership also offers affordable financing options.

Eastside Used Cars

Established in 2011, Eastside Used Cars is a family-owned used car dealership. The dealership is fully internet based and all sales are by appointment only, in one of two locations: Sandy and Gresham. The dealership claims to have the best prices in the market, offering wholesale prices to the public. Customers may also expect to receive top dollar for their trade-ins.

The dealership currently offers an inventory of 175 vehicles, ranging in price from $6,990 to $60,800. It offers a variety of finance options for consumers with all levels of credit, but outside financing is welcomed.

Competitive Advantage

Reliable Motors holds the following advantages over the competition:

• Rigorous Vehicle Inspection : Each vehicle in our inventory undergoes a thorough inspection to ensure its mechanical and cosmetic condition, providing customers with peace of mind.
• Customer-Centric Approach : We prioritize customer satisfaction by offering personalized assistance, transparent pricing, and a hassle-free buying experience.
• Extensive Inventory : Our diverse inventory caters to various customer preferences and budgets, ensuring a wide range of options to choose from.

Marketing Plan

Brand & value proposition.

Reliable Motors will offer a unique value proposition to its clientele:

• Client-focused automotive sales, where the customer is treated fairly, with transparent pricing and a variety of financing options
• Service built on long-term relationships
• Top-quality automotive repair and maintenance, at competitive prices

Promotions Strategy

The promotions strategy for Reliable Motors is as follows:

Reliable Motors understands that the best promotion comes from satisfied customers. The Company will encourage its customers to refer other businesses by providing economic or financial incentives for every new customer produced. This strategy will increase in effectiveness after the business has already been established.

Social Media

Reliable Motors will invest heavily in a social media advertising campaign. The company will create social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.

Website/SEO Marketing

Reliable Motors will invest heavily in developing a professional website that showcases current inventory, and provides valuation tools for potential trade-ins. It will also invest heavily in SEO so that the firm’s website will appear at the top of search engine results.

Operations Plan

The following will be the operations plan for Reliable Motors. Operation Functions:

• Otto Masterson is the Owner of Reliable Motors. In addition to providing inventory management and sales, he will also manage the general operations of the business.
• Otto Masterson is joined by a full-time administrative assistant, Mandy Bobo, who will take charge of the administrative tasks for the company. She will also be available to answer incoming calls and make service appointments.
• As the company builds its customer base, Otto will hire more sales professionals to grow our business further.

Milestones:

Reliable Motors will have the following milestones completed in the next six months.

• 6/2023 Finalize location purchase
• 7/2023 Design and build out Reliable Motors
• 8/2023 Hire and train initial staff
• 9/2023 Kickoff of promotional campaign
• 10/2023 Launch Reliable Motors
• 11/2023 Reach break-even

Reliable Motors’s most valuable asset is the expertise and experience of its founder, Otto Masterson. Otto has been in automotive sales for the past 20 years. Throughout his career, he has developed a loyal customer base, many of whom have stated that they will switch to Reliable Motors when it comes time to purchase a new vehicle. Otto’s customer-centric approach, and strong understanding of the local market will ensure that our dealership is successful.

Though he has never run his own business, Otto Masterson worked his way up from automotive sales associate to sales manager, where he gained an in-depth knowledge of the operations (e.g., running day-to-day operations) and the business (e.g., staffing, marketing, etc.) sides of the industry. He also already has a starting customer base that he served while working for other auto dealerships. He will hire several other employees who can help him run the aspects of the business that he is unfamiliar with.

Financial Plan

Key revenue & costs.

Reliable Motors’s revenues will from vehicle sales, with additional income generated through financing options and after-sales services. Key costs include

The notable cost drivers for the company will include inventory acquisition, overhead expenses, marketing expenses, personnel costs, and facility maintenance.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Number of clients:
• Year 1: 400
• Year 2: 500
• Year 3: 750
• Year 4: 1000
• Year 5: 1250

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Used Car Dealership Business Plan FAQs

What is a used car dealership business plan.

A used car dealership business plan is a plan to start and/or grow your used car dealership business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Used Car Dealership business plan using our Used Car Dealership Business Plan Template here .

What are the Main Types of Used Car Dealership Businesses? 

There are a number of different kinds of used car dealership businesses , some examples include: Franchised dealership, Independent dealerships, and “Bad Credit” dealerships.

How Do You Get Funding for Your Used Car Dealership Business Plan?

Used Car Dealership businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Used Car Dealership Business?

Starting a used car dealership business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Used Car Dealership Business Plan - The first step in starting a business is to create a detailed used car dealership business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your used car dealership business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your used car dealership business is in compliance with local laws.

3. Register Your Used Car Dealership Business - Once you have chosen a legal structure, the next step is to register your used car dealership business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your used car dealership business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Used Car Dealership Equipment & Supplies - In order to start your used car dealership business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your used car dealership business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful used car dealership business:

• How to Start a Used Car Business

Where Can I Get a Used Car Dealership Business Plan PDF?

You can download our free used car dealership business plan template PDF here . This is a sample used car dealership business plan template you can use in PDF format.

Used Car Dealership Business Plan Template

Written by Dave Lavinsky

Used Car Dealership Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their used car dealerships.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a used car dealership business plan step-by-step so you can create your plan today.

Download our Ultimate Used Car Dealership Business Plan Template here >

What is a Car Dealership Business Plan?

A business plan provides a snapshot of your used car dealership as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Car Dealership

If you’re looking to start a used car dealership or grow your existing used car dealership company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your used car dealership to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Used Car Dealerships

With regards to funding, the main sources of funding for a used car dealership are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for used car dealers.

Finish Your Business Plan Today!

How to write a business plan for a used car dealership.

If you want to start a used car dealership or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your used car dealership business plan. If you are looking to start a new car dealership, you will need a car dealership business plan template.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of used car dealership you are running and the status. For example, are you a startup, do you have a used car dealership that you would like to grow, or are you operating a chain of used car dealerships?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the used car dealership industry.
• Discuss the type of used car dealership you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of used car dealership you are operating.

For example, you might specialize in one of the following types of used car dealerships:

• Franchised dealership : this type of dealership operates as part of a franchise, which enables them to offer a broader range of services than an independent dealership. Franchised dealership services can include competitive quality assurance and warranty programs, as well as certified used vehicles.
• Independent dealerships: this type of dealership is typically a single-location, locally owned dealership. Independent dealers typically offer the lowest prices, but may also sell lower-quality vehicles
• “Bad Credit” dealerships: this type of dealership caters to consumers who have bad credit, offering used automobiles with high-interest financing.

In addition to explaining the type of used car dealership you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of cars sold, the number of service jobs performed (maintenance, repairs, etc.), number of vehicles financed in-house, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

While this may seem unnecessary, it serves multiple purposes.

First, researching the used car dealership industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section:

• How big is the used car dealership industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your used car dealership? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: prime customers, subprime customers, super-prime customers, and deep subprime customers.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of dealership you operate. Clearly, individuals with prime credit ratings would respond to different marketing promotions than deep subprime customers, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other used car dealerships.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes new car dealers, online marketplaces, or consumers who opt to maintain/repair their existing vehicle. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve (prime, subprime, etc.)?
• What type of vehicles are in their inventory (cars, minivans, pickup trucks, etc.)?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide options for those with bad credit?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a used car dealership, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of used car dealership company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide certified pre-owned vehicles, warranties, and financing? Or will you focus on the sale of used vehicles alone?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your used car dealership company. Document where your company is situated and mention how the site will impact your success. For example, is your used car dealership located in a busy retail district, a business district, or do you operate purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your used car dealership marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your used car dealership, including answering calls, engaging with prospective buyers on the lot, filling out paperwork, overseeing the service department, prepping inventory, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sell your Xth car, or when you hope to reach $X in revenue. It could also be when you expect to expand your used car dealership to a new location.  

Management Team

To demonstrate your used car dealership’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing used car dealerships. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a used car dealership or successfully running an auto repair shop.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

In developing your income statement, you need to devise assumptions. For example, will you sell 10 cars per week, and service 15 per week? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your used car dealership, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a used car dealership:

• Cost of inventory and office supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your dealership location lease or a list of repair and maintenance services you offer.  

Writing a business plan for your used car dealership is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the used car dealership industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful used car dealership.  

Used Car Dealership Business Plan Example PDF

Download our Used Car Dealership Business Plan PDF here. This is a free used car dealership business plan example to help you get started on your own used car dealership plan.

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J. V. Stalin

The Tasks of Business Executives

Speech delivered at the first all-union conference of leading personnel of socialist industry 1 february 4, 1931.

Source : Works, Vol. 13, 1930 - January 1934 Publisher : Foreign Languages Publishing House, Moscow, 1954 Transcription/HTML Markup : Salil Sen for MIA, 2008 Public Domain : Marxists Internet Archive (2008). You may freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit "Marxists Internet Archive" as your source.

Comrades, the deliberations of your conference are drawing to a close. You are now about to adopt resolutions. I have no doubt that they will be adopted unanimously. In these resolutions — I am somewhat familiar with them — you approve the control figures of industry for 1931 and pledge yourselves to fulfil them.

A Bolshevik's word is his bond. Bolsheviks are in the habit of fulfilling promises made by them. But what does the pledge to fulfil the control figures for 1931 mean? It means ensuring a total increase of industrial output by 45 per cent. And that is a very big task. More than that. Such a pledge means that you not only pledge yourselves to fulfil our five-year plan in four years — that matter has already been settled, and no more resolutions on it are needed — it means that you promise to fulfil it in three years in all the basic, decisive branches of industry.

It is good that the conference gives a promise to fulfil the plan for 1931, to fulfil the five-year plan in three years. But we have been taught by "bitter experience." We know that promises are not always kept. In the beginning of 1930, too, a promise was given to fulfil the plan for the year. At that time it was necessary to increase the output of our industries by 31 to 32 per cent. But that promise was not kept to the full. Actually, the increase in industrial output during 1930 amounted to 25 per cent. We must ask: Will not the same thing occur again this year? The managers and leading personnel of our industries now promise to increase industrial output in 1931 by 45 per cent. But what guarantee is there that this promise will be kept?

What is needed in order to fulfil the control figures, to achieve a 45 per cent increase in output, to secure the fulfilment of the five-year plan not in four, but, as regards the basic and decisive branches of industry, in three years?

Two fundamental conditions are needed for this.

Firstly, real or, as we term it, "objective" possibilities.

Secondly, the willingness and ability to direct our enterprises in such a way as to realise these possibilities.

Did we have the "objective" possibilities last year for completely fulfilling the plan? Yes, we had. Incontestable facts testify to this. These facts show that in March and April of last year industry achieved an increase of 31 per cent in output compared with the previous year. Why then, it will be asked, did we fail to fulfil the plan for the whole year? What prevented it? What was lacking? The ability to make use of the existing possibilities was lacking. The ability to manage the factories, mills and mines properly was lacking.

We had the first condition: the "objective" possibilities for fulfilling the plan. But we did not have in sufficient degree the second condition: the ability to manage production. And precisely because we lacked the ability to manage the factories, the plan was not fulfilled. Instead of a 31-32 per cent increase we had one of only 25 per cent.

Of course, a 25 per cent increase is a big thing. Not a single capitalist country increased its production in 1930, or is increasing production now. In all capitalist countries without exception a sharp decline in production is taking place. Under such circumstances a 25 per cent increase is a big step forward. But we could have achieved more. We had all the necessary "objective" conditions for this.

And so, what guarantee is there that what happened last year will not be repeated this year, that the plan will be fulfilled, that we shall use the existing possibilities in the way that they should be used, that your promise will not to some extent remain a promise on paper?

In the history of states and countries, in the history of armies, there have been cases when there was every possibility for success and victory, but these possibilities were wasted because the leaders failed to notice them, did not know how to take advantage of them, and the armies suffered defeat.

Have we all the possibilities that are needed to fulfil the control figures for 1931?

Yes, we have such possibilities.

What are these possibilities? What is needed in order that these possibilities should really exist?

First of all, adequate natural resources in the country: iron ore, coal, oil, grain, cotton. Have we these resources? Yes, we have. We have them in larger quantities than any other country. Take the Urals, for example, which provide a combination of resources not to be found in any other country. Ore, coal, oil, grain — what is there not in the Urals? We have everything in our country, except, perhaps, rubber. But within a year or two we shall have our own rubber as well As far as natural resources are concerned we are fully provided. We have even more than necessary. What else is needed?

A government desirous and capable of utilising these immense natural resources for the benefit of the people. Have we such a government? We have. True, our work in utilising natural resources does not always proceed without friction among our leading personnel. For instance, last year the Soviet Government had to conduct a certain amount of struggle over the question of creating a second coal and metallurgical base, without which we cannot develop further. But we have already overcome these obstacles and shall soon have this base.

What else is needed?

That this government should enjoy the support of the vast masses of workers and peasants. Does our government enjoy such support? Yes, it does. You will find no other government in the world that enjoys such support from the workers and peasants as does the Soviet government. There is no need for me to refer to the growth of socialist emulation, the spread of shock-brigade work, the campaign and struggle for counter-plans. All these facts, which vividly demonstrate the support that the vast masses give the Soviet Government, are well known.

What else is needed in order to fulfil and overfulfil the control figures for 1931?

A system that is free from the incurable diseases of capitalism and has great advantages over capitalism. Crises, unemployment, waste, destitution among the masses — such are the incurable diseases of capitalism. Our system does not suffer from these diseases because power is in our hands, in the hands of the working class; because we are conducting a planned economy, systematically accumulating resources and properly distributing them among the different branches of the national economy. We are free from the incurable diseases of capitalism. That is what distinguishes us from capitalism; that is what constitutes our decisive superiority over capitalism.

Notice the way in which the capitalists are trying to escape from the economic crisis. They are reducing the workers' wages as much as possible. They are reducing the prices of raw materials as much as possible. But they do not want to reduce the prices of food and industrial commodities for mass consumption to any important extent. This means that they want to escape from the crisis at the expense of the principal consumers, at the expense of the workers and peasants, at the expense of the working people. The capitalists are cutting the ground from under their own feet. And instead of overcoming the crisis they are aggravating it; new conditions are accumulating which lead to a new, even more severe crisis.

Our superiority lies in the fact that we have no crises of overproduction, we have not and never will have millions of unemployed, we have no anarchy in production, for we are conducting a planned economy. But that is not all. We are a land of the most concentrated industry. This means that we can build our industry on the basis of the best technique and thereby secure an unprecedented productivity of labour, an unprecedented rate of accumulation. Our weakness in the past was that this industry was based upon scattered and small peasant farming. That was so in the past; it is no longer so now. Soon, perhaps within a year, we shall become the country of the largest-scale agriculture in the world. This year, the state farms and collective farms — and these are forms of large-scale farming — have already supplied half of all our marketable grain. And that means that our system, the Soviet system, affords us opportunities of rapid progress of which not a single bourgeois country can dream.

What else is needed in order to advance with giant strides?

A party sufficiently solid and united to direct the efforts of all the best members of the working class to one point, and sufficiently experienced to be unafraid of difficulties and to pursue systematically a correct, revolutionary, Bolshevik policy. Have we such a party? Yes, we have. Is its policy correct? Yes, it is, for it is yielding important successes. This is now admitted not only by the friends but also by the enemies of the working class. See how all the well-known "honourable" gentlemen, Fish in America, Churchill in Britain, Poincare in France, fume and rave against our Party. Why do they fume and rave? Because the policy of our Party is correct, because it is yielding success after success.

There, comrades, you have all those objective possibilities which assist us in realising the control figures for 1931, which help us to fulfil the five-year plan in four years, and in the key industries even in three years.

Thus we have the first condition for fulfilment of the plan — the "objective" possibilities.

Have we the second condition, the ability to use these possibilities?

In other words, are our factories, mills and mines properly managed? Is everything in order in this respect?

Unfortunately, not everything is in order here. And, as Bolsheviks, we must say this plainly and frankly.

What does management of production mean? There are people among us who do not always have a Bolshevik approach to the question of the management of our factories. There are many people among us who think that management is synonymous with signing papers and orders. This is sad, but true. At times one cannot help recalling Shchedrin's Pompadours. Do you remember how Madame Pompadour taught the young Pompadour: "Don't bother your head with science, don't go into matters, let others do that, it is not your business — your business is to sign papers." It must be admitted to our shame that even among us Bolsheviks there are not a few who carry out management by signing papers. But as for going into matters, mastering technique, becoming master of the business — why, that is out of the question.

How is it that we Bolsheviks, who have made three revolutions, who emerged victorious from the bitter civil war, who have solved the tremendous task of building a modern industry, who have swung the peasantry on to the path of socialism — how is it that in the matter of the management of production we bow to a slip of paper?

The reason is that it is easier to sign papers than to manage production. And so, many economic executives are taking this line of least resistance. We, too, in the centre, are also to blame. About ten years ago a slogan was issued: "Since Communists do not yet properly understand the technique of production, since they have yet to learn the art of management, let the old technicians and engineers — the experts — carry on production, and you, Communists, do not interfere with the technique of the business; but, while not interfering, study technique, study the art of management tirelessly, in order later on, together with the experts who are loyal to us, to become true managers of production, true masters of the business." Such was the slogan. But what actually happened? The second part of this formula was cast aside, for it is harder to study than to sign papers; and the first part of the formula was vulgarised: non-interference was interpreted to mean refraining from studying the technique of production. The result has been nonsense, harmful and dangerous nonsense, which the sooner we discard the better.

Life itself has more than once warned us that all was not well in this field. The Shakhty affair 2 was the first grave warning. The Shakhty affair showed that the Party organisations and the trade unions lacked revolutionary vigilance. It showed that our economic executives were disgracefully backward in technical knowledge; that some of the old engineers and technicians, working without supervision, rather easily go over to wrecking activities, especially as they are constantly being besieged by "offers" from our enemies abroad.

The second warning was the "Industrial Party" trial 3 .

Of course, the underlying cause of wrecking activities is the class struggle. Of course, the class enemy furiously resists the socialist offensive. This alone, however, is not an adequate explanation for the luxuriant growth of wrecking activities.

How is it that wrecking activities assumed such wide dimensions? Who is to blame for this? We are to blame. Had we handled the business of managing production differently, had we started much earlier to learn the technique of the business, to master technique, had we more frequently and efficiently intervened in the management of production, the wreckers would not have succeeded in doing so much damage.

We must ourselves become experts, masters of the business; we must turn to technical science — such was the lesson life itself was teaching us. But neither the first warning nor even the second brought about the necessary change. It is time, high time that we turned towards technique. It is time to discard the old slogan, the obsolete slogan of non-interference in technique, and ourselves become specialists, experts, complete masters of our economic affairs.

It is frequently asked: Why have we not one-man management? We do not have it and we shall not get it until we have mastered technique. Until there are among us Bolsheviks a sufficient number of people thoroughly familiar with technique, economy and finance, we shall not have real one-man management. You can write as many resolutions as you please, take as many vows as you please, but, unless you master the technique, economy and finance of the mill, factory or mine, nothing will come of it, there will be no one-man management.

Hence, the task is for us to master technique ourselves, to become masters of the business ourselves. This is the sole guarantee that our plans will be carried out in full, and that one-man management will be established.

This, of course, is no easy matter; but it can certainly be accomplished. Science, technical experience, knowledge, are all things that can be acquired. We may not have them today, but tomorrow we shall. The main thing is to have the passionate Bolshevik desire to master technique, to master the science of production. Everything can be achieved, everything can be overcome, if there is a passionate desire for it.

It is sometimes asked whether it is not possible to slow down the tempo somewhat, to put a check on the movement. No, comrades, it is not possible! The tempo must not be reduced! On the contrary, we must increase it as much as is within our powers and possibilities. This is dictated to us by our obligations to the workers and peasants of the U.S.S.R. This is dictated to us by our obligations to the working class of the whole world.

To slacken the tempo would mean falling behind. And those who fall behind get beaten. But we do not want to be beaten. No, we refuse to be beaten! One feature of the history of old Russia was the continual beatings she suffered because of her backwardness. She was beaten by the Mongol khans. She was beaten by the Turkish beys. She was beaten by the Swedish feudal lords. She was beaten by the Polish and Lithuanian gentry. She was beaten by the British and French capitalists. She was beaten by the Japanese barons. All beat her — because of her backwardness, because of her military backwardness, cultural backwardness, political backwardness, industrial backwardness, agricultural backwardness. They beat her because it was profitable and could be done with impunity. You remember the words of the pre-revolutionary poet: "You are poor and abundant, mighty and impotent, Mother Russia." 4 Those gentlemen were quite familiar with the verses of the old poet. They beat her, saying: "You are abundant," so one can enrich oneself at your expense. They beat her, saying: "You are poor and impotent," so you can be beaten and plundered with impunity. Such is the law of the exploiters — to beat the backward and the weak. It is the jungle law of capitalism. You are backward, you are weak — therefore you are wrong; hence you can be beaten and enslaved. You are mighty — therefore you are right; hence we must be wary of you.

That is why we must no longer lag behind.

In the past we had no fatherland, nor could we have had one. But now that we have overthrown capitalism and power is in our hands, in the hands of the people, we have a fatherland, and we will uphold its independence. Do you want our socialist fatherland to be beaten and to lose its independence? If you do not want this, you must put an end to its backwardness in the shortest possible time and develop a genuine Bolshevik tempo in building up its socialist economy. There is no other way. That is why Lenin said on the eve of the October Revolution: "Either perish, or overtake and outstrip the advanced capitalist countries."

We are fifty or a hundred years behind the advanced countries. We must make good this distance in ten years. Either we do it, or we shall go under.

That is what our obligations to the workers and peasants of the U.S.S.R. dictate to us.

But we have yet other, more serious and more important, obligations. They are our obligations to the world proletariat. They coincide with our obligations to the workers and peasants of the U.S.S.R. But we place them higher. The working class of the U.S.S.R. is part of the world working class. We achieved victory not solely through the efforts of the working class of the U.S.S.R., but also thanks to the support of the working class of the world. Without this support we would have been torn to pieces long ago. It is said that our country is the shock brigade of the proletariat of all countries. That is well said. But is imposes very serious obligations upon us. Why does the international proletariat support us? How did we merit this support? By the fact that we were the first to hurl ourselves into the battle against capitalism, we were the first to establish working-class state power, we were the first to begin building socialism. By the fact that we were engaged on a cause which, if successful, will transform the whole world and free the entire working class. But what is needed for success? The elimination of our backwardness, the development of a high Bolshevik tempo of construction. We must march forward in such a way that the working class of the whole world, looking at us, may say: There you have my advanced detachment, my shock brigade, my working-class state power, my fatherland; they are engaged on their cause, our cause, and they are working well; let us support them against the capitalists and promote the cause of the world revolution. Must we not justify the hopes of the world's working class, must we not fulfil our obligations to them? Yes, we must if we do not want to utterly disgrace ourselves.

Such are our obligations, internal and international. As you see, they dictate to us a Bolshevik tempo of development.

I will not say that we have accomplished nothing in regard to management of production during these years. In fact, we have accomplished a good deal. We have doubled our industrial output compared with the pre-war level. We have created the largest-scale agricultural production in the world. But we could have accomplished still more if we had tried during this period really to master production, the technique of production, the financial and economic side of it.

In ten years at most we must make good the distance that separates us from the advanced capitalist countries. We have all the "objective" possibilities for this. The only thing lacking is the ability to make proper use of these possibilities. And that depends on us. Only on us! It is time we learned to make use of these possibilities. It is time to put an end to the rotten line of non-interference in production. It is time to adopt a new line, one corresponding to the present period — the line of interfering in everything. If you are a factory manager — interfere in all the affairs of the factory, look into everything, let nothing escape you, learn and learn again. Bolsheviks must master technique. It is time Bolsheviks themselves became experts. In the period of reconstruction, technique decides everything. And an economic executive who does not want to study technique, who does not want to master technique, is a joke and not an executive.

It is said that it is hard to master technique. That is not true! There are no fortresses that Bolsheviks cannot capture. We have solved a number of most difficult problems. We have overthrown capitalism. We have assumed power. We have built up a huge socialist industry. We have transferred the middle peasants on to the path of socialism. We have already accomplished what is most important from the point of view of construction. What remains to be done is not so much: to study technique, to master science. And when we have done that we shall develop a tempo of which we dare not even dream at present.

And we shall do it if we really want to.

Pravda, No. 35, February 5, 1931

Collected Works Index | Volume 13 Index Works by Decade | J. V. Stalin Archive