How to Start an Off Road Vehicle Dealership in the USA?
If managed right, a car dealership can be very profitable. So, if you’re passionate and knowledgeable about vehicles, this is a business you should consider starting. According to statistics, 17,726 new dealerships have been started in the US this year, increasing by 0.5% from 2020.
But before opening a dealership, it’s important to consider whether you’ll be selling sedans, trucks, SUVs, or off-road vehicles. If you live in an area with many dangerous toads, starting an off-road vehicle dealership makes sense. Here are some tips to help you get started.
1. Assess the Market
Before you even choose a location for your off-road vehicle dealership, assess the market. Find out the competitors in your city or town, the market demand for off-road vehicles, and consumer preferences. Use your findings to choose the best location, the vehicles to sell, and how to market them.
2. Have a Budget
The costs for starting your off-road car dealership will depend on the type of dealership you plan to open. New dealership franchises are typically more expensive to set up and operate compared to used car dealerships. However, both come with standard costs such as rent, employees' salary, inventory acquisition, and miscellaneous expenses.
3. Consider the Type of Dealership You’d Like to Open
There are two main types of dealerships: dealership franchises that sell new cars and dealerships that sell second-hand cars. According to the law, all new vehicles must be sold through a franchised dealership. With franchising, the auto manufacturer offers a franchise opportunity to a dealer to sell its cars. For instance, the dealership could be a Toyota or a Honda dealership.
So, before launching your off-road vehicle dealership, find out whether starting a franchise is easier. You can reach out to automakers who might be looking for a car dealer to partner with. If you choose this option, ensure you have enough money for inventory. The dealership franchise model is popular, and light-vehicle dealership sales topped $980 billion in 2020.
4. Obtain Licenses and Insurance
For your dealership to be fully operational, you need to get licenses, insurance, and a business bond. A comprehensive insurance cover is essential for general liability, inventory loss, and property damage. In addition, you’ll need a commercial surety bond to shield your business from contract defaults.
If you plan to offer car loan services, you’ll need to get licenses that allow your customers to get loans. That way, you can offer better financing terms to potential customers who pre qualify auto loan and win their business. With the right licenses, you can start operating right away.
5. Build Inventory
If you decide to open a dealership franchise, auto manufacturers will give you the cars to sell. However, if you decide to become an independent dealer, you’ll have to source the off-road cars from auctions, finance companies, existing contacts, private sellers, or from social media.
As the economy continues to recover from the effects of the COVID-19 pandemic, motor vehicle sales are going up. So, this may be the best time to start an off-road vehicle dealership. But if you want the business to be successful, follow the tips we’ve shared.