Challenges of Starting a Car Dealership and How to Overcome Them

01 Jul 2024 Helpful Tips

starting a dealership 

Starting a car dealership in Australia is an exciting adventure. When it comes to starting any business, let alone a car dealership, there are going to be challenges along the way. What will determine if your dealership is successful or not is the way that you plan for and adapt to challenges when presented.

EasyCars has put together a list of the 7 most commonly faced challenges when starting a car dealership and how your dealership can overcome them.

Let’s get into it!

1. Capital and Financing

Challenge: One of the biggest challenges of starting any business is securing the finance or startup capital. Starting a car dealership costs money, you will need to have access to several hundred thousand dollars to get your dealership up and running. Some of the costs that you need to consider is location rent, car inventory, staff, overheads and more.


  • Develop a Comprehensive Business Plan: Having an in-depth car dealership business plan can help you understand what you want to achieve and how you are going to achieve it. Having a great business plan will allow you to pitch your business to lenders or investors to raise the funds needed to launch.
  • Explore Various Financing Options: There are many different lending options available in Australia. Seek bank loans, credit unions or even private or family investors. There is also the option of applying for Government Grants.
  • Manage Cash Flow Efficiently: To manage your dealerships cashflow effectively it is important that you employ a strong accountant or bookkeeper that monitors your performance and offers recommendations.

2. Location and Facilities

Challenge: The location that your dealership operates from will make or break your success. Your dealership location needs to be easily accessible, visible and in an area which is in close proximity to your target customers.


  • Conduct Market Research: Before choosing a dealership location, be sure to do market research to understand where your customers are located and if there are any suitable locations that are affordable and available. Be sure to choose an area with high organic visibility near main roads.
  • Invest in Professional Design: A well-designed car showroom and service area often enhances your dealerships brand and perception which will help lead to better customer appeal and enquiries.
  • Ensure Compliance: Arguably the most important point is to choose a location that meets all local zoning laws and regulations. It is vital that you obtain all the necessary permits and licences to operate legally.

3. Inventory Management

Challenge: Managing car inventory effectively is another make or break task of operating a car dealership. As a car dealer it is important that you have the right mix of vehicles that customers want.


  • Utilise Dealer Management Systems (DMS): Using a DMS like EasyCars will streamline the entire inventory management process. In EasyCars DMS you can leverage real-time data to monitor stock levels, identify sales trends and customer preferences, all of which will help you source and sell effectively.
  • Build Relationships with Suppliers: The key to having strong vehicle inventory management is having strong, reliable suppliers. Build relationships with wholesalers, manufacturers and auction houses to secure good consistent car stock.
  • Monitor Market Trends: Customer buying preferences change rapidly. What car buyers were buying in 2015 is much different to what they are buying today. Be sure to stay informed about new cars in Australia and update your inventory accordingly.

4. Compliance and Regulations

Challenge: The Australian automotive industry is heavily regulated, and staying compliant with all the legal requirements is complex. Failing to comply with Car Dealer compliance laws will result in heavy fines and even loss of licence.


  • Invest in a DMS: Investing in a DMS like EasyCars completely automates the entire government compliance process. The benefit of EasyCars is that forms automatically update if and when new legislation is changed, ensuring that you trade compliantly.
  • Hire Legal Expertise: Another option is to consider hiring a legal advisor who has experience in the Australian automotive industry.

5. Marketing and Brand Awareness

Challenge: Marketing a dealership isn’t easy. Competition is farce and digital marketing is expensive.


  • Leverage Digital Marketing: Invest in a professional dealership website, search engine optimisation (SEO), and social media marketing to reach a broader audience. Facebook Automotive Inventory Ads are found to be incredibly affordable with budgets being as low as $5 per day!
  • Use Online Advertisers: Leverage the power of automotive advertising websites. These websites are seen by millions every month and are a proven way of getting your cars in front of the right buyers.

6. Customer Service

Challenge: Another huge challenge for all businesses is offering 5-star customer service. In a highly competitive industry like automotive, customer service could be all it takes for a customer to choose your dealerships over a competitor so it is important that you offer service that is second to none.


  • Train Your Staff: The key to offering strong customer service is training your staff. Invest in a training and development program for all your staff to ensure high service levels.
  • Implement Customer Feedback Systems: Always ask your customers to leave feedback, to review their experience or complete a survey. Based on their response update your service accordingly.
  • Focus on Relationship Building: No two customers are the same, treat every customer interaction as an opportunity to build a long-term relationship. Follow up with customers after the time of sale to check in to see if they are happy with their purchase.

7. Technology Integration

Challenge: Having the right technology and systems in place at your dealership is another key fundamental in achieving ongoing success. Integrating the right technology and applications will lead to better operations, lower costs and better customer experiences.


  • Invest in a Comprehensive DMS: A robust dealer management system like EasyCars can integrate with various applications to make the daily management process seamless.

Final Word,

Starting a car dealership in Australia comes with its unique set of challenges, but with careful planning, these challenges can be overcome. The 7 challenges presented in this piece are common and can be avoided by using the solutions presented.

We hope you enjoyed reading this article. To read more articles like this, please visit the EasyCars latest news page here.

About EasyCars,

EasyCars by Jeal is an Australian, web-based, dealer management system that automates the buying and selling of motor vehicles. Using the latest technologies, EasyCars removes frustrations experienced at the dealership and opens your doors for greater growth.

EasyCars features include Simple Stock Management, Automated Advertising, Integrated Accounting, Government Compliance, Business Reporting, Facebook Automotive Inventory Ads, Reviews Management, Dealership Websites and more.

To learn more about EasyCars Dealer Management System or to arrange a no-obligation free demo, contact us today on 1300 473 744 or submit the form below.

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