What You Need To Consider Before Opening a Car Dealership?

13 Dec 2022 Helpful Tips


Looking to start a Car Dealership in Australia? Before you set off on your journey, there are a few things that you need to know and consider.

1. Upfront Costs

The first and most important thing that you need to consider before starting a Car dealership is the upfront costs. To start a Car Dealership in Australia you will need to have some significant funds or investment behind you.

When it comes to a cost breakdown, the main upfront expenses you need to prepare yourself for are:

  • Location Lease Costs
  • Location Build
  • Initial Vehicle Stock
  • Recruitment Costs
  • Dealer License Costs

Before you begin your journey, it is important that you put together a cost analysis to help you prepare for the associated upfront costs.

It has been found that the average upfront cost required to start a Car Dealership in Australia is in the vicinity of $100,000. However, this will vary depending on location and individual circumstances.

Related Article: Expenses Car Dealers Can Reduce Easily in 2022.

2. Ongoing Costs

On the topic of costs, it is also important to consider your ongoing costs. Every business will have their own ongoing costs and a Motor Dealership is no different. Many people who plan on starting a Motor Dealership are often shocked and unaware of some of the ongoing costs.

The most common ongoing costs of running a Car Dealership Include:

  • Rent
  • Staff
  • Vehicle Advertising
  • Insurance
  • Software subscription
  • Utilities (Electricity, Internet etc.)

Like mentioned in the point above, it is always best practice to create a cost analysis prior to beginning your journey. The last thing you want to do is put all your funds into the initial upfront costs and have nothing left for your ongoing costs.

Related Article: 5 Factors That Affect Profitability for Motor Dealerships.

3. Location

Location is the key to having a successful Motor Dealership. Picking the wrong location for a dealership will instantly put you behind the 8-ball and seriously affect sales opportunities. Before you look to start a Motor Dealership it is important that you research and find a good location.

The key to finding the best location for a dealership is choosing an area which generates strong foot and visibility. Try to pick a location that’s easy to get to and offers customer parking. Another important thing you need to consider when it comes to location is the spacing. You need to ensure your choice of location is big enough to help you scale in the future. The last thing you want to do is pick a location that is either too small or too large, either option will cost you.

4. Sourcing Vehicles to Sell

Arguably the biggest challenge facing the Australian Motor Industry is Stock Shortages. Many dealerships are finding it hard to source vehicles to sell due to the astronomical used car prices and the ongoing new car production delays.

Before you set off on starting a Motor Dealership it is important that you how you are going to source vehicles to sell. Are you going to source cars directly from private sellers? Are you going to buy directly from the Manufacturer? This needs to be carefully considered before you proceed.

5. Staff

The only way that your dealership is going to be successful is by having a strong, passionate and results driven team. In saying that, hiring the right candidate for your dealership is not an easy task.

What type of staff member do you want? How many staff members do you need? How are you going to go about hiring someone? These are some of the things that you need to consider prior to starting your journey.

It is important that you understand what you want your staff to achieve before you begin the hiring process. You need to find someone who shares same passion you do!

6. Target Market

This is a big one! Before you consider opening a dealership you need to understand the industry and more importantly the target market that you are looking to capture.

What type of customer are you targeting? How are you going to acquire customers? Are you going to use vehicle advertising? It is important that you understand who, what and how you are going to sell your vehicles to.

By understanding your targeting market, you will be able to put together a strategic plan that you can use for lead generation.

Related Article: Top 5 Digital Marketing Strategies for Car Dealerships in 2022.

Final Word,

Starting a Car Dealership isn’t an easy task. To be successful you need to familiarize yourself with the industry, understand your motivations and consider all the factors presented to open and operate a successful Motor Dealership.

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

DISCLAIMER – The content within this blog does not constitute professional advice and is intended to be general in nature.

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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