Become a Car Dealership Owner

Some car dealerships stand out far among the rest. In fact, sometimes you may recognize one specific individual name, branding a variety of dealerships and serving multiple locations. To be clear, were not talking about car manufactures here but rather sole individuals who in their entrepreneurial efforts have monopolized the area market in car dealerships. Knowing you should love what you do, what else is the secret of being a great car dealership owner? There has to be something we don’t know, and more so, things we would love to find out.

What we do know, is that any car dealership owner, most likely had to start small and began with just one location. They also need to obtain strong people skills, both with whom they choose to hire and with the customers who grace their doors. Getting a customer to make a large financial commitment, takes someone who understands the ins and outs of finance, sales tactics, communication skills, and people management. As the owner, you will also need to obtain a license to sell cars, claiming you as a valid auto broker and determine your inventory balance through creating a floorplan.

Now how about the money question, how much do you really make owning a car dealership and do the rewards outweigh the challenges? Depending on your overhead costs and if you are paying someone else to sell the cars, your bottom line profit can ultimately vary. Yet based off of the anonymous salaries disclosed on Glassdoor, the average salary of a car dealership manager averages themselves $93,200 a year.

Since salary disclosure from actual car dealership owners is kept pretty hush hush, and depends again on the size of the business, we can modestly estimate using the following numbers based off of the National Auto Dealers Association.

An average new vehicle will result a profit in the averages of 100-200 dollars per car. Where the real money is made, is in the financing, warranties, and add ons.

Many car dealership owners have mastered the art of financing, and if a customer leases or finances from the dealership, that dealership then sells the loan in a process called fleecing. This common practice can bring an average of a $1,000 profit for the dealership along with what other extras are sold in addition to the vehicle. Times that by selling just 10 cars in a 30-day period, and you have a quick $10,000 a month.

Besides overseeing the financials and partnering with both banks and lenders, car dealership owners need to know how to market their business, follow federal and state laws and regulations, and balance their inventory. Improper management of a car inventory can leave you with more disposable income, but little to no selection. Too much inventory or inventory that doesn’t sell, and you have essentially tied up your cash until it moves.

Getting started in this exciting business venture comes with both it’s challenges and rewards, but like everything, the more you put into something the more you are likely to get in return. And with car manufactures now releasing their new lines of alternative fuel and economic vehicles in 2012 this year, the promises of profitable car dealerships looks bright.

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