Used Car Dealership Business Plan Template [Updated 2024]
Used Car Dealership Business Plan Template
If you want to start a used car dealership or expand your current used car dealership, you need a business plan.
The following Used Car Dealership business plan template gives you the key elements to include in a winning Used Car Dealership business plan.
You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.
Used Car Dealership Business Plan Sample
I. executive summary, business overview.
[Company Name], located at [insert location here] is a used car dealership that sells, and services used vehicles to customers in the surrounding community. Our dealership will offer vehicles at a range of price points , for customers across the spectrum of creditworthiness.
Products and Services
[Company Name] will maintain an inventory of used vehicles, and operate a service department for trade-ins.
In addition, [Company name] will also offer financing and insurance options for customers with all credit scores. Sub-prime customers will find financing options at [Company name] that they will not find at other area dealerships.
Customer Focus
[Company Name] will primarily serve the residents within a 30 mile radius of our location. The demographics of these customers are as follows:
- 27,827 residents
- Average income of $45,700
- 38.9% with higher education
- 29.6% in Mgt./Professional occupations
- Median age: 35 years
This bodes well for [Company Name], as the prime demographic for used car dealerships are consumers with subprime credit ratings. Individuals of all ages will be sure to patronize [Company Name] for their extensive vehicle and financing options.
Management Team
[Company Name]is led by [Founder’s Name] who has been in sales for 20 years. While [Founder] has never run a dealership himself, he has worked in the car dealership industry since age 30. As such [Founder] has an in-depth knowledge of the dealerships industry, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- The Company will fill a specific market niche in the growing community we are entering. In addition, we have surveyed the local population and received extremely positive feedback saying that they explicitly want to frequent our business when it is launched.
- Our location is in a high-volume area with easy access from multiple residential and commercial district zones.
- The management team has a track record of success in the car dealership industry.
- Used car dealerships are a proven business and have succeeded in communities throughout the United States.
- Local competitors leave a large gap in the market—there are car dealers offering new cars and maintenance services, and a dealership that exclusively sells used vehicles, but nothing that cater to subprime customers.
Financial Highlights
[Company Name] is currently seeking $500,000 to launch. Specifically, these funds will be used as follows:
- Lot design/build: $100,000
- Inventory: $300,000
- Working capital: $100,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even
II. Company Overview
Who is [company name].
[Company Name], located at [insert location here] is a a used car dealership that sells, and services used vehicles to customers in the surrounding community. Our dealership will offer vehicles at a range of price points, for customers across the spectrum of creditworthiness.
[Company Name] was founded by [Founder’s Name]. While [Founder’s Name] has been in the auto sales business for some time, it was in [month, year] that he decided to launch [Company Name]. Specifically, during this time, [Founder] took a trip to Fort Lauderdale, FL. During his trip, [Founder’s Name] visited a used car dealership that enjoyed tremendous success. After discussing the business at length with the owner of the dealership, [Founder’s Name] clearly understood that a similar business would enjoy significant success in his hometown.
Specifically, the customer demographics and competitive situations in the Fort Lauderdale location and in his hometown were so similar that he knew it would work. After surveying the local population, [Founder’s name] went ahead and founded [company name].
[Company Name]’s History
Upon returning from Fort Lauderdale, surveying the local customer base, and finding a potential lot location, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].
The business is currently being run out of [Founder’s Name] private offices, but once the build-out on [Company Name]’s commercial location is finalized, all operations will be run from there.
Since incorporation, the Company has achieved the following milestones:
- Found commercial space and signed Letter of Intent to purchase it
- Developed the company’s name, logo and website located at [website]
- Hired an architect to design the showroom
- Determined equipment and inventory requirements
- Begun recruiting key employees with previous auto sales experience
[Company Name]’s Products & Services
Below are [Company Name]’s products and services:
- Used vehicles
- Parts and repair services
- Finance and insurance
Sales professionals will be available to determine the customer’s needs, budget, and preferences, and recommend options.
[Company Name] will also offer financing and insurance options for target customers with a range of credit scores.
[Company Name] will feature a range of used vehicles. It will continue to update its inventory in order to provide fresh options to its customers.
Furthermore, the waiting area will feature a relaxing, welcoming atmosphere, and a coffee bar will be available for waiting customers.
Showroom Design
[Company Name] will develop a 2,000 square foot facility whose key elements will include the following:
- Office area
- Reception Desk
- A waiting area
[Company Name] plans to be open 6 days a week, from 7AM to 9PM. As demand dictates, we may extend or reduce our hours.
III. Industry Analysis
[Company Name] competes against other new and used car dealerships, as well as online-only car dealers and private consumer sales.
According to a report by National Independent Automobile Dealers Association, the used car dealership industry is a fragmented one, with nonemploying dealerships estimated to represent 81.4% of total establishments. The market is estimated to grow to over $150.6 billion in five years. Since there are no truly dominant competitors, barriers to entry are not as high as many other industries, and a start-up can expect to have success in this growing market, [Company Name] is well-positioned for success. There is plenty of room in the industry particularly for conveniently located dealerships that cater to specific demographic trends and demands. In this industry, size does not necessarily mean an advantage, which bodes well for [Company Name].
Market Trends
The market in which [Company Name] will compete is experiencing a number of different trends.
Market-level trends:
- Flat growth. This market is expected to remain consistent, with slow growth of 0.6% annually.
- Success drivers. Customer satisfaction is what ultimately makes one dealership triumph while another fails. The experience a dealership’s customer has will ultimately determine whether or not they return and whether or not they refer others to the dealer.
Firm-level trends:
- Inventory and Price. Most used car dealerships have inventories dominated by vehicles that are at least six years old and have more than 60,000 miles. The variety of vehicles in stock is an important factor in a consumer’s decision to buy, as are financing options.
- Customer service. Happy customers generally tell three friends about their positive experience, while unhappy customers tell five times as many people.
Customer-level trends:
- Availability. Because of the limited used car inventory and slowed vehicle production, consumers are less set on whether they want a used or new vehicle. Instead, they are more likely to make a purchase decision based on available stock and prices.
- Purchasing preferences. Customers are increasingly shopping online, including shopping for vehicles. While not all customers complete an automobile purchase online, many do use the internet to research and compare before making the final purchase decision.
IV. Customer Analysis
Demographic profile of target market.
[Company Name] will serve the residents of [company location] and the immediately surrounding areas as well as those who work in [company location].
The area we serve is populated mostly by lower middle class Millennials; as a result, they are more likely to shop for high quality used vehicles. Further, many are looking to transition to hybrid or electric vehicles, and used EVs are a more affordable option.
The precise demographics of the town in which our retail location resides is as follows:
Customer Segmentation
- Subprime and deep subprime customers: Subprime customers, or customers that have a VantageScore between 501 and 600, are expected to account for 21.7% of industry revenue. In contrast, deep subprime customers possess a score of less than 500 and are expected to account for 3.4% of revenue. [Company name]’s inventory will include a variety of financing options to meet the needs of this demographic.
- Prime and near prime customers: Prime and near prime customers are expected to represent 41.4% and 21.9% of industry revenue, respectively. Prime credit ratings correspond to a VantageScore between 661 and 780, while near prime customers’ credit ratings correspond to a VantageScore between 601 and 660. Customers with intermediate credit scores may choose to purchase vehicles at a used car dealer to protect their credit scores for more important purchases.
- Super prime customers: Super prime customers have credit scores of 781 or higher. With such a high credit rating, these customers qualify for the best interest rates. Super prime customers may choose to purchase vehicles from a used car dealer, whether financed or cash, to protect their favorable credit.
V. Competitive Analysis
Direct & indirect competitors.
The following dealerships are located within a 20 mile radius of [Company Name], thus providing either direct or indirect competition for customers:
Premiere Auto
Incorporated in 1997, Premiere Auto is a privately held preowned dealership. Premiere Auto has consistently been ranked in the Top 20 independent preowned dealerships in the United States and has sold over 50,000 vehicles since it opened. Premiere Auto sources most of its vehicles from private individuals. Most of these vehicles have Carfax available, and come with a 2 year/100,000-mile warranty. Premiere Auto operates a service and parts center and offers financing. Premiere Auto currently has 152 vehicles available on its website; priced from $4,999 to $58,999.
We expect that Premiere Auto will continue to thrive. But since is located in the next city, we expect more and more customers will frequent [Company Name] based on proximity and competitive prices we offer.
Randy’s Auto Sales
Established in 1993, Randy’s Auto Sales, Inc is a privately held preowned dealership. Randy’s Auto Sales has a wide range of vehicle makes and models and offers financing. The dealership offers a range of Warranty coverages provided by GWC Warranty and operates two lots. Randy’s Auto Sales has 71 vehicles available on the two lots; priced from $3,995 to $15,995.
[Company Name] has several advantages over Randy’s Auto Sales, in that offers a larger inventory, and has more financing options.
Boardwalk Auto Sales
Established in 2010, Boardwalk Auto Sales, Inc. is a privately held single location used car dealership. Boardwalk Auto Sales primarily offers In-House Lease Financing on its used vehicles. Boardwalk Auto Sales includes a warranty on every vehicle offered and can arrange traditional financing. Further, the dealership does not preform Credit Check and can offer flexible terms and payment options. Boardwalk Auto Sales operates an Inspection Station & full service facility able to handle anything from routine tire swaps, brake work & oil changes to engine swaps and transmission repairs. Boardwalk Auto Sales has 56 vehicles for sale online; priced from $8,990 to $12,990.
Boardwalk Auto Sales offers some financing options which are unique to the area, and thus we expect it will continue to draw a large clientele. However, because many of its services are geared to subprime clientele, we expect to draw prime buyers who seek better financing terms.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Location: [Company Name]’s location is near the center of town, giving us access to commuters going to and leaving the train station, local office workers, and passersby shopping in the city.
- Strong inventory: The inventory offered by [Company Name] is large, and [Company Name] offers these vehicles at affordable prices.
- Management: Our management team has years of business and marketing experience that allows us to market to and serve customers in a much more sophisticated manner than our competitors.
- Relationships: Having lived in the community for 25 years, [Founder’s Name] knows all of the local leaders, newspapers and other influencers. As such, it will be relatively easy for [Company Name] to build brand awareness and an initial customer base.
VI. Marketing Plan
[Company name] seeks to position itself as a respectable competitor in the used car industry. Customers can expect to receive personal attention and choose from a variety of used cars offered at reasonable prices.
The [Company Name] Brand
The [Company Name] brand will focus on the Company’s unique value proposition:
- Convenient location
- Highly trained specialists
- Significant personal attention
- Moderate price point
- Comfortable, customer-focused environment
Promotions Strategy
[Company Name] expects its target market to be individuals working and/or living within a 10-mile radius of its location. [The Company’s] marketing strategy to reach these individuals includes:
Local Publications : [Company name] will announce its opening several weeks in advance through publicity pieces in multiple local newspapers and publications. Regular advertisements will run to maintain exposure to relevant markets. Community newspapers, school publications, youth sports programs, and similar channels will be a major promotion effort.
Major Publications : We will make careful use of advertising in selected larger publications. [Publication or newspaper name] has a circulation of xyz and we can expect to reach a wider geographic region of customers on a limited basis. Advertisements with major publications will be used selectively, based on cost effectiveness. These ads will include discount coupons so that response to the ads can be tracked.
Community Events/Organizations : [Company name] will promote itself by distributing marketing materials and participating in local community events, such as school fairs, local festivals, or homeowner associations.
Commute Advertising : We will drive attention toward [Company name] by leasing a billboard alongside [route or highway]. Advertising on heavily traveled commute routes is an opportunity to alert large numbers of working individuals with disposable income of our opening.
Customer Loyalty Programs : [Company name] will create a winning customer loyalty program to keep its best clients coming back again and again. In addition, we will send periodic, regular emails and text messages to customers. These communications will (a) ensure that customers are satisfied with their purchases, and (b) remind customers after a certain period of time has passed that they might want to shop for another car. Long-term customers will have the opportunity to participate in the loyalty program, and referrals will be rewarded as well.
Direct Mail : [Company Name] will blanket neighborhoods surrounding its locations with direct mail pieces. These pieces will provide general information on [Company Name], offer discounts and/or provide other inducements for people to visit the center.
Ongoing Customer Communications : [Company Name] will maintain a website and publish a monthly email newsletter to tell customers about new events, inventories and more.
Pre-Opening Events : Before opening the dealership, [Company Name] will organize pre-opening events designed for prospective customers, local merchants and press contacts. These events will create buzz and awareness for [Company Name] in the area.
Pricing Strategy
[Company Name]’s pricing will be competitive so customers feel they receive great value when shopping for a new car. The customer can expect to receive personalized attention and honest dealing when shopping for a used car.
VII. Operations Plan
Functional roles.
[Company name] will carry out its day-to-day operations on a walk-in basis.
In order to execute on [Company Name]’s business model, the Company needs to perform several functions. The majority of employees will have a primary function as auto sales professionals. [Company name] anticipates using the services of X employees, divided into the following roles.
Service Functions
- Financing and insurance processing
- Auto maintenance and service
Administrative Functions General & administrative functions including legal, marketing, bookkeeping, etc. Sourcing and storing products and inventory Hiring and training staff Appointment making Customer service/cash register functions Miscellaneous
- Maintenance personnel
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
VIII. Management Team
Management team members.
[Company Name]is led by [Founder’s Name] who has been in auto sales for 20 years.
While [Founder] has never run a dealership himself, he has worked in the auto industry since age 30. He began his career after he graduated from [University Name] in [19xx].
[Other person’s name] will serve as the customer service manager. [He/she] has extensive experience in the auto industry.
[Founder] will serve as the office manager. In order to launch our dealership, we need to hire the following personnel:
- Sales staff (3 to start)
- Finance and insurance processors (2 to start)
- Service personnel (2 to start)
- Porter (1 to start)
- Appraiser (1 to start)
- Assistants (1 to start)
- Receptionist (1 to start)
As dictated by demand and operational maturity, [Founder] will consider hiring the following personnel:
- Sales Manager [Number]
- Assistant Office Manager
IX. Financial Plan
Revenue and cost drivers.
[Company Name]’s revenues will come primarily from the sale of used vehicles and secondarily from the sales of parts/accessories and auto services.
The major cost drivers for the company’s operation will consist of:
- Inventory and parts
- Salaries and commissions
Moreover, ongoing marketing expenditures and cost of goods sold expenses are also notable cost drivers for [Company Name].
Capital Requirements and Use of Funds
[Company Name] is seeking $500,000 to launch. Specifically, these funds will be used as follows:
Key Assumptions & Forecasts
5 year annual income statement, 5 year annual balance sheet, 5 year annual cash flow statement, download a free used car dealership business plan pdf.
Use this used car dealership business plan PDF to write a successful car dealership business plan.
Comments are closed.
IMAGES
VIDEO