Almost everyone needs a car for business or personal needs. After that, the car owner needs to carry out maintenance or repair of the vehicle. Today, many people are looking for dealers because they want to buy a car and need a repair shop to maintain the vehicle. However, the cost of opening and running a car dealership business can reach billions of rupiah. Before deciding, study carefully how to become a car dealer thoroughly.
Step
Part 1 of 3: Finding Out Customer Needs
Step 1. Do market research
Before starting any business, make sure first whether there is a demand for the product or service you want to offer. If so, think of ways your company can meet this demand by attracting customers.
- Look for information on how many cars have been sold in your area. For example, assuming a potential buyer wants to visit a car dealership 15 km from home, find out how many cars have been sold within a 15 km radius from the location of the showroom that you are going to open. We assume that car sales at that location are 50,000 units/year.
- After getting data on car sales, do research on car buying behavior based on the type of vehicle. For example, how many passenger cars were sold? How many trucks were sold? What is the percentage of new car sales of total sales? What percentage of used cars make up total sales? Find out the number of car sales by category (mini cars, family cars, luxury cars, etc.)
- Look for data on car dealers who are already operating in the market. For example, the sales of new car brand H in your location are 3,000 units/year. If you want to become an H car dealer, find out how many agents are there selling H cars in your desired location? Of the total sales of new car brand H, how many units were purchased via the internet and how many units were purchased from dealers outside the city?
- Based on the analysis of the data, you can determine whether there is still a need for new dealers in your planned location.
Step 2. Determine the most ideal customer
Every business must determine the most ideal customers, namely customers who have the same quality with the best customers. After determining the most ideal customer criteria, develop a business plan to meet their needs.
- Pay attention to the age, gender, occupation and amount of income of the particular population you are bidding on. If you want to be a dealer selling H cars, do some market research to find out how many people buy H cars.
- For example, research data shows that the ideal customers in the H car sales business are white-collar men who are professionals aged 27-50 years and have above-average incomes. The buyer of car H already has car H or his family members also have car H.
- Many car dealers build relationships with customers through selling cars and opening repair shops. The buyers will come again to take care of their cars.
- Find out where the H car buyer you think is the ideal customer cares for his car. Do they take care of the car at the dealer's repair shop or at another repair shop? You can use this information to open a workshop that can attract customers.
Step 3. Calculate the market potential
The goal of market research is to determine if there is a sizable demand for the product you are offering. However, you have to know how much money you make from selling your product and make an estimate of how much you can attract customers.
- We assume 3,000 new cars H are sold at your location each year. Currently, you are considering the opportunity to sell a used car H with an estimated 2,000 units/year. So, you have the potential to sell 5,000 units of H cars in the market share of new cars and used cars.
- Based on research on existing car dealers and customer demand, you believe you can dominate 20% of the current H car market. The number 20% means 1,000 units or 5,000 units (new cars and used cars) x 20%.
- We assume the average profit/unit (new and used cars) is IDR 500,000. If 1,000 units are sold, your business will make a profit of 1,000 x Rp. 500,000 = Rp. 500,000,000. In addition, you estimate that you will get a profit from the workshop of Rp. 300,000,000. So, by becoming a car dealer, you can make a profit of IDR 800,000,000.
Part 2 of 3: Choosing an Agency Type
Step 1. Consider franchising options
Almost all large-scale car dealerships run a franchise business. In this case, you are the party who must make payments to the franchisor. Both parties must also sign an agreement as a cooperation agreement to run the business.
- Before becoming an H car dealer, you have to go through a long process to buy a franchise business. The franchisor will ask you to provide financial statements so he can determine whether you have the financial capabilities to open and operate a business as an H car dealer.
- If approved, the franchisor will give you permission to use the H logo and other marketing tools to run the franchise business. You will also receive an H car for sale.
- Making agency agreements with well-known brands is one way to increase credibility so that cars are easier to sell. However, the franchisor will determine the advertising strategy and sales procedures. You must comply with all regulations so as not to violate the agreement.
Step 2. Decide whether you will be selling a new car, a used car, or both
You can serve two market segments if you sell new cars and used cars. However, this method requires a greater investment of time and money.
- If you sell a used car, the people who will become customers will usually want to spend less money buying the car. For example, instead of paying IDR 250,000,000 for a new car, they will buy a used car for IDR 150,000,000.
- Used cars usually require more repairs and maintenance. The repair shop business will grow if you sell more used cars.
- Know that online car purchases are becoming more and more common. Customers who come to your place usually have checked 4-5 dealers to compare the prices of certain cars. Maybe you will face stiff competition if you sell a new car. Consider opening a workshop to increase sales.
Step 3. Decide if you need to open a workshop
Every car owner needs car maintenance. Opening a repair shop is a great way to build relationships with car owners.
- Try to build relationships with repair shop customers who buy cars at other dealers. If you provide satisfactory service, maybe he will buy the next car at your place.
- Keep in mind that customers who cannot use the car because it is being serviced are likely to feel stressed and uncomfortable. Try to provide the best service to relieve the anxiety of the guests who are waiting at the workshop.
- After completing maintenance, maintain a good relationship with customers. Increase car sales and repair services by asking for feedback via email and other means of communication. The effort you put in makes customers feel interested in buying your car in the future.
Part 3 of 3: Making a Financial Plan
Step 1. Calculate the cost of becoming a car dealer
Opening and running a particular agency requires billions of rupiah in funds. Buying a car inventory requires very large funds.
- Inventory costs are costs that arise because you need to keep a stock of cars in the parking lot. In addition to these costs, you may need to buy or rent a property. Also consider whether you want to build or renovate a building for a showroom and plans to open a workshop.
- Before running a franchise business, you have to pay a fee to buy a car business from the franchisor. Once operational, you must pay an annual fee according to the agreement.
- Car dealers should provide training to their employees if there are new types or new features so that they are able to provide information to customers. So, you need to spend quite a lot of training costs.
Step 2. Determine how to get funds to become a dealer
You have to make a strong commitment to be able to fund a business as a car dealer. Think carefully about how to get money to start the business.
- Many dealers fund their business by drawing on bank loans because they need substantial funds to design and build showrooms and workshops. The stock of the car will serve as collateral for the debt.
- In addition to stocking up on cars, you'll need to hire employees as needed and provide cash to pay salaries each month.
- Before borrowing money, prepare collateral according to the terms of the loan. Maybe you need to pledge personal assets so that the bank approves your loan application. The bank will also analyze financial statements and business plans to find out whether your business is able to generate profits and pay off loans.
Step 3. Carefully study the rules for opening and operating a car dealership
Each state, province, or city determines the requirements for doing business as a dealer. Some of them aim to protect customers who will make a big investment by buying a car.
- You must also get a car sales business license as your main business. Although buying and selling cars can be done individually, dealers who want to sell cars in large quantities can only operate after obtaining official permission from the government.
- Before building showrooms and workshops, you must obtain a permit from the city or provincial government.
- Government regulations also require you to sign a letter of guarantee before operating as a dealer, for example a letter of guarantee for consumer protection to protect the buyer's rights in the event of a loss due to a car purchase transaction.
