Is there money in used cars?

panthro · 27 Mar 2006 at 18:01

great advice said:
I currently run my own very successful business and have a top accountant, in my spare time i build cars and buy and sell the odd cheapy. I know a lot of people in the industry who could help me out too, so i think i have the skills needed to take something like this forward.

Just dunno what area to go for

this might sound cheesy, but it may be an idea to speak to as many car dealers as you can. When I was doing my final year project at uni (I know it isnt much of a comparison), I designed an MRP program for use in SME's. I got absoloutely loads out of other MRP companies just by emails, arranging interviews, etc. They may have been welcoming because they thought "this guy is just a uni student, he cant be a serious rival". How wrong they were. Try and be subtle about it.
Maybe if you gather as much information and research as you can, i.e. forum posts, emails, meetings, etc then you can build decisions and get ideas?

valerian · 27 Mar 2006 at 18:01

in the ash trays you'll find some shrapnel -usually

great advice · 27 Mar 2006 at 18:03

The_Dark_Side said:
depends.
how much of a percentage of your income do you want this to provide?
how much capital do you want to invest?
how much effort do you intend to dedicate to this side of your business?

They're the kinds of things i dont really want to discuss on here if im honest, i suppose if i did it would make life easier for people who are trying to help though.

divine` · 27 Mar 2006 at 18:04

If you can source decent cars worth the money you can make a mint.

Like anything, you need the contacts aswell as the knowledge and capital to buy with.

blueboy2001 · 27 Mar 2006 at 18:06

I've considered getting into used cars a few times when my other business has been a bit quiet, but its always picked up quickly and I've never really had the opportunity.

There is money to be made, but you need to either be very good with a spanner and a sponge yourself, or have contacts who will do work for you at reasonable prices. A tame garage will be needed for MOT's and work you cannot carry out yourself, contacts in the bodyshop game would be very useful too.

You need to carefully consider your obligations under the Sale of Goods Act and decide how you will cover the warranty/guarantee side of things. You will also need fleet insurance, a set of trade plates, and accounts with the major auction houses or your profit margins will be depleted by buyers premiums.

If you are going for it I think you need to specialise. One guy I know buys clean supermini's at £600 - £800 and turns them over for £1100 - £1500 after a valet, service and an MOT. There seems to be no shortage of Dads willing to pay cash for their childs first car. He does at least 2 a week - buys them on a Wednesday night and usually gets rid of them by the weekend. Another guy I know specialises in 4x4's and he can make £2k+ on an £8k 4x4 bought at auction with a couple of hundred quids worth of tidying up but he really knows his stuff and repairs on 4x4's can cost a fortune if there are any major problems, especially with the transmission.

[TW]Fox · 27 Mar 2006 at 18:06

This is something I've been doing rather a lot of research about of late.

My conclusions so far are yes, there is money in used cars, but only if you are sensible, buy and sell wisely, and pick a particular market and stick with it. You also need to consider there is huge potential for issues when you start having premesis - you also have quite a bit of liability for problems etc which may arise, etc.

You are making a few quid here and there at the moment, but the profit margin on doing it properly is likely to be lower - although you can sell cars for a higher price as a bona fide trader, you also more liabilities such as insurance etc.

It's also a very capital intensive business model.

Let me know what else you can find out

The_Dark_Side · 27 Mar 2006 at 18:10

great advice said:
They're the kinds of things i dont really want to discuss on here if im honest, i suppose if i did it would make life easier for people who are trying to help though.

ok then, i'll respect your privacy and change tack slightly.
you can easily make between £500 and £750 per week by selling a couple of sub £2k cars.
if you feel you're competant to inspect them yourself at auction then this takes minimal effort and returns a decent enough income.
yes you can make much more buy becoming a purveyor of used 911's but this takes more time/effort and considerably more capital.

Siliconslave · 27 Mar 2006 at 18:11

I'd be tempted to go with the sports/prestege end of the market then maybe have a second lot to sell off cheaper cars you take in part ex. This seems to be where the money is. Give someone a semi decent price for a part ex saving them the effort of selling it privately, then wash it and flog it off for a packet more

Firestar_3x · 27 Mar 2006 at 18:13

Indeed, i would sell MX5's buy some up in the winter urber cheap and flog them at a premium in summer!

[TW]Fox · 27 Mar 2006 at 18:14

Siliconslave said:
I'd be tempted to go with the sports/prestege end of the market then maybe have a second lot to sell off cheaper cars you take in part ex. This seems to be where the money is. Give someone a semi decent price for a part ex saving them the effort of selling it privately, then wash it and flog it off for a packet more

See, the problem with this is you need to consider the needs and desires of your typical prestige buyer. If we are talking £10k+ vehicles, the majority of people buying expensive prestige cars wish to walk into the glass showroom of the main dealer, and buy something approved used. They will probably not feel comfortable buying from a 'shady second hand dealer' as they will surely see it.

This is why, for example, the majority of sub 3 year old 5 Series, E Class, S Class and similar are to be found within the main dealer networks approved schemes and not on forecourts up and down the country.

If you were spending £30k on a prestige car would you spend another grand for the security of the main dealer, or just buy purely on price? Price isn't as effective a promotional tool with the more expensive cars.

The exception to this can often be the traders percieved as 'prestige specialists'. But this perception isn't something you can instantly acheive the day you set up

The_Dark_Side · 27 Mar 2006 at 18:15

Firestar_3x said:
Indeed, i would sell MX5's buy some up in the winter urber cheap and flog them at a premium in summer!

costs a lot of money to do that.
you want turnover,not money tied up for months on vehicles just sitting there.

Firestar_3x · 27 Mar 2006 at 18:18

The_Dark_Side said:
costs a lot of money to do that.
you want turnover,not money tied up for months on vehicles just sitting there.

Suppose, all depends if you buy now from auction a 5.5k car will sell for 6.5 - 7k easy even at the moment in a month you can probably add another 500 to that.

Zip · 27 Mar 2006 at 18:27

Try selling mondeos.They seem to be selling like hotcakes up there.
Ive lost count how many people on these forums alone over past few weeks have been buying them or atleast looking at them.
It will also keep Fox happy

How do Japanese cars sell up there?
You could try selling performance jap cars.

The_Dark_Side · 27 Mar 2006 at 18:28

Firestar_3x said:
Suppose, all depends if you buy now from auction a 5.5k car will sell for 6.5 - 7k easy even at the moment in a month you can probably add another 500 to that.

you mentioned buying in winter and selling in summer.
that's a minimum of 3 months or so.
so you're gonna make a grand and take 12 weeks to do so?
trust me mate it 's not worth the time and effort.

[TW]Fox · 27 Mar 2006 at 18:29

Zip said:
Try selling mondeos.They seem to be selling like hotcakes up there.
Ive lost count how many people on these forums alone over past few weeks have been buying them or atleast looking at them.
It will also keep Fox happy .

But there is very little money in Mondeos.

Zip · 27 Mar 2006 at 18:35

[TW]Fox said:
But there is very little money in Mondeos.

In that case he shouldnt sell mondeos then

The_Dark_Side · 27 Mar 2006 at 18:37

you want advice?
Punto's and to a lesser extent Ka's and Corsa's.
they sell like hot cakes.

great advice · 27 Mar 2006 at 18:58

The property ill be renting is about a 1/4 of a mile away from "the punto centre" a place that specialises in Punto's as well as other small cars so that one is out of the question really.

£500-700 is a lot of money but tbh i can earn that just by increasing my hours with what im doing now so it isnt really worth the risk and hassle.

Couldnt agree with Fox any more tbh, Prestige cars are usually sold via main dealers and no matter how fancy your showroom is your still a dodgy car dealer compared to a dealership.

Firestarter is almost right too, the folk i know in the trade do little business through-out the winter months. Its the build up to christmas, folk are spending there money on christmas then jan/feb they are paying it off so not many cars are sold in these months. Its in summer when most cars are sold

Ill be renting an old Rover dealership (for another use) from September so i have plenty of time to think about it if im honest - it might be just a pipe dream at the moment

Lashout_UK · 27 Mar 2006 at 19:01

Plus there's the hassles of returns/warranties/etc. As soon as you're selling more vehicles you're classifed as a dealer and honourable to returns/trade legalities aren't you........

Easy way to get into a lot of doo-doo methinks.

Firestar_3x · 27 Mar 2006 at 19:03

Unless you do an insurance backed warranty scheme, build that into the price of the cars then its not your problem