Here's a question from a subscriber...........................
Question: I'm thinking about starting a used car dealership. I've researched 23 comparable used car dealerships in my state over a three year period. I've also been involved in the industry at several levels - but never as a owner principle. I'm not over extending myself with debt and inventory...in other words I'm starting really small. My question is in this economy, which I think is a depression, am I nuts?
A.V. Scottsdale AR
Answer Marc Charles:
Most of the people and entrepreneurs I meet with rarely do the research and due diligence you've done. I'm serious. Most people are in too much of a hurry to start a business, and most people bite off more then they can chew.
But, as I've mentioned in my newsletters, columns and on this blog, a neighborhood used car dealership can be a very wise choice, especially in a depression.
New car dealerships are dropping like flies, downsizing, and just trying to survive until the next bull market arrives. The next bull market in new cars may be ten years down the road..if ever.
What's more, most new car dealers are expanding their used car inventory....in a big way, because that's what people want (and can afford).
A small neighborhood used car lot with an Internet division, could do extremely well.
Obviously if you can offer reasonably priced services like financing, repair, sound system installation, interior repair and upgrades (like carpet and seats).....you should do extremley well.
On top of that, you'll be competing with the huge auto mall superstores (with dedicated Internet divisions and wholesale auction access)....but who cares! Most of these guys will be ghost towns if the depression persists...which I think it will.
And by the way, you can run commercials just like they do on YouTube...FREE!
So, no I don't think you're crazy. In fact, please keep me posted. I put you on my list for buying a car!
PS One of the most amazing things in my business life is how new car dealerships in a place like Maine can survive. I saw a 2011 Chrysler mini van for $38,000 today. Are you kidding me? This is about $20,000 over what it should be!