A VERY OLD BUSINESS
Car trading is one of the oldest business ideas. It still
maintains it's appeal. But, although many people aspire
to such a business, few actually start. It's not really a table
top type business, but it is something that you can start
with not too much difficulty if you sketch out a basic plan.
Needless to say, there's plenty of demand for car trading.
Millions of potential customers every year! The big
franchised dealers have got all the big opportunities
cornered, but the thing to do is to look out for riches
where the small trader can begin. Often, it's not necessary
to be involved in any mechanical work at all.
SETTING UP
Unfortunately, car trading is not a business where you can
start with a few pounds capital. You're going to need
some investment. That said, it can be less than you might
think in the right circumstances. œ500 would be sufficient,
but more would obviously be helpful.
A few car dealers have started by re-selling their own car
for a profit. And, depending on how attached you are to it,
it can be a possibility.
You can certainly work from home, but a telephone will
be essential.
When working from home you should be very careful not
to make it obvious that you are dealing in cars. It's not
strictly allowed under planning regulations. You won't
generally cause any problems if you only handle one
vehicle at a time, which is quite enough.
Consider the legal implications of car trading. You'll
need appropriate insurance to drive all cars - a special
trader's insurance is available. Also, any cars you drive on
the road, or even keep there, will need insurance, tax and MOT, whether you are using them or not (but not if they are on your own property).Also remember that it's illegal to knowingly sell a car in an unroadworthy condition. Having an MOT certificate is some evidence of legal mechanical conditions, but not necessarily roadworthiness.Take some time to research the various ins and outs, because motor vehicles are some of the most regulated possessions ever.
BUYING STOCK
Once properly set up, you can start to think about buying a car to trade in. A single one will do to start. Now, there's no need to think about getting some old banger and 'doing it up' as some dealers do. In fact, unless you have mechanical knowledge, or will pay someone to work on cars, it's not a good idea unless you're absolutely sure of safety.On the contrary, it is possible to make money without doing anything to them. Perhaps just cleaning them up will be enough. Many established garages buy in cars and resell at an immediate profit. It's all down to careful buying. Basically, there are two ways of buying cars in for resale that involve minimum problems:
AUCTIONS
The 'easy' source of cars for resale. They are held all round the country. Check your local papers to see what's available.What you buy will depend on your finances. There are some auctions that sell only late model cars (up to four years old) where the vehicles are ready for instant resale.
This might be a possibility.
On the other hand, there are auctions which sell old cars
for œ20 and œ30 that are almost guaranteed to be worth
œ100 in a resale. Ideal for a bargain basement business.
But remember the safety problem.
It's best if you can take a mechanic to an auction, because
most don't offer much, if any, warranty. If you don't have
a vehicle mechanically checked, then you are buying very
much on a risk basis. With careful buying, auction cars will
virtually assure you of a profit. The amounts vary, but it's
usually 10% minimum (that's œ400 on a œ4,000 car) and
can be up to 30% sometimes. Start with one car to see
how it goes.
PRIVATE
The second method of getting in cars is to buy privately.
This is good if you have a sum of cash available to outlay
now.
Consider that all over the country there are people who
want to sell their cars quickly for cash. Maybe they need
the money or have brought a new car. If you can come
up with the money quickly, then you can get a big
discount.
Place advertisements for cars wanted in local newspapers.
Respond to enquiries. Remember that you're expecting
a big discount to give immediate cash.
Value the car by reference to advertisements in papers -
the going rate. Or try the 'Black Book' which is a trade
guide to prices available which you can get once
established.
Then think in terms of offering the seller about 30% off
the retail price and negotiate around that. I will work for
people who need fast money and don't want to wait.
Do what you can to ensure the vehicle is the property of
the seller. The registration document is not proof, but if
their address is on it, and they can prove that they live
there, it's a good pointer. But, of course, it is a risk.
As I said, you might get 30% off. So you can, with
aggressive negotiation, get a œ3,000 car for œ2,100!
DOING CARS UP
The best thing when operating as a small trader is not to
become involved with doing cars up. As I said, there's a
safety risk. If you have to pay someone else to do the
work this will probably make it uneconomic. Until you
are established and can afford to pay someone skilled,
then the most work you should do is to give your
purchases a thorough clean inside and out. Strip off
every bit of grime. It's amazing what value a good clean
up will add. You're probably talking in the region of
œ100 to œ200 for even a small car, and that's in addition
to the profits of buying cheap.
SELLING ON
Sell on your stock as soon as possible, because it's
depreciating all the time!
The best ways of selling trade cars are undoubtedly
classified advertisements in newspapers. Or, even
better, those regional car selling magazines. You can
advertise quite cheaply and they are usually circulated to
thousands of interested buyers in your area every week.
Don't rely on advertising in window cards, or Sunday car
sales and the like. It's almost certainly not worth it.
In selling, pitch your price quite high. Compare to
similar cars and pitch higher for the age and mileage.
Prospective buyers are almost certainly going to make
you an offer and it's nice to be able to accept this with
only a small cut in your profit margin!
Never part with your car against a cheque or a bank draft
that hasn't been cleared first. The only acceptable
payment for a client to take a car immediately is cash in
hand.
One snag is that traders usually offer finance facilities and
perhaps a warranty. It's possible to arrange both of these
in conjunction with finance companies and specialist car
warranty companies. In both cases, these companies will
provide you with finance for your customer (and pay you
a commission), or a warranty. Make enquiries. You might
have to be established for a while before they'll take you
on. If you can't offer a warranty facility make it clear that
your vehicles are sold 'as seen'. This will mean that your
prices are a little lower than garage type traders.
However, you still have a legal responsibility to the
customer that the car is roadworthy and as you described
it in any advertisement.
Because so many cars are on the market, selling is not
always easy. But the low prices you can buy cars for at
auctions, or for cash, mean that a profit, even if only
modest, is virtually assured in most cases, and that's
enough for a home business.
FINAL SUMMARY
Probably, most prospective car dealers and car
millionaires never get their ideas off the ground, because
they think too big. For example, they expect a posh
showroom and to be involved in mechanical repairs,
resprays, etc, is always necessary. The fact is, however,
you needn't be concerned with all this. It's much better to
start in a small way with just one car, and steer clear of
mechanical work and all the usual trappings of the car
trade. Obviously the rewards are less for a smaller
business, but they are still quite attractive for the effort.
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