One of the consequences of the changes in the car business in the last 10 years is that many small independent car traders are no longer in the business. Additionally those that have survived find it much more of a struggle than ever before despite their wealth of knowledge and experience.
So why is it that we probably receive at least 5 to 10 e-mails a month from readers who are asking our advice on starting up a business as a car trader?
It seems that if they enjoy tinkering with cars and ‘doing them up’ and have had a modicum of success selling their own car for a small profit they believe that’s enough to warrant making a success of selling cars full time.
Far be it from us to discourage enterprise and people having a go but it really is not that easy. The fact is I can guarantee that anyone still in the business will know a once successful dealer or trader who couldn’t make a living out of it anymore and are now doing something else.
The simple fact of the matter is that once information and communication became easier to access, and traditional buying channels were no longer the domain purely of the car trader, then it became much harder to make a good margin from selling a car on through the trade or for that matter to a retail customer.
For example, in the past a trader could be at a different auction everyday and would get the catalogue together and call his contacts to see what they would pay for a car and then bid accordingly or bid on behalf of the dealer for a commission. Today however all the auctions will have a physical sale that is online at the same time so dealers can confidently bid on cars from the comfort of their own office; therefore they do not need anyone to bid for them and can get the cars without the trader’s margin being added. Also because there is now more choice than ever in terms of decent makes and models dealers are far more choosy as to what they want to stock as the demands of their customers increase and consequently what is a popular model today may not be tomorrow and only experience and up to date information will tell you that.
There are almost daily stories of professional car dealers and traders who get it wrong and sell cars at a loss and they have been in business many years. The trick is to take your loss, don’t cry and re-invest the money in another car that will be profitable in a speculative way and if they get more right than wrong, happy days!
Can you imagine a inexperienced person who does not have the expertise or knowledge of the market investing their money in cars which don’t sell? Well they will quickly be out of pocket and presumably just as quickly out of business.
Perhaps the most difficult aspect of dealing in cars today is the fact we are all chasing those 1 owner high spec 3 year old examples which are guaranteed sellers. However, as one of regular contributors is always pointing out, talking about them is easy actually locating them in any great number and selling them for a nice profit and at the same time sifting through all the big engined, base model, low spec examples which are absolutely everywhere is quite a different kettle of fish.
As another regular insider always says; selling the hero car is easy it is finding them and buying them at a realistic price to ensure a retail profit where the expertise comes in.
So by all means if you are attracted to the industry because you have a love for cars and a flair for business come and have a go but for the faint hearted it ain’t!