Does anyone have a rough number on how much it costs to build a car dealer from the ground up? It would be great if it's a Honda or Toyota dealer, but any other dealer would be just as valuable. Preferably a dealer that will only sells S2000

I'm cranking out some market research paper and in need of some numbers just so that I don't look stupid pulling it out of thin air.

Mod, please feel free to move if this is off topic. I'm just hoping to get more responses here.

 

a TON of $$$$$$ The ability to borrow $5M would seem logical.....

Just a building on a decent lot would be well over $2M where I live..... you would need to have another $2M to finance 75-100 cars......... then you would another bunch of $ to pay your employees, stock some replacement parts, etc.... until the business was fully up to speed and bringing in more $ than it was spending.....

I think this is the main reason that new dealership are usually started by an exisiting dealer... like we have Faulkner chevy, Faulkner cadilac, Faulkner honda, Faulkner mazda, Faulkner toyota,
and Sutliff chevy, Sutliff ford, Sutliff kia, Sutliff Hummer
and Rahal Honda, Rahall Toyota, Rahal Acura, Rahal Scion, Rahal Lexus
Brenner dodge, brenner nissan, brenner jeep, brenner chyrsler

There really aren't too many "one" dealership owners any more....

The normal guys have to start with a crappy used car dealership and slowly build it up.....then if they are lucky move into the new car world.



edit - i see you are from canada....multiply everything by about 1.34 to get to canadian $.

 

Scot is right it takes a lot of money to open a dealership! Especially if it is a Honda/Toyota/Porsche and so on. So lets say you wanted to be a Honda Dealership, you contact the CEO to ask for permission to the name "Honda" kinda like paying a fee. Then they do a background check on you to make sure you have the $$$ and other stuff. After all that is approved, you need to buy the land, making the building, buy all the parts, and the cars. Would I be surprised if it cost more then 5million probably not.

Scot is right there aren't any "one" dealership owners anymore.

Can you imagine starting a porsche dealership?! That would be INSANE. Personally if you don't have at least 10 million to play with I wouldn't think about trying to sell Honda's, Toyota's or any other cars.

Though all this is for selling new cars not used cars. Though I would imagine selling used cars would be the same deal, just maybe on a lesser scale.

Here in Ga, on P-Tree Industrial Blvd. A Mistubushi dealership just closed down cause another bigger Mistubushi dealership gave it to much competition and it no longer could compete so it went out of business.

Even if you get approved remember inventory of cars is very important and so is competive prices.

-Alan

 

I'll bet you could find a Geo Metro dealership for about 58 bucks!

 

Sorry, I read your post wrong!!! LOL!! I thought YOU was going to start a dealership.

-Alan

 

locally we were without an Acura dealer and a Mitsubishi dealership (no dealers of either brand for 40 mile radius)........ i kept trying to figure out how much everything would cost......

anyway.... after 2 years or so bobby rahal decided to open an acura dealer and a different place decided on Mitsubishi's..... too much corn for me!

You could easily eliminate the $2M on the building by renting somewhere, but the rent would be $15-$20k per month, and you would probably need a 2 year lease (min)...... but that would definately cut back on the original amount of $ you would need.

 

Thanks for the numbers guys... keep em coming.

I've thought about a 7 digits figure in Canadian dollars => $1 american. I have a client with a big wallet and thinking of getting into the car business. This subject is completely out of the blue and out of my area of expertise. It's just a favor to him if I could tell him what he's looking at. Judging by the numbers so far it's quite doable for him. Considering most bank will do 6:1 loan with a almost guarantee loan if the client can do 4:1.

 

Inventory can be floor planned, but don't forget about advertising. The big dealerships here spend well over $1M per year per store in advertising costs.

Keep space in mind. The dealership building has to be big (service, showroom, offices) and there would need to be parking for lots of cars. Up to 500 for inventory, around 85 for service (requirements depending on manufacturer), up to 20 for customers and about 50 for employees. Depending on the climate, the lot also needs to be large enough to hold excess snow in the winter months to avoid blocking valuable inventoy (the plows gotta put it somewhere...) The manufacturer also has to approve of the location, and see it as a complemetary to their business strategy.

Liability insurance is also high due to driving being classified (by U.S. employment law) as a dangerous occupation.

 

I've looked into it here in my province (alberta). A cash flow of $1,000,000 Canadian would be needed up here, to start a small to medium sized dealership.

I'm sure the cost would be 4-5 times that much in most areas of the United States.

 

My local Honda dealer spent 4.4M.