Here's How to Become a Car Dealer

so the number one question I get asked the most is how did I get my dealer's license or how did I become a used-car dealer and this is despite the fact that I made a video a few months ago showing how I went broke as a full-time used-car dealer so now I'm about to head over to look at all the dealer auction cars and as I hoopty show up I guess I'll do my best to answer this question even though you'll just forget everything five minutes after watching this and ask me again later the first thing I always suggest is someone actually work at a car dealership for a little bit and see how difficult it can be unless it's a very high volume store it can take years to build up a decent clientele giving you enough referral business to make a living and starting out you're only going to source customers that are walk-ins and you're lucky to close on one out of every 10 people you talk to and there will probably be months where you make less than what people make working in McDonald's but at a good store you can learn a lot in six months to a year before I started my old dealership I worked at Carmack's as well as a franchise BMW Cadillac and Chevrolet store I was 20 years old when I started at the franchise dealership and the very first person I walked up and talked to ended up buying a new loaded out truck and he didn't negotiate on the price off full sticker and he owed 10 thousand more on his trade-in them what the wholesale dealers were bidding on it this was before the Great Recession and banks were much more loose with lending money so they approved this guy at full retail with $10,000 financed on top to cover his upside down trade and I made $1,500 since it was my first day I figured this is what it was like every day around here so I immediately spent the money on a new plasma screen TV ends up I didn't make a sale the next day or the next week and when I finally did make another sale it was a two hundred dollar minimum Commission on a Chevy Cobalt I lasted a little less than a year before quitting to focus on finishing college but I learned a lot and if you don't have a conversational personality and aren't willing to be even a little pushy to motivate people to buy a car you don't stand a very good chance of making it for me once a customer left a lot without some kind of commitment four out of five times they would just never come back if they say they're gonna talk to the wife check with their bank or pray on it chances are you are never going to see them again anywho the auction is about to start so I better head that way after working at a dealership for a while or you can just disregard my advice which is understandable and decide you want to start up your own little car lock and start pedaling hoop tease many people are surprised when I tell them there are lots of Hoops to jump through to get licensed most states don't want casual part-time used car dealers working out of your home and believe me you don't want a lot of these people coming to your house anyway so the first step in getting your dealers license is finding a property zoned commercial to rent my first space was about $900 a month and it was a two thousand four foot building in a warehouse area I prefer this space over a highly visible car lot because I could store more my inventory inside and keep them clean and secure and since most sales nowadays come from the internet anyway it worked out fine for me most states require some kind of zoning board approval or in smaller towns the City Council has to vote on whether to improve the location for the dealership a lot of people need car Lots isn't isomers which was recently the case with my mechanic the car wizard when he recently got his license he's located right next to a historic train station Museum where I felt sometimes and somebody there didn't like the idea of a car lobby next to work and tried to use their political muscle to block it thankfully the car wizard was able to wizard his way around it but there are also funny little zoning laws about parking and other reasons that just give uric rats a reason to say no so don't sign a lease on a property until you're sure the site is approved or make the lease conditional on the site approval once that's out of the way the next step is insurance of course every state is going to require some pretty hefty liability insurance and some kind of and you want to happen anyway I think my state is a hundred thousand our minimum for liability and with people driving around your cars doing god-knows-what on test drives I need to feel like that was enough and with a million dollar policy even with the minimum you'll have a hard time finding dealership insurance for under five thousand dollars a year that overhead really does stack up even if you want to remain small and have your business the low rent area I think you'll have a hard time keeping your overhead under $2,000 a month you're building luck insurance and all of their expense most states don't want people to do this part-time most require you to post business hours have a business phone along with tons of other locals to follow you also have to learn how to properly fill out cards finals collect sales tax and cities and states have their own tax to collect in the case of Wichita Kansas they have a nice little annual tax for a second man selling license and you can't really skirt around these rules as most states have people hired specifically to make sure our dealers abide by the rules but once you get all the rules out of the way and know all the paperwork and have a clue as to what you're doing the fun part can really commence at least for me and that was buying cars so I'm tagging along today with my good friend Michael Keaton he's been in the car business for 25 years his name is actually Bobby just looks like that man I'm Batman and this is his beautiful 79 Mercury Capri turbo RS he had one similar to this in high school at first car since I'm completely broke I'm gonna tag along with Bob and see if he's able to buy anything at the auctions today and we're starting here at the main one actually just a few miles from my house where I've bought a lot of my hoopty Slyke recently the $500 Subaru SVX and a few others so let's go take a look all right sounds good I'm Batman ooh look a first generation Escalade a little weird oh my oh my that was a rough Taco Tuesday Batman and I had taken a look at the auction cards earlier and found three standouts including this 2003 toyota rav4 with a little over a hundred thousand miles which look nice and drove fine but the check engine light was on and it had accidents on the history report still worth a bid we also like this 2003 Mazda B 2300 pickup with a hundred and fifty nine thousand miles that felt solid - of normal old trucks suspension rattles and we really like this minty looking 2011 Toyota Sienna XLE with 93 thousand miles and it really didn't need a thing unfortunately there were plenty of dealers looking to spend a lot of money at the auction today and Bob lost out handily on the first to the rav4 selector Feaster nearly thirty nine hundred dollars which is way above what KBB says trade-in value is and almost in the private party range keep in mind this is for a car with two accidents on the history report and a check engine light you don't test the hand brake hand brakes just slow you down the Mazda pickup was even more shocking selling for around twenty eight hundred dollars with fees which is almost two thousand dollars more than kvb traded and well above private-party range same goes for the van just way too much in my opinion to make any kind of profit unless you're making money on the financing with high interests buy here pay here style loans to live Bob spirits I let him take the wheel of my LS walk 911 that's what you call swabbing response if you look up the dictionary for bottle responses video this car holy crap looks familiar even if you come out empty-handed from the auction there are plenty of other ways to get franchised dealer trade ins some locks have their own sealed bid auctions on site and will also open up the bidding to some of their aged inventory that's not selling hoping for a decent wholesale bid so they can clean out their steel units for something fresh no somebody traded this in for a new S 5 swings not bad any cars I get an impression of the interior because that will tell you about the owner this one this challenged individual that's your very diplomatic there give her a hundred and that's like a record for a PT give her the beans Oh put a load on we have a misfire we have a knock come on PT Cruiser to a Ferrari California Bob I got about thirty eight hundred dollars in the bank so if I bust open my daughter's piggy bank that's another 20 bucks so let's just make it an even four grand can we bid that I'm saying no because I'd like to continue to do business here and I wouldn't really want to give them a punch in the gut like that I'm Batman the downside of a sealed bid auction is there's no instant gratification sometimes you have to wait until later that evening or even a few days to find out if your bid was higher than all the others Bob finds a lot of really cool cars for his lot this way but buying good inventory is half the battle now if you're actually able to buy some cars for a decent price don't laugh my microphone ran out of memory this is the backup you actually have to go to the trouble of fixing all the problems with the cars while not eating up your profit margin and then selling them and it's not easy my strategy was the seldom at private party value since it's so competitive with other dealers I was never gonna match the big guys in a marketing budget so I had to give really good deals on cars to get people in the door and they had to be cars that they actually wanted but that can also be hard since Japanese vehicles as you saw and any kind of truck which pretty much is what everybody wants around here can bring private party value at auction oh here comes the train this is the one thing about Bob's location that's pretty rough get ready for this [Music] [Applause] [Music] all right I moved back inside because of the Train and all the traffic it was just too much but as you can see it takes a lot more effort to have a dealership than you think and for me the return wasn't enough to be on call seven days a week and dealing with all the headaches so I have a lot of respect for the guys that are still out there hustling at this point I basically run a car lot kind of anyway except the only customers myself and it's really easy to sell that idiot anything speaking of which there's a Jag akshay are out there for only seven grand and it looks really yummy thank you for watching [Music]

Channel: Hoovies Garage

Views: 499,597

Rating: 4.8630495 out of 5

Keywords: dealer, auction, dealership, open, business, advice, steps, problems, wholesale, bidding, hoovies, garage

Id: UZwVJPTq1zY

Length: 11min 55sec (715 seconds)

Published: Fri Nov 17 2017