Starting a car sales business on a part time basis, much like any other business, requires experience, knowledge, a carefully crafted business plan and collateral. Yet the most prohibitive aspect might be age and ability to attain affordable motor trader's insurance for a car dealership with premises. A new start up in the British car market selling motor vehicles is going to face a lot of competition from some big names from the outset. With a great many acting as franchises for manufacturers such as Volvo, BMW and Ford. These franchise dealers account for almost 5000 dealerships in the UK alone. Although a small number closed due to Covid, leaving some room for entry for entrepreneurs with new ideas, angles and a savvy sales approach.
Research and preparation is key to any new business plan. Which locality to set up in? Premises. Is vehicle crime high in your chosen area? Whether you will enter as a new car dealership owner or dealing in used cars. Choosing to focus on Gas and Diesel vehicles at a time when carbon and climate is the hot topic of the day may not be so wise. Where Hybrid and more so Electric cars are being ushered in via Government taxation schemes. With Tesla forcing traditional car manufacturers to change their designs.
Can anyone start a fully fledged car dealership business? Almost. Unfortunately insurance doesn't abide by societal norms, age can be an issue. Having the requisite motor trader's insurance is the primary need of any prospective dealership owner. Coupled with experience and determination, obstacles can often be removed and most policy underwriters will risk assess to the hilt to provide a motor trader's insurance policy. The younger you are, the higher these policy premiums may be. Typically if you are aged 25 or over, gaining a motor trade insurance policy for a new car dealership will be a lot easier.
Between the ages of 21 and 25 years old, considered to be the young motor trader's insurance bracket, premiums and limitations begin to stack up. The basic rule is at minimum you need to have a U.K. driver's license or recognised equivalent for at least one year and be over 18 years old. At age 23 you should be able to get cover for buying and selling vehicles. Either from a forecourt and most certainly from a home address. Between 21 and 23 most motor trade insurance brokers will only allow you on to a policy for repairing or servicing vehicles. Enabling you to work for a garage or possibly start your own breakdown recovery service though limitations may still apply. There is no written rule against a young business entrepreneur with a new start up car dealership where a partner (Dad or Mum) has the controlling oversight. Under 23 years old and the pool of accepting trader policy brokers is vastly reduced.
Is age the only restriction to buying and selling cars professionally and for profit? In tangent with age requirements comes experience, sometimes the latter can offset the former. A clean driving history with no claims bonuses is a boon but criminal driving convictions could see insurance premiums increased initially. There is a raft of motor trader's insurance policies with conviction codes that can be checked for acceptance. For instance minor speeding offenses are not that worrisome.
Without a doubt an insurance policy for a second hand car dealership will be cheaper than that for a new dealership dependent on stock ratio and value. Dealing in used cars that are not high end, antique / collector's items or high performance / sports vehicles or so called unique exotic cars will keep premiums lower. Getting trade insurance cover is still primarily based upon age and driving experience. However the type of car you stock, wish to test drive or flip carries an insurable weight too.
Getting into the new and used car dealer market without any knowledge or experience as a car showroom salesman or part time used car dealer is not recommended. If you have had a passion for cars since an early age, know the specs, understand the demand, the market and have the sales garb then a young motor trader's insurance policy for a new start dealership either part time or a full time car sales business is going to be easier to attain. Those that begin a dealership or franchise have likely been working in the motor trade industry for a while. Have held or been on a motor trader's policy and are known to brokers. To get more information regarding the effects of convictions click here. Probably starting out as a forecourt sales person or managed sales for a period of time, serviced vehicles at some point and generally know makes and models, the fuel efficiencies and what single men and women, families, Husbands and Wives are looking for in sports cars, SUVs, coupes, hatchback or Convertibles.
There is no industry standard for entering the car dealing market as an owner. Not like you'd expect of a plumber or builder, a license isn't even required to operate a dealership. To obtain a job as a car salesman with the forecourt run by another person it is possible to start as an apprentice gaining a VCQ (vocational competence qualification) Diploma in vehicle sales. Or apply having gained good GCSEs and or come from a similar sales environment with at least two to three years work experience.
A great many new dealership owners have both an interest in vehicles, have held managerial or forecourt sales positions or at the very least have been partly flipping cars on the side from home. If you don't have the collateral to begin renting or purchasing premises, are too young for motor trader's insurance then turning a profit while holding down a full time job could be a path forward.
Fireman, Nurse, Lion Tamer are a few imagined careers held at a young age, not many wish to leave school at 16 years old and start a car dealership. However a love of cars and vehicles can begin early on. No matter your age as you seek a viable route into buying and selling cars and gaining cheaper motor trader's insurance, here's a few tips to tick off on the way.
1. Many are caught by the awe of expensive fast cars and if your mind is set on making money from car sales, gaining experience and knowledge is essential. This can be achieved through relevant qualifications in both car servicing and repairs, courses organised by manufacturers such as the four-day sales immersion course at Ford's Daventry HQ. Or an apprenticeship at a car dealership. Having a DR10 or drink drive conviction can increase insurance costs
2. If your dream is still to oversee and profit from car sales, engaging with the public, advising them which motor is best for their needs. Then starting a part time trader's business from home while holding down the day job would be an ideal scenario. Real life experience of buying used cars, repairing, servicing and flipping to new owners is probably an equal learning curve to that of forecourt sales.
3. Experience can count for everything, but qualifications aid in convincing business partners, colleagues, bankers and insurance brokers / underwriters that you mean business. This, your ideas, prospective manufacturer contracts, stock you perceive to hold, profit margins vs overheads and sales expectations, staffing, premises planning and marketing budget will all need to be addressed in a comprehensive business plan.
4. If you're over 25 getting a preliminary quote for Motor Traders insurance in regards to stock, premises and business insurance will be easy to attain. Though you need to factor in the multitude of areas that a broker and underwriter will be looking to include. All business risks need calculating. A motor trader's insurance policy for a car dealership is often termed a Combined Traders Insurance.
- Buildings Insurance: A full time car dealership will require rented or owned premises. A building and land that is private yet accessible to the general public. If you have a criminal matter relating to your licence then a policy may be refused. This aspect covers burglary, theft, damage to the building either by fire, water damage or structural damage by a vehicle.
- Contents and Stock Insurance: Your stock is your business, while you may not be purchasing the car outright before it is sold, the vehicles are under your control, loss of this stock could amount to millions of pounds. Equally loss of office furniture due to fire is a financial drain unless insured.
- Machinery and Plant cover: Should you choose to have a connected garage for parts repairs, any theft or breakdown is covered.
- Business equipment including tools: Integrating a car manufacturer service area is one way to profit from service contracts and keep your customers returning. In fact car sales are primarily connected to service warranty and that is where a manufacturer makes the most ongoing profit. This will cover for the expensive electronics required to maintain vehicle hardware and update vehicle software which will pointed out in the policy.
- Employer’s liability: Cars don't sell themselves, you will most likely need more sales staff. Should an employee fall or become injured, need to take sick days or they lose possessions on your premises this policy kicks in.
- Public liability: Equally, members of the public visit your place of business. Should an accident occur during a test drive or while they are in your showroom, that person could sue for hundreds of thousands of pounds.
- Business Interruption: Downtime for any business is costly, this policy includes aspects which cover for that loss so you don't go bankrupt in the short term.
In summary, anybody can start a part time car sales business once they understand the mammoth task in front of them, and the barrier of age entry to motor trader's insurance for car dealerships. This is not a journey you need to take on your own. No one expects you to understand everything. This is why specialist motor trade insurance brokers are on hand to assist with formulating the correct insurance cover, the most competitive, comprehensive and ensure whether you are expecting to hold 20 hot off the line new luxury cars or 200 used cars, that your business insurance needs are covered for a reasonable monthly premium to contain costs