3 Ways to Build and Grow a Car Dealership without Burning Lots of Money

Couple buying a car

A typical American household these days owns at least one car. Pew Research also revealed that over 85% of people in the country drive one. It isn’t surprising that an auto-related business like a car dealership is both appealing and profitable. The problem is the high startup cost. Experts estimate it to be around $50,000, which covers only the basics.

While no business guarantees foolproof success, some allow potential owners to earn good income and flexibility in cash flow. Here are some of them:

1. Auto Franchise

Business owners can take auto car dealerships to a whole new level with options such as auto franchise opportunities. It is beneficial for the following reasons:

  • Entrepreneurs can count on tried-and-tested marketing and operations formula. The franchise can also back them up or guide them, especially during the first few years of running the business.
  • Franchisors can help them choose locations that cater to underserved or unserved markets. It significantly reduces competition.
  • It permits the car dealership to sell different models of vehicles.
  • It may include add-on services that boost the dealership income.

2. BHPH Financing

Another way that auto business owners can increase income and even reduce debt is by offering buy here, pay here financing. Also known as BHPH, it is a loan program where car buyers don’t need to seek approval from another lender, such as a bank. Instead, the car dealership itself extends it to them.

This setup has its pros and cons, but often, the benefits outweigh the challenges. It may be the best setup for both the seller and the buyer:

  • It can accept buyers who lenders may reject due to zero or thin credit history. According to Experian, over 60 million Americans are in this situation. These are usually millennials, new immigrants, and people who don’t keep active credit accounts.
  • It hastens that approval of financing. It then decreases the chances of the buyer backing out from the purchase.
  • It helps keep the car dealership’s cash flow more stable.

3. Auto Repair

Couple looking at brand new car

Car dealerships can also expand their business by complementing them with an auto repair shop. It is a fast-growing market that has the potential to earn more than $810 billion in 2026.

Adding it to the dealership also makes sense for the following reasons:

  • Americans are looking for ways to decrease their car ownership costs. One of these is insurance. Insurers may be more open to give discounts or lower premiums when owners maintain their vehicles well.
  • Many cars in the United States are aging. The average age of vehicles on the road right now is already over ten years old.

Car repair shops can also attract loyalty or earn extra income through the following methods:

  • Offering maintenance and repair packages
  • Giving corporate discounts to business, such as car rentals or tour companies
  • Extending credit or financing for pricier repairs
  • Selling aftermarket parts

Note: For those applying for auto franchise opportunities, they may need to discuss adding a car repair shop with the management. Some may allow it as long as the shop doesn’t offer services that may compete with those in the franchise.

Car dealerships face many challenges these days, including the popularity of a shared economy. It may reduce the number of people buying vehicles. The options above may help them earn more income, manage their expenses, and improve customer experience. This way, car owners feel they’re getting their money’s worth.

About Faye Gonzales 1650 Articles
Meet our chief explorer, Faye Gonzales. With over a decade of travel experience, Faye is not only a passionate globetrotter but also a loving mom who understands the unique needs of family travelers. Her insights into family-friendly destinations and travel tips make her a trusted guide for parents seeking memorable adventures with their children.