Used Car Dealership Business Plan Template [Updated 2024]

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Used Car Dealership Business Plan Template

If you want to start a used car dealership or expand your current used car dealership, you need a business plan.

The following Used Car Dealership business plan template gives you the key elements to include in a winning Used Car Dealership business plan.

You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

Used Car Dealership Business Plan Sample

I. Executive Summary

Business Overview

[Company Name], located at [insert location here] is a used car dealership that sells, and services used vehicles to customers in the surrounding community. Our dealership will offer vehicles at a range of price points , for customers across the spectrum of creditworthiness.

Products and Services

[Company Name] will maintain an inventory of used vehicles, and operate a service department for trade-ins.

In addition, [Company name] will also offer financing and insurance options for customers with all credit scores. Sub-prime customers will find financing options at [Company name] that they will not find at other area dealerships.

Customer Focus

[Company Name] will primarily serve the residents within a 30 mile radius of our location. The demographics of these customers are as follows:

  • 27,827 residents
  • Average income of $45,700
  • 38.9% with higher education
  • 29.6% in Mgt./Professional occupations
  • Median age: 35 years

This bodes well for [Company Name], as the prime demographic for used car dealerships are consumers with subprime credit ratings. Individuals of all ages will be sure to patronize [Company Name] for their extensive vehicle and financing options.

You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

Management Team

[Company Name]is led by [Founder’s Name] who has been in sales for 20 years. While [Founder] has never run a dealership himself, he has worked in the car dealership industry since age 30. As such [Founder] has an in-depth knowledge of the dealerships industry, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).

Success Factors

[Company Name] is uniquely qualified to succeed due to the following reasons:

  • The Company will fill a specific market niche in the growing community we are entering. In addition, we have surveyed the local population and received extremely positive feedback saying that they explicitly want to frequent our business when it is launched.
  • Our location is in a high-volume area with easy access from multiple residential and commercial district zones.
  • The management team has a track record of success in the car dealership industry.
  • Used car dealerships are a proven business and have succeeded in communities throughout the United States.
  • Local competitors leave a large gap in the market—there are car dealers offering new cars and maintenance services, and a dealership that exclusively sells used vehicles, but nothing that cater to subprime customers.

Financial Highlights

[Company Name] is currently seeking $500,000 to launch. Specifically, these funds will be used as follows:

  • Lot design/build: $100,000
  • Inventory: $300,000
  • Working capital: $100,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even

Topline projections over the next five years are as follows:

Financial SummaryYear 1Year 2Year 3Year 4Year 5
Revenue$400,000$466,067 $524,563 $590,400 $664,500
Total Expenses$345,594 $385,172 $419,434 $475,894 $507,480
EBITDA$54,406$80,895 $105,129 $114,506 $157,020
Depreciation$20,840 $20,840 $20,840 $20,840 $20,840
EBIT$33,566$60,055 $84,289 $93,666 $136,180
Interest$16,822 $14,719 $12,617 $10,514 $8,411
PreTax Income$16,744$45,336 $71,673 $83,153 $127,769
Income Tax Expense$0$0$17,104 $29,103 $44,719
Net Income$16,744$45,336 $54,569 $54,049 $83,050
Net Profit Margin-10%10%9%12%


II. Company Overview

You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

Who is [Company Name]?

[Company Name], located at [insert location here] is a a used car dealership that sells, and services used vehicles to customers in the surrounding community. Our dealership will offer vehicles at a range of price points, for customers across the spectrum of creditworthiness.

[Company Name] was founded by [Founder’s Name]. While [Founder’s Name] has been in the auto sales business for some time, it was in [month, year] that he decided to launch [Company Name]. Specifically, during this time, [Founder] took a trip to Fort Lauderdale, FL. During his trip, [Founder’s Name] visited a used car dealership that enjoyed tremendous success. After discussing the business at length with the owner of the dealership, [Founder’s Name] clearly understood that a similar business would enjoy significant success in his hometown.

Specifically, the customer demographics and competitive situations in the Fort Lauderdale location and in his hometown were so similar that he knew it would work. After surveying the local population, [Founder’s name] went ahead and founded [company name].

[Company Name]’s History

Upon returning from Fort Lauderdale, surveying the local customer base, and finding a potential lot location, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].

The business is currently being run out of [Founder’s Name] private offices, but once the build-out on [Company Name]’s commercial location is finalized, all operations will be run from there.

Since incorporation, the Company has achieved the following milestones:

  • Found commercial space and signed Letter of Intent to purchase it
  • Developed the company’s name, logo and website located at [website]
  • Hired an architect to design the showroom
  • Determined equipment and inventory requirements
  • Begun recruiting key employees with previous auto sales experience

[Company Name]’s Products & Services

Below are [Company Name]’s products and services:

  1. Used vehicles
  2. Parts and repair services
  3. Finance and insurance

Sales professionals will be available to determine the customer’s needs, budget, and preferences, and recommend options.

[Company Name] will also offer financing and insurance options for customers with a range of credit scores.

[Company Name] will feature a range of used vehicles. It will continue to update its inventory in order to provide fresh options to its customers.

Furthermore, the waiting area will feature a relaxing, welcoming atmosphere, and a coffee bar will be available for waiting customers.

Showroom Design

[Company Name] will develop a 2,000 square foot facility whose key elements will include the following:

  • Office area
  • Reception Desk
  • Coffee bar
  • A waiting area
  • Restrooms

[Company Name] plans to be open 6 days a week, from 7AM to 9PM. As demand dictates, we may extend or reduce our hours.


III. Industry Analysis

You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

[Company Name] competes against other new and used car dealerships, as well as online-only car dealers and private consumer sales.

According to a report by National Independent Automobile Dealers Association, the used car dealership industry is a fragmented one, with nonemploying dealerships estimated to represent 81.4% of total establishments. The market is estimated to grow to over $150.6 billion in five years. Since there are no truly dominant competitors, barriers to entry are not as high as many other industries, and a start-up can expect to have success in this growing market, [Company Name] is well-positioned for success. There is plenty of room in the industry particularly for conveniently located dealerships that cater to specific demographic trends and demands. In this industry, size does not necessarily mean an advantage, which bodes well for [Company Name].

Market Trends

The market in which [Company Name] will compete is experiencing a number of different trends.

Market-level trends:

  • Flat growth. This market is expected to remain consistent, with slow growth of 0.6% annually.
  • Success drivers. Customer satisfaction is what ultimately makes one dealership triumph while another fails. The experience a dealership’s customer has will ultimately determine whether or not they return and whether or not they refer others to the dealer.

Firm-level trends:

  • Inventory and Price. Most used car dealerships have inventories dominated by vehicles that are at least six years old and have more than 60,000 miles. The variety of vehicles in stock is an important factor in a consumer’s decision to buy, as are financing options.
  • Customer service. Happy customers generally tell three friends about their positive experience, while unhappy customers tell five times as many people.

Customer-level trends:

  • Availability. Because of the limited used car inventory and slowed vehicle production, consumers are less set on whether they want a used or new vehicle. Instead, they are more likely to make a purchase decision based on available stock and prices.
  • Purchasing preferences. Customers are increasingly shopping online, including shopping for vehicles. While not all customers complete an automobile purchase online, many do use the internet to research and compare before making the final purchase decision.


IV. Customer Analysis

You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

Demographic Profile of Target Market

[Company Name] will serve the residents of [company location] and the immediately surrounding areas as well as those who work in [company location].

The area we serve is populated mostly by lower middle class Millennials; as a result, they are more likely to shop for high quality used vehicles. Further, many are looking to transition to hybrid or electric vehicles, and used EVs are a more affordable option.

The precise demographics of the town in which our retail location resides is as follows:

WilmetteWinnetka
Total Population26,09710,725
Square Miles6.893.96
Population Density3,789.202,710.80
Population Male48.04%48.84%
Population Female51.96%51.16%
Target Population by Age Group
Age 18-243.68%3.52%
Age 25-345.22%4.50%
Age 35-4413.80%13.91%
Age 45-5418.09%18.22%
Target Population by Income
Income $50,000 to $74,99911.16%6.00%
Income $75,000 to $99,99910.91%4.41%
Income $100,000 to $124,9999.07%6.40%
Income $125,000 to $149,9999.95%8.02%
Income $150,000 to $199,99912.20%11.11%
Income $200,000 and Over32.48%54.99%

Customer Segmentation

The Company will primarily target the following three customer segments:

  • Subprime and deep subprime customers: Subprime customers, or customers that have a VantageScore between 501 and 600, are expected to account for 21.7% of industry revenue. In contrast, deep subprime customers possess a score of less than 500 and are expected to account for 3.4% of revenue. [Company name]’s inventory will include a variety of financing options to meet the needs of this demographic.
  • Prime and near prime customers: Prime and near prime customers are expected to represent 41.4% and 21.9% of industry revenue, respectively. Prime credit ratings correspond to a VantageScore between 661 and 780, while near prime customers’ credit ratings correspond to a VantageScore between 601 and 660. Customers with intermediate credit scores may choose to purchase vehicles at a used car dealer to protect their credit scores for more important purchases.
  • Super prime customers: Super prime customers have credit scores of 781 or higher. With such a high credit rating, these customers qualify for the best interest rates. Super prime customers may choose to purchase vehicles from a used car dealer, whether financed or cash, to protect their favorable credit.

  • V.Competitive Analysis

    You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

    Direct & Indirect Competitors

    The following dealerships are located within a 20 mile radius of [Company Name], thus providing either direct or indirect competition for customers:

    Premiere Auto

    Incorporated in 1997, Premiere Auto is a privately held preowned dealership. Premiere Auto has consistently been ranked in the Top 20 independent preowned dealerships in the United States and has sold over 50,000 vehicles since it opened. Premiere Auto sources most of its vehicles from private individuals. Most of these vehicles have Carfax available, and come with a 2 year/100,000-mile warranty. Premiere Auto operates a service and parts center and offers financing. Premiere Auto currently has 152 vehicles available on its website; priced from $4,999 to $58,999.

    We expect that Premiere Auto will continue to thrive. But since is located in the next city, we expect more and more customers will frequent [Company Name] based on proximity and competitive prices we offer.

    Randy’s Auto Sales

    Established in 1993, Randy’s Auto Sales, Inc is a privately held preowned dealership. Randy’s Auto Sales has a wide range of vehicle makes and models and offers financing. The dealership offers a range of Warranty coverages provided by GWC Warranty and operates two lots. Randy’s Auto Sales has 71 vehicles available on the two lots; priced from $3,995 to $15,995.

    [Company Name] has several advantages over Randy’s Auto Sales, in that offers a larger inventory, and has more financing options.

    Boardwalk Auto Sales

    Established in 2010, Boardwalk Auto Sales, Inc. is a privately held single location used car dealership. Boardwalk Auto Sales primarily offers In-House Lease Financing on its used vehicles. Boardwalk Auto Sales includes a warranty on every vehicle offered and can arrange traditional financing. Further, the dealership does not preform Credit Check and can offer flexible terms and payment options. Boardwalk Auto Sales operates an Inspection Station & full service facility able to handle anything from routine tire swaps, brake work & oil changes to engine swaps and transmission repairs. Boardwalk Auto Sales has 56 vehicles for sale online; priced from $8,990 to $12,990.

    Boardwalk Auto Sales offers some financing options which are unique to the area, and thus we expect it will continue to draw a large clientele. However, because many of its services are geared to subprime clientele, we expect to draw prime buyers who seek better financing terms.

    Competitive Advantage

    [Company Name] enjoys several advantages over its competitors. These advantages include:

    • Location: [Company Name]’s location is near the center of town, giving us access to commuters going to and leaving the train station, local office workers, and passersby shopping in the city.
    • Strong inventory: The inventory offered by [Company Name] is large, and [Company Name] offers these vehicles at affordable prices.
    • Management: Our management team has years of business and marketing experience that allows us to market to and serve customers in a much more sophisticated manner than our competitors.
    • Relationships: Having lived in the community for 25 years, [Founder’s Name] knows all of the local leaders, newspapers and other influencers. As such, it will be relatively easy for [Company Name] to build brand awareness and an initial customer base.


    VI.Marketing Plan

    You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

    [Company name] seeks to position itself as a respectable competitor in the used car industry. Customers can expect to receive personal attention and choose from a variety of used cars offered at reasonable prices.

    The [Company Name] Brand

    The [Company Name] brand will focus on the Company’s unique value proposition:

    • Convenient location
    • Highly trained specialists
    • Significant personal attention
    • Moderate price point
    • Comfortable, customer-focused environment

    Promotions Strategy

    [Company Name] expects its target market to be individuals working and/or living within a 10-mile radius of its location. [The Company’s] marketing strategy to reach these individuals includes:

    Local Publications

    [Company name] will announce its opening several weeks in advance through publicity pieces in multiple local newspapers and publications. Regular advertisements will run to maintain exposure to relevant markets. Community newspapers, school publications, youth sports programs, and similar channels will be a major promotion effort.

    Major Publications

    We will make careful use of advertising in selected larger publications. [Publication or newspaper name] has a circulation of xyz and we can expect to reach a wider geographic region of customers on a limited basis. Advertisements with major publications will be used selectively, based on cost effectiveness. These ads will include discount coupons so that response to the ads can be tracked.

    Community Events/Organizations

    [Company name] will promote itself by distributing marketing materials and participating in local community events, such as school fairs, local festivals, or homeowner associations.

    Commute Advertising

    We will drive attention toward [Company name] by leasing a billboard alongside [route or highway]. Advertising on heavily traveled commute routes is an opportunity to alert large numbers of working individuals with disposable income of our opening.

    Customer Loyalty Programs

    [Company name] will create a winning customer loyalty program to keep its best clients coming back again and again. In addition, we will send periodic, regular emails and text messages to customers. These communications will (a) ensure that customers are satisfied with their purchases, and (b) remind customers after a certain period of time has passed that they might want to shop for another car. Long-term customers will have the opportunity to participate in the loyalty program, and referrals will be rewarded as well.

    Direct Mail

    [Company Name] will blanket neighborhoods surrounding its locations with direct mail pieces. These pieces will provide general information on [Company Name], offer discounts and/or provide other inducements for people to visit the center.

    Ongoing Customer Communications

    [Company Name] will maintain a website and publish a monthly email newsletter to tell customers about new events, inventories and more.

    Pre-Opening Events

    Before opening the dealership, [Company Name] will organize pre-opening events designed for prospective customers, local merchants and press contacts. These events will create buzz and awareness for [Company Name] in the area.

    Pricing Strategy

    [Company Name]’s pricing will be competitive so customers feel they receive great value when shopping for a new car. The customer can expect to receive personalized attention and honest dealing when shopping for a used car.


    VII.Operations Plan

    You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

    Functional Roles

    [Company name] will carry out its day-to-day operations on a walk-in basis.

    In order to execute on [Company Name]’s business model, the Company needs to perform several functions. The majority of employees will have a primary function as auto sales professionals. [Company name] anticipates using the services of X employees, divided into the following roles.

    Service Functions

    • Auto sales
    • Financing and insurance processing
    • Auto maintenance and service
    • Appraisals

    Administrative Functions

    • General & administrative functions including legal, marketing, bookkeeping, etc.
    • Sourcing and storing products and inventory
    • Hiring and training staff
    • Appointment making
    • Customer service/cash register functions

    Miscellaneous

    • Maintenance personnel
    • Porters

    Milestones

    The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:

    DateMilestone
    [Date 1]Finalize lease agreement
    [Date 2]Design and build out [Company Name]
    [Date 3]Hire and train initial staff
    [Date 4]Kickoff of promotional campaign
    [Date 5]Launch [Company Name]
    [Date 6]Reach break-even


    VIII. Management Team

    You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

    Management Team Members

    [Company Name]is led by [Founder’s Name] who has been in auto sales for 20 years.

    While [Founder] has never run a dealership himself, he has worked in the auto industry since age 30. He began his career after he graduated from [University Name] in [19xx].

    [Other person’s name] will serve as the customer service manager. [He/she] has extensive experience in the auto industry.

    [Founder] will serve as the office manager. In order to launch our dealership, we need to hire the following personnel:

    • Sales staff (3 to start)
    • Finance and insurance processors (2 to start)
    • Service personnel (2 to start)
    • Porter (1 to start)
    • Appraiser (1 to start)
    • Assistants (1 to start)
    • Receptionist (1 to start)

    As dictated by demand and operational maturity, [Founder] will consider hiring the following personnel:

    • Sales Manager [Number]
    • Assistant Office Manager


    IX. Financial Plan

    You can download our Used Car Dealership Business Plan Template (including a full, customizable financial model) to your computer here.

    Revenue and Cost Drivers

    [Company Name]’s revenues will come primarily from the sale of used vehicles and secondarily from the sales of parts/accessories and auto services.

    The major cost drivers for the company’s operation will consist of:

    • Inventory and parts
    • Salaries and commissions
    • Lease

    Moreover, ongoing marketing expenditures and cost of goods sold expenses are also notable cost drivers for [Company Name].

    Capital Requirements and Use of Funds

    [Company Name] is seeking $500,000 to launch. Specifically, these funds will be used as follows:

    • Lot design/build: $100,000
    • Inventory: $300,000
    • Working capital: $100,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even

    Key Assumptions & Forecasts

    The following table reflects the key revenue and cost assumptions made in the financial model.

    Number of cars sold per month
    FY 120
    FY 225
    FY 330
    FY 440
    FY 550

    5 Year Annual Income Statement

    Year 1Year 2Year 3Year 4Year 5
    Revenues
    Product/Service A$151,200 $333,396 $367,569 $405,245 $446,783
    Product/Service B$100,800 $222,264 $245,046 $270,163 $297,855
    Total Revenues$252,000 $555,660 $612,615 $675,408 $744,638
    Expenses & Costs
    Cost of goods sold$57,960 $122,245 $122,523 $128,328 $134,035
    Lease$60,000 $61,500 $63,038 $64,613 $66,229
    Marketing$20,000 $25,000 $25,000 $25,000 $25,000
    Salaries$133,890 $204,030 $224,943 $236,190 $248,000
    Other Expenses$3,500 $4,000 $4,500 $5,000 $5,500
    Total Expenses & Costs$271,850 $412,775 $435,504 $454,131 $473,263
    EBITDA($19,850)$142,885 $177,112 $221,277 $271,374
    Depreciation$36,960 $36,960 $36,960 $36,960 $36,960
    EBIT($56,810)$105,925 $140,152 $184,317 $234,414
    Interest$23,621 $20,668 $17,716 $14,763 $11,810
    PRETAX INCOME($80,431)$85,257 $122,436 $169,554 $222,604
    Net Operating Loss($80,431)($80,431)$0$0$0
    Income Tax Expense$0$1,689 $42,853 $59,344 $77,911
    NET INCOME($80,431)$83,568 $79,583 $110,210 $144,693
    Net Profit Margin (%)-15.00%13.00%16.30%19.40%

    5 Year Annual Balance Sheet

    Year 1Year 2Year 3Year 4Year 5
    ASSETS
    Cash$16,710 $90,188 $158,957 $258,570 $392,389
    Accounts receivable$0$0$0$0$0
    Inventory$21,000 $23,153 $25,526 $28,142 $31,027
    Total Current Assets$37,710 $113,340 $184,482 $286,712 $423,416
    Fixed assets$246,450 $246,450 $246,450 $246,450 $246,450
    Depreciation$36,960 $73,920 $110,880 $147,840 $184,800
    Net fixed assets$209,490 $172,530 $135,570 $98,610 $61,650
    TOTAL ASSETS$247,200 $285,870 $320,052 $385,322 $485,066
    LIABILITIES & EQUITY
    Debt$317,971 $272,546 $227,122 $181,698 $136,273
    Accounts payable$9,660 $10,187 $10,210 $10,694 $11,170
    Total Liabilities$327,631 $282,733 $237,332 $192,391 $147,443
    Share Capital$0$0$0$0$0
    Retained earnings($80,431)$3,137 $82,720 $192,930 $337,623
    Total Equity($80,431)$3,137 $82,720 $192,930 $337,623
    TOTAL LIABILITIES & EQUITY$247,200 $285,870 $320,052 $385,322 $485,066

    5 Year Annual Cash Flow Statement

    Year 1Year 2Year 3Year 4Year 5
    CASH FLOW FROM OPERATIONS
    Net Income (Loss)($80,431)$83,568 $79,583 $110,210 $144,693
    Change in working capital($11,340)($1,625)($2,350)($2,133)($2,409)
    Depreciation$36,960 $36,960 $36,960 $36,960 $36,960
    Net Cash Flow from Operations($54,811)$118,902 $114,193 $145,037 $179,244
    CASH FLOW FROM INVESTMENTS
    Investment($246,450)$0$0$0$0
    Net Cash Flow from Investments($246,450)$0$0$0$0
    CASH FLOW FROM FINANCING
    Cash from equity$0$0$0$0$0
    Cash from debt$317,971 ($45,424)($45,424)($45,424)($45,424)
    Net Cash Flow from Financing$317,971 ($45,424)($45,424)($45,424)($45,424)
    SUMMARY
    Net Cash Flow$16,710 $73,478 $68,769 $99,613 $133,819
    Cash at Beginning of Period$0$16,710 $90,188 $158,957 $258,570
    Cash at End of Period$16,710 $90,188 $158,957 $258,570 $392,389