One of the foremost rents regarding a used car dealership is that these businesses are almost always able to remain profitable and cash flow positive at all times. Even during economic recessions, the demand for used vehicles remain strong as many people opt to purchase a preowned vehicle rather than acquiring a new one. These businesses are able to generate a substantial number of revenue streams not only from the sale of the vehicle, but also from financing and repair services as well. In fact, one of the primary profit centers for most used car dealers is their financing arm. The interest rates that are associated with these types, and many financial institutions are willing to partner with vehicle dealerships in order to provide financing to the end-user. One of the other good things about a used car dealership is that they have readily available access the capital given the very large inventory and tangible asset base of the business.
As relates to weaknesses, used car dealers are subject to a number of laws and regulations regarding the sales of vehicles. Additionally, the operating expenses associated with a used car dealership are relatively high given that a large-scale lot must be maintained as well as a staff of mechanics and salespeople. These businesses often also have extremely high marketing expenditures although the use of the Internet can substantially reduce these costs on an ongoing basis.
As it relates to opportunities, used car dealers can expand by simply increasing their inventory of cars that they hold on their lot. Additionally, many vehicle dealers will frequently use online sales platforms in order to ensure that inventory turnover is kept very high. Many used car dealers will also develop internal financing programs that will allow for a boosted profit margin on each car sold as many people that purchased used vehicles often obtain credit facilities to do so. The used car dealer can also expand by simply establishing additional locations from which they can sell cars to the general public. Most financial institutions are willing to provide the necessary capital to a profitable use car dealership in order to launch operations.
For threats, one of the ongoing issues is the complicated regulatory environment regarding the sales of used vehicles as well as providing financing for them a qualified attorney should be hired in order to remedy any of these issues and ensure that the used car dealers operating within the letter of the lot all times. One of the other major threats faced by these businesses – is that there are usually a number of used car dealership as such, these businesses must find ways to effectively market from other competitors and in the market. This is commonly done by providing low-cost repairs on site.
Overall, the outlook for the used vehicle industry will remain strong given the need this type of motor transportation.