New Part Time Car Trader

[MrJimbo]

Hi Everyone,

Firstly I must say what a great forum, I have found it very helpful being a complete novice!

Just abit of back ground on me, cars have always been a passion of mine. I am a fully qualified technician and I have worked in different garages in different roles for roughly 15 years so I have made many friends and contacts.

With covid happening it really got me thinking, life is too short and I should really do something that makes me happy. I currently have a full time job and I would like to trade cars part time to see how well it goes.

My plan would be to source stock to begin with from private sales and also local garages where customers have part exchanged there current vehicle.

I would carry out all repairs at home myself then get the cars mot'ed at my local garage.

I have got quotes for trade insurance and trade plates which I have money for. I also plan to rent a cheap office with parking so potential customers would not come to my house but view the car there. I have had quotes from different warranty companies as I would like to supply a 6 month warranty.

I do feel completely out my depth with this so I would like to get your thoughts as I dont know anything about business. I just think if I don't try this now then I will always think what if.

I think I would need liability insurance is there any recommendations, and also where can I get help on writing terms and conditions.

Any help and advice would be much appreciated - apologies for such a long thread, please be gentle!!

 

[Mark T Jones]

Something like this will probably a good start point

https://www.britcar.org/ (There are other associations)

I'm sure you are aware that buying quality stock is challenging with the plethora of webuyanycar clones- and most franchised dealers are owned by bug corps and have their hands tied

That said, a bit of networking and digging around might reveal some useful sources

I believe you will heed FCA authorisation to offer warrantiez

 

[fisicx]

Part exchange cars go straight to auction. So you might struggle to get those.

Private sales might be ok but you will spend hours and hours finding suitable cars nearby.

And then we come to marketing. This could easily wipe out your profits. People looking for a car have a huge range of online sources to choose from. Can you afford to pay for the listings on these sites?

 

[WaveJumper]

As above you will find cars especially from the larger dealer just go straight to auction, they don’t like them hanging around on the forecourt, unless you have some very good contacts with local dealers. Several people I know who deal specialise in one particular model so worth thinking about creating a little niche for yourself.

One word of warning when going to actions it’s so easy to get carried away and pay to much. Best of luck though as the second hand car market is quite hot at the moment.

 

[MBE2017]

I flip a few motors, used cars are getting top prices atm, partly due to factory shortages on new models. I tend to deal in the £1/3k retail level, and like yourself issue warranty etc.

Best of luck in your new venture, bear in mind a warranty is better than nothing, but doesn’t cover you for all repairs under your potential obligations, the clients can also change their mind and return the vehicles within 30 days under certain circumstances.

I’ve yet to have an awkward client, or discount on the sale price. The most important thing if I can give you any advice, is make sure you sell to the correct people. I have turned away guys who look like future trouble, and so far it has paid dividends.

Would be interesting to know what part of the country you are in.

 

[MrJimbo]

Hi All,

Thanks so much for the link and your replies.

Regarding FCA I thought this was only required to provide finance so thanks for this information.

I do have some good contacts in local dealerships where I have previously worked, so hoping if all things go well we could come to an agreement.

I totally agree with a niche that sounds like the way forward. Also I've not been to an auction yet but I can imagine it's easy to get carried away, I bet people also forget about the additional fees too!

 

[MrJimbo]

I flip a few motors, used cars are getting top prices atm, partly due to factory shortages on new models. I tend to deal in the £1/3k retail level, and like yourself issue warranty etc.

Best of luck in your new venture, bear in mind a warranty is better than nothing, but doesn’t cover you for all repairs under your potential obligations, the clients can also change their mind and return the vehicles within 30 days under certain circumstances.

I’ve yet to have an awkward client, or discount on the sale price. The most important thing if I can give you any advice, is make sure you sell to the correct people. I have turned away guys who look like future trouble, and so far it has paid dividends.

Would be interesting to know what part of the country you are in.

Thanks for the great advice here much appreciated, there are some strange people out there!

I would like to deal around the same level too, if you don't mind me asking, where do you get your warranty from and are you FCA authorised?

As this is part time I would only be doing 1 car every few months and go from there. I just want to be an honest trader that's all.

I'm in the Midlands just outside of Banbury, where are you based?

Thanks

 

[JEREMY HAWKE]

I also have a passion for cars and have run fleets of vehicles all my life
Thats the reason I would never do any trading

 

[Chris Ashdown]

It sounds like a good idea with maybe a little more research, the big car dealers have massive overheads to cover where you can possibly be set up at very low cost, I guess that depends a lot on what price range of cars you intend to sell and why people should buy from you

For safety you will need to be a limited company and no doubt be VAT registered

Low risk but good potential, I say go for it and if nothing else you will learn a lot about running a business

 

[cts1975]

I would think about specialising. Maybe Land Rovers or micro cars like Toyota Aygo's and Citroen C1. I was in the car trade in the 90's and the traders making the most money specialised in a particular type of vehicle. We had a Land Rover guy and I guy who just bought MPV's from us that were not our franchise manufacturer.

 

[Frank the Insurance guy]

I have got quotes for trade insurance and trade plates

I think I would need liability insurance

Check your trade insurance quote as it probably already includes liability cover. If not, you can probably add it on and it would be cheaper than getting liability cover separately.

 

[MrJimbo]

Thank you all for your replies and your advice, you have been really helpful!

 

[Ozzy]

Part exchange cars go straight to auction.

My uncle flips motors as a trader, and gets all his stock from auction. From his experience I would recommend that as your best option for getting stock. It's also where ex-lease cars go too, I was tempted to buy my last lease car back from auction as I thought I could get it cheaper from auction than buying it from Lex....but ended up getting another lease instead.

One word of warning when going to actions it’s so easy to get carried away and pay to much.

^ +1 best advice. Have a price in mind for what you see on the walk around and stick to it, don't be afraid to lose out on a few. You need to cover any patchwork, making good, whatever, and make a profit.

Regarding FCA I thought this was only required to provide finance

I believe that warranty is finance, at least that's my take on it.

I'm in the Midlands just outside of Banbury

Ah not many miles from my neck of the woods. There is, or at least was last time I looked, quite a big regular auction in Milton Keynes.

 

[WaveJumper]

BBC
Second-hand car sales in the UK have more than doubled in the last few months due to coronavirus restrictions easing and a shortage of new models.
https://www.bbc.co.uk/news/business-58150025

 

[MBE2017]

BBC
Second-hand car sales in the UK have more than doubled in the last few months due to coronavirus restrictions easing and a shortage of new models.
https://www.bbc.co.uk/news/business-58150025

It is mad times atm, most cars which should sell for say £2k in good clean condition, can be selling for £2.5-2.8k, leaving just £3-500 to cover for repairs to maximum retail prices. A lot of new guys, and experienced ones are paying way too much for their stock at the moment.

Most auctions are by telecast these days, a few have started re opening but most traders are too busy to take the time to attend unless local. After a year of lockdowns, most now just enter their maximum proxy bid in advance.

 

[Financial-Modeller]

You will not make money competing with the volume / car supermarket guys, so I echo the suggestion to specialise.

Be the 'go-to' guy for XYZ model that you have knowledge of, interest in, and diagnostics/parts etc

A fellow nearby started with BMW Minis and now has c.20 on his forecourt at any time. He has a good reputation locally, so everybody goes there if they want a Mini specifically, or a similar car from someone trustworthy and local.

Also, although it sounds obvious, remember that it takes the same amount of time and effort to buy, prepare and sell a cheap car as an expensive one, so if your time is limited, it may be better to move upmarket a bit and (hopefully) make more money for that time and effort.

 

[Stedurham]

Hi Everyone,

Firstly I must say what a great forum, I have found it very helpful being a complete novice!

Just abit of back ground on me, cars have always been a passion of mine. I am a fully qualified technician and I have worked in different garages in different roles for roughly 15 years so I have made many friends and contacts.

With covid happening it really got me thinking, life is too short and I should really do something that makes me happy. I currently have a full time job and I would like to trade cars part time to see how well it goes.

My plan would be to source stock to begin with from private sales and also local garages where customers have part exchanged there current vehicle.

I would carry out all repairs at home myself then get the cars mot'ed at my local garage.

I have got quotes for trade insurance and trade plates which I have money for. I also plan to rent a cheap office with parking so potential customers would not come to my house but view the car there. I have had quotes from different warranty companies as I would like to supply a 6 month warranty.

I do feel completely out my depth with this so I would like to get your thoughts as I dont know anything about business. I just think if I don't try this now then I will always think what if.

I think I would need liability insurance is there any recommendations, and also where can I get help on writing terms and conditions.

Any help and advice would be much appreciated - apologies for such a long thread, please be gentle!!

Firstly depending on where you live, you will have issues with neighbours theres always someone willing to report you to council. Plus how would you like it if a neighbour was repairing cars all the time its noisy.
Once you get 2/3 it gets messy, so storing 2/3 at yours and one outside office. This is unlikely to make you any money. I used to have 10/15 up for sale and then its a struggle at times, the prices are crazy watched the auction other day and stuff uis selling plus fees for what id say is retail.
Join car dealer forum and search on there hundreds of post and replys about new traders.

Getting stock is and always will be the issue, you might be ok if garage you worked at sell but usually they wont they sent to auction and get top dollar. If they are a small garages they may sell to you good luck. Private sales be careful most are plastic traders getting rid of dodgy stock.

Warrantys some dont cover you in first 30 days and all will treat you customer badly in my expertice, I used to self warrant, put say £100/150 a car in a pot and you are covered and have some spare at end of year fingers crossed.

Find a niche, find what sells, people buying from doorsteppers, even with an office are different to what you will be used to in a dealership. I had a mini that I couldnt give away was in perfect spec and condition, blew £800 on that never bought one again. Someone like above does really well with them, every area is different

 

[Stedurham]

It is mad times atm, most cars which should sell for say £2k in good clean condition, can be selling for £2.5-2.8k, leaving just £3-500 to cover for repairs to maximum retail prices. A lot of new guys, and experienced ones are paying way too much for their stock at the moment.

Most auctions are by telecast these days, a few have started re opening but most traders are too busy to take the time to attend unless local. After a year of lockdowns, most now just enter their maximum proxy bid in advance.

Only plastic traders are buying cars with £300-500 profit, by time pay the vat man, tax, part of your insurance rent of office spare, valet and prep work you are definately losing money

Roughly our cost per sale is £100 for advertising, allocate £40 for a clean and valet, usually £250 for a service and tyres etc Then costs of premises, insurance, liability insurance, trade plates, heating etc vat man wants his 20% ish. Plus warranty if you are going to use them.

Most people try and get finance there's good commissions depending on who you place them with

 

[Mark T Jones]

Most people try and get finance there's good commissions depending on who you place them with

Less good than it used to be now the FCA are paying attention!

 

[Stedurham]

Yeah definately but theres still decent money especially if only making few hundred on a car, we make roughly enough to cover rent and utilities off the commissions, plus if we are organising finance we can control the deal more, which we prefer.
What I would say though is know your customer some we don't want to sell to and wont
Put the wrong customer on finance and you will get issues, headaches for months, the finance companys equally liable.

 

[MBE2017]

Only plastic traders are buying cars with £300-500 profit, by time pay the vat man, tax, part of your insurance rent of office spare, valet and prep work you are definately losing money

Agreed, but there are plenty of them around, as in all trades. Quite what they do when a client hits a problem and expects it to be sorted is beyond myself.

The only way I have got stock recently is buying privately, and thinking outside the box a bit, choosing unusual models compared to normal. It’s possible to survive this way short term, but it’s far from ideal. I look to clear £500/1000 per car, no point buying a lot at auctions atm since there is no way that can be achieved on most stock going through.

 

[Stedurham]

Agreed, but there are plenty of them around, as in all trades. Quite what they do when a client hits a problem and expects it to be sorted is beyond myself.

The only way I have got stock recently is buying privately, and thinking outside the box a bit, choosing unusual models compared to normal. It’s possible to survive this way short term, but it’s far from ideal. I look to clear £500/1000 per car, no point buying a lot at auctions atm since there is no way that can be achieved on most stock going through.

We’ve got one we sell some to he washes them and lists them changed number regularly
There’s a few sell from parking on busy roads
Burner phones a tenner so cheap I guess
Just bought 4 through auction this week but listed about 70/80 that were interested in. Got 3 so far seem good mechanically need a panel painting and service and out door. We work on min £1000 after refurb or we won’t buy. From the 1k profit there’s probs half took by vat and tax and rest pays for staff and towards rent etc don’t net much at all of 1k

 

[Stedurham]

If I was original poster, with his experience I would be buying the ones with lights eml faults etc. They are some of best money ever made however we’ve lost a local mechanic that was amazing and haven’t found one as good or as cheap