Used car Business

[jet_freestyle]

Hi All

first time posting so be forgive me if i dont know the norms of the forum....
Anyhow i live on a golf course which my family owns and operates. I am looking to mkae use of the facility and start a used car business looking to supplement my income more than anything with just a couple of car sales a month. I would like to make about 1k a car so i suppose i should be looking at the higher end of the used car market?

anyhow i have a couple of questions that need addressing:

1. What is my tax position as a part time used car dealer? do i have to reg for vat? do i have to set up a ltd company? whats most cost effective way of structuring business? stay self employed and declare and profits on my self asessment?

2. best place to source vehicles, i live in the midlands

3. What kind of warranty do i need to issue to customers?

Any advice appreciated

 

[Chrisbridgett]

1. What is my tax position as a part time used car dealer? do i have to reg for vat? do i have to set up a ltd company? whats most cost effective way of structuring business? stay self employed and declare and profits on my self asessment?

You only need to register for VAT after reaching and exceeding the VAT threshold. I'd recommend seeing an accountant re deciding on a company structure.

2. best place to source vehicles, i live in the midlands

A lot of used car dealers buy at auction (not usually ebay). Many mainstream dealerships auction off ex-lease vehicles to shift stock.

3. What kind of warranty do i need to issue to customers?

Not 100% sure here, but look into the sale of goods act 1979 then Google for any similar laws relating to motor vehicles.

Good luck!

 

[williamluke]

I agree with "Chrisbridgett" you should discuss with any govt tax office for this business.I know about bikes dealing not clearly about cars...

 

[James Greg]

I agree with Chrisbridgett and his provided information is correct according to the question. I want to add one thing more that it is true that mostly people buy car through auction or showroom, but it is also true that many people are moving to online purchasing.

You only need to register for VAT after reaching and exceeding the VAT threshold. I'd recommend seeing an accountant re deciding on a company structure.

A lot of used car dealers buy at auction (not usually ebay). Many mainstream dealerships auction off ex-lease vehicles to shift stock.

Not 100% sure here, but look into the sale of goods act 1979 then Google for any similar laws relating to motor vehicles.

Good luck!

 

[Wasworkinallweek]

do you know anything about cars ???
do you have a good tame mechanic ??
high end meaning modern ,or prestige
while it was easy to make a grand on cars in the 3000 bracket some years ago (10). We had knowledge and full workshop facilities on our side .

but we dont do it now ...

 

[Paul Norman]

I am going to echo the post above. How well do you know cars? How familiar are you with the used car market?

If the answer is 'not very', then you are about to lose a fortune. Succeeding at used cars requires a sharp knowledge of the values of cars, to purchase at the correct prices. Armed thus, £1k a unit is very achievable, but so is a loss of a similar amount if you get it wrong.

To be specific, at 2 cars a month you will definitely need to be VAT registered, as you will be over the threshold, unless the cars are a total abomination! You will need to make arrangements to have the cars checked and prepared for sale. And you should have the ability to give, or sell, warranties on the cars - there are a variety of warranty companies out there with policies to sell. Use a reputable one.

You will need insurance, so that people can test drive the cars, and to cover the cars whilst in stock, too.

 

[jet_freestyle]

Paul

I have a decent amount of knowledge on car values for land Rovers, Mercs and BMWs as these are the cars i have personally bought and sold for the past 10 years and keep an eye on all the time. Which is what i meant when i said high end cars.
I have at my disposal a workshop with most tools i would need for any repair work that we use for the grounds machines and also a full time mechanic on site.
I am aware of all the insurance i need to have in place and are in the process of getting some quotes at the moment.
What are the names of some of the reputable companies that offer the warranties? is it normal practice to include the price of this in the vehicle and give it as standard? or give the customer the option to purchase it in addition?

 

[Experiencedays]

Paul

I have a decent amount of knowledge on car values for land Rovers, Mercs and BMWs as these are the cars i have personally bought and sold for the past 10 years and keep an eye on all the time. Which is what i meant when i said high end cars.
I have at my disposal a workshop with most tools i would need for any repair work that we use for the grounds machines and also a full time mechanic on site.
I am aware of all the insurance i need to have in place and are in the process of getting some quotes at the moment.
What are the names of some of the reputable companies that offer the warranties? is it normal practice to include the price of this in the vehicle and give it as standard? or give the customer the option to purchase it in addition?

Why don't you call round a few used car dealers in your area and see what sort of warranty they offer and the costs involved, that way you can also look into how you can beat their warranty and give more to your customers.

 

[permandtemp]

Dealerships do offer warranties on used cars minimum of a month so that you have confidence buying the vehicle.

You can get an insurance company to back you. Also I believe the RAC do a scheme for dealers for warranties.

 

[Wasworkinallweek]

Paul

I have a decent amount of knowledge on car values for land Rovers, Mercs and BMWs as these are the cars i have personally bought and sold for the past 10 years and keep an eye on all the time. Which is what i meant when i said high end cars.
I have at my disposal a workshop with most tools i would need for any repair work that we use for the grounds machines and also a full time mechanic on site.
I am aware of all the insurance i need to have in place and are in the process of getting some quotes at the moment.
What are the names of some of the reputable companies that offer the warranties? is it normal practice to include the price of this in the vehicle and give it as standard? or give the customer the option to purchase it in addition?

Right the killer for all these top end cars is there electronics and engine managment systems .
Can you diagnose these faults and have you got the equipment or a friendly local man who has as main dealers will charge 80 to 120 pounds a go .
You could do really well ,we had a spate of doubling our money on these types of cars but and its a big but think long and hard about the possible negatives

for instance we regularly fit injectors and pumps to diesel mondeos (around £1200 plus vat)
fuel injector changes and resets are regular items
recently £300 loom for a galaxy which had one window not working .
reset the can bus system on a s max to get the towbar to work properly
late 6 series door mirror replaced but you had to tell the body control module it had a new one fitted or it wouldnt work .
Peugot coupe with no key £1200 for a lock set and ecu oh plus programing the alarm etc .
You may do really really well but a mechanic who services lawnmowers and tractors will not be up to the problems you may well face and you will spend £10000 on diagnostic gear easilly (and still get stuck )

why do people change their cars either there rich enough or the old one has a problem .........


sorry to sound negative but i have seen it before and as i said we bought and sold a few years back and made a killing but we dont do it now .....

 

[jet_freestyle]

this is exactly what i need to hear, thank you for your input you obviously have a lot of knowledge about the game.
And yea for any kind of electrical work i have a couple of friends who can do it. 1 guy works at Land Rover and has access to the computers, and another friend is a Merc specialist and has been doing mercs for 15 years with the computer systems aswell, its where iv personally been taking our cars for the past 10 years so i know there reliable.
As far as my mechanics, there not just greens machines mechanics there actual full blown car mechanics that do MOTs, services ect and have been in business for 30 years. They just do our greens machines as a bit of a favour more than anything.

I am by no means dead set on focusing on these high end cars but just looking for other dealers opinions. Im thinking i dont want to go right at the bottom of the market as there are 101 guys out there doing that already. But if i just aimed at the 5-8k market. Family cars, diesels? 3 series Bmws, C class mercs, Audi A4. As i have zero overheads id be happy making 10% a car.

One thing then is this warranty thing? iv been told that whatever can i sell i should be confident enough to be able to give a 30 day warranty myself? others have told me to get an external company to do the warranties?
Whats the best way of going about it?

 

[Wasworkinallweek]

no question really external warranty in my mind on that price of car you need a watertight 12 month wattanty included in the sale ,plus the carrot of a free first service maybe ..

if i was going in to this again i would look at a niche market
estate cars small autos 4x4 vans maybe


remember top end stuff depriciates like a stone and they are so cheap to lease now

 

[The Byre]

Some important points for the OP -

1. The law! Any used car purchase by a private individual from a trader is covered by the Consumer Rights Act 2015, which gives them the right to reject the car if it is not as described or is faulty. They are also covered by the Road Traffic Act 1988, which says that it is an offence for a trader to sell an unroadworthy vehicle (unless bought as a non-runner!)

2. Companies such as Warranty Direct can sell policies and they have detailed data on which cars are likely to have faults (You can look up the WD stats on-line at https://www.reliabilityindex.com/ )

3. Mercs, Beemers and LR??? Dear God! The three bands of used cars that are most likely to do a boomerang and fly right back to you! From 1995 to about 2010, all three churned out cars that had a series of really bad faults, such as cheap timing chains mounted at the rear of the engine, defective ABS systems, engine management and transmission systems that crashed and a whole series of stupid basic QC problems. Merc and BMW have since cleaned their acts up somewhat, but any fixes are very expensive!

4. Diagnostics hard- and software does not have to be expensive and you can opt for an on-line subscription from someone like Bosch (though they are a bit pricey). The hard part is understanding and interpreting some of the fault codes!

5. Used car dealers get their cars from new car dealers. They bomb down to the local whatever franchise and pick up the cheaper models that the franchise does not want on the lot. That is usually most stuff that could sell for under about £10,000 and any high-risk cars that they just don't like the look of (e.g. older Rovers, Mercs and BMWs!!!)

6. HOWEVER - times are getting tough and the big national dealership chains such as Arnold Clark are starting to cherry-pick the cheaper cars and sell them separately and away from the franchise lot. Typically, these will be the very cars you want and need to make a profit. They sell for under £4,000 and are mostly the baby hatch-backs that become the second car or junior's first car. https://www.arnoldclark.com/used-cars/search?search_type=Value Range

It is these baby cars that move. Older Merc. LR and Beemers and most other prestige marques - they can and often do become trusted friends that sit on your lot, gently rusting away for a few months!

£10,000 tied up in four small cars that move within ten days for £3,500 each is better than one £10k Range Rover that sits there for a few months and needs extensive work.

 

[MBE2017]

Used to sell the RAC scheme to used car dealers, and as warranties go it is amongst the best.

That said, you need to have good premises and have been in business for a year or two before you would be considered. There are plenty of other warranty companies who would deal with you though.

That said, and this is the hard bit for a dealer, you will only be covered for certain things, your customer will expect to be covered for everything, so you will still be liable for many expensive repairs, whoever you use.

If you sell a car and a week later the clutch goes, you would be asked for photos and proof of the reason for the fault. Sometimes you would be told the fault was present when you sold the car, so no pay out. Sometimes it might appear your customer has been practicing donuts in a local car park, no payout etc.

The best long term dealers tend to self warrant, and set aside £2-300 per car for work, but every now and then you might have real cash flow problems, so you need good money behind you.

As for the mark up, you are deluded to think £1k per car is achievable on a regular basis, £3-500 is the norm, and high end cars tend not to move very fast of a lot.

I have dealt with all kinds of dealer, from £2k to £250k and more per vehicle. As for sourcing, main dealers, auctions but more and more from end customers trade ins. The trouble with trade ins tends to be want to change when the car begins to develop faults.

 

[MikeJ]

This thread is 6 years old.

 

[The Byre]

Ooops!

 

[MBE2017]

Ooops x 2