Used Car Business Plan: What IS It About?

Business plans are made to serve a business’s roadmap in attaining its goals and objectives. It lays out the groundwork on the steps to be taken to address the financial, operational, marketing, and sales goals. And it’s all about revenue goals as well. Oftentimes, business plans are created as a report presented to invite more potential investors to join in, or as a report presentation for financial lending institutions to secure either capital startup funds or additional operating capital. Businesses need to prove that they’re a venture that is feasible for stakeholders to invest in. To do that, they need to present plans that are, at the very least, based on the SMART goal concept, which is plans that are Specific, Measurable, Achievable, Relevant, and Time-bound. The same goes for a used car business plan. A used car business plan provides detailed information on the condition of your used car business, how it stands and fares in the current market condition, what are its growth opportunities and challenges in terms of sales and marketing, and what are its plans to grow in terms of its business infrastructure as a car dealership and terms of its sales revenue.

Types of Car Dealerships

A car dealership is all about buying and selling cars. There are several different types of car dealerships. Car dealership contract businesses are decided and created by business owners, who want to join in on the car trade industry, depending on the current market need and by the business owner’s preference. Car dealerships are one of the most profitable business ventures there is, as long as you have the right knowledge about vehicles and business operations. Since the late 1800s, the car dealership business has grown into different types and forms. So long as there is a new type of vehicle, brand, model, and make, put out into the market, expect that this type of industry will never run out of momentum. And as long as people have second-hand vehicles they’re willing to sell or trade, then the car dealership remains one of the top lucrative businesses or investments to get into.

New Car Dealership: Having a shiny, brand new automobile is always something to look forward to. With that scent of new seat leather, color still polished and shiny, tires new with no sign of wear and tear yet, engines purring like a kitten, every turn of the wheel, and buttons sensitive at your touch, hey, who wouldn’t want to have a car like that, right? That is what a new car dealership business wants you to experience if you buy a brand new car from them. New car dealership businesses are either directly owned by the car manufacturer itself, a franchised store, or a business that goes in partnership with car manufacturers, serving as their distributor partners. One of the best things about buying a new car is that simply because it has no history of use yet! It has no sign, obviously, of wear and tear, and you get to enjoy its brand new features and functions solely! You have the first touch, mark, or print on it. A full warranty is also another best thing about owning a new car. It is usually the kind of warranty that runs for several years and covers most of the major expenses such as maintenance, repair, et cetera. And with a new car, you get full complete control over its personalization or customization. Not bad at all for those who wanted to purchase new cars.Used Car Dealership: This article mainly focuses on used car dealerships. Used car dealerships are in the business of buying and selling second-hand or pre-owned vehicles. They either purchase cars from owners who trade in their old vehicles, through auctions, or from individuals who simply just walk in their shops wanting to sell their old cars. Depreciation is one of the reasons why people want to sell their cars. Cars, in hindsight, are considered liabilities so long as car manufacturers keep on producing new car make and model consistently on a yearly, or even sometimes monthly, basis. Unless, of course, if the vehicle is the luxury, collector’s item type that undergoes careful maintenance over the years to preserve its original function and features. As new cars come out in the market, old cars lose their original price value. Plus, with the usual maintenance and repair on a vehicle’s wear and tear, the car owner would probably pay more than what he originally paid for when they first purchased the car. That’s where a used car dealership comes to the rescue and solves the problem for you on how you’re going to dispose of your old car. They buy your old car depending on its current market value and conditions, they refurbish, repair, improve or upgrade the features of the old car, and sell it on the market based on its market value plus all the expenses they have done to make the car resemble as if it’s still brand new.Online Car Dealerships: With the online digital world of doing business taking the market economy by storm, it goes to show that nothing is impossible as long as you have an internet connection and an internet-compatible device to work and do business on. People love the convenience online shopping brings, and that is what online car dealership businesses hope to express as well. Online car dealerships make car purchasing (or shopping), selling, and trading very convenient for car owners and would-be car owners. For one thing, you have a wide selection of cars to choose from in just several clicks of your mouse or scroll from your mobile phone screen, all done in just one single device! You don’t need to go to an actual store to purchase a car. There are lots of online car businesses that even have virtual tours on their website so that potential customers can have a 3D experience of what the car looks like. Cars sold online also have better prices or deals! Pure online car dealerships don’t have a physical store since they sell directly from the manufacturer. Think of it as a dropshipping kind of a business. And when you don’t have an actual physical store, you get to save on overhead and operating costs, and expenses. Hence, you have the flexibility of selling the cars at a price that you want to (but still at a reasonable price, though). Another advantage of having an online car dealership is that you don’t need to have an actual salesman to do all the sales talk for you. You can sit back and relax, and just let the online marketing platforms and tools do your sales talk and marketing for you!BHPH Car Dealership: Known as the Buy Here, Pay Here car dealership, this type of dealership focuses more on the financing aspects of a car purchaser. This type of car dealership (whether new or used) provides in-house financing for those who cannot afford to buy cars in cash due to bad credit history or that they’re unable to meet certain credit requirements. BHPH car dealers offer the financing themselves so that their customers do not have to worry about going through the hassle of going through the application process of a third-party lender or financial lending institution.

Making a Used Car Business Plan

Business plans are created to establish and sustain a business’s future in the market. It is meant to address concerns involving the operation side, the financial side, the marketing, and the sales side of the business. As we’ve mentioned, business plans are also often created to secure investments or capital budget if it’s still a startup business. Hence, when creating a business plan, the strategies laid out should show that the business is capable of handling all the challenges the market brings, as well as leverage on whatever growth opportunities come their way. A used car business plan should present all of those aspects as well. There are no strict formats required when making a used car business plan. To make the business plan effective, however, it should contain at least the following essential elements to it.

  • 1. Executive Summary

    An executive summary provides a brief overview of what the used car business looks like. It includes a brief description of how long it has been established or the purpose it has been established, the kind of vehicles it services, how it operates, where it gets its used vehicles from, as well as the goals and objectives of the company. It also gives a quick look into the current market condition of used car businesses, the targeted market, and the competitors. Aside from that, it also lists the core members that make up the business. Often, executive summaries contain a mission and a vision statement. The mission statement describes the reason or the purpose for the business plan, while the vision statement explains what the business hopes to achieve within a given timeframe.

  • 2. Products and Services

    The next section of your business plan should contain the type of vehicles you are servicing, as well as whatever services or added-value services you offer for your customers. It could be that you are in the business of buying a particular type of vehicle, such as luxury or sports type, or just about anything random. Services, or added-value services, are what you offer to your customers who chose to buy vehicles from your shop, trade, or sell their second-hand cars to. This is also the part where you make a quick rundown of how much your vehicles are priced at, including what are the warranties or services attached to them. You could also indicate if your shop is purely selling used cars or if it’s accepting trade-ins. Services could include free drop-off or pick-up from customers’ residences, or free maintenance for a given period.

  • 3. Market Analysis

    A market analysis takes a look at the current market conditions that the used car business is involved in. It looks at the market trend, growth opportunities, and challenges in the market. The result of the market analysis section will be the basis of creating later on the marketing and sales strategy of the business. Doing a SWOT analysis is one way of studying the market situation. SWOT means Strengths, Weaknesses, Opportunities, and Threats aspects that could affect the used car business. Strengths are those features of the business that makes it stand out from the rest. It could be that the business has a great after-sales customer service experience, or it could also be that they sell the most trusted quality second-hand cars in this side of the region. Weaknesses are those factors that limit the success of the business. It could come in the form of lack of manpower such as sales personnel, lack of equipment and tools to service the cars, or it could even be lack of budget to upgrade the shop’s facilities. Opportunities are those aspects that the business could use to boost their business’s success, such as using social media to promote their shop. Threats are those factors that could potentially harm or put the business at risk such as an oversaturated used car business market or an increase in taxes.

  • 4. Marketing and Sales Strategies

    Both the marketing and the sales strategies are created based upon the goals and objectives of the business. A marketing strategy is about targeting potential customers and making them into actual purchasing customers. While a sales strategy is about positioning and selling the products and services to the target market. A marketing strategy would be utilizing online digital marketing platforms, such as social media, social networking, websites, SEO marketing, and even email marketing to promote the used car business. A sales strategy could include cold calling, partnering up with other brands or businesses, tailoring or customizing a used car according to the customer’s needs, offering added-value services, and so on.

  • 5. Financial Statement

    The financial statement section is where the financial condition of the used car business is laid out. This section is usually the deciding factor for potential investors. If the investors see fit the financial statements as well as the strategies presented are feasible, then it’s a go for the funding! A financial statement typically includes a cash flow statement and a balance sheet statement.


What are the 4 Ps of marketing?

Often called the marketing mix, the 4 Ps of marketing are the product, price, promotion, and place. The marketing mix is the element upon which the basis for creating marketing strategies is founded.

What is a franchise car dealership?

A franchise car dealership is owned by an independent seller that goes into a contract or a partnership with auto manufacturers to sell their vehicles. The franchise business typically only sells cars coming from that partnered auto manufacturer.

Where do used car businesses get their cars to sell?

Used car businesses usually get their vehicles from people walking into their shop to sell their second-hand cars, or it could also be from people wanting to trade their cars with another car. Another way for used car businesses to stock on their car inventory is by going and participating in car auctions.

A used car business can be a profitable business to get into as long as you’re fully equipped and ready to deal with the challenges that owning a used car business brings. After all, the car dealership market is very diverse, aggressive, and challenging. But once you have the right tool to penetrate and establish your business in the market, then those challenges would almost seem like growth opportunities instead. The tool that you would be needing to conquer the automobile market is a Used Car Business Plan. 

Planning to create one? No worries, because we have made life simple for you! Download one of our used car business plan templates now, and start building a successful career in the automotive industry!