Used Car Business Model

upscale used car image

Let me share the best used car business model I have ever seen with you. I was fortunate to be the service director and lead technician for one of the most clever used-car sales businesses in the NY Metro area. In fact I have never come across one quite like it to this day

I will disclose why it succeeded and why it failed. Keep in mind I've seen really good ideas like "Her First Car Lot" selling cars that appealed to young female drivers. The dealership discussed here specialized in and only sold used upscale vehicles. The stock was mostly purchased at car auctions.

The Owner would also acquire a few units from desperate people in over their heads that advertised the cars for sale in local newspapers. The lot also had one of those obligatory "we buy car" signs good for snaring an unsuspecting fly once in a while.

He was known for offering a low ball cash now bailout offer that made people cry. Armed with an ample amount of working capital he controlled the situation and was always willing to walk away from a deal. Any purchased automobiles where obtained far below wholesale prices.

These units where then reconditioned both internally and externally to be resold well above retail value. I helped inspect and evaluate the cars before purchase giving the owner an idea of how high he could go and still make a profit. This is not what made the used car business unique. The basis for making a profit in the car sale business hasn't changed in the last hundred years. You buy low and sell high. Although he did bring this skill to a new level it wasn't what made him successful.

Best Used Car Dealership

used 5-Series BMW

It was his unique ability to make everyone involved with his dealership extremely happy that brought huge success. A big part of his success was stocking vehicles that sold with no effort. A car you would take a picture of and put on the desk at work next to the wife and kids!

Everybody wants to drive an upscale car like a Benz or BMW 5 Series. Even though these vehicles would usually have very high miles the reconditioning efforts put into the cars made them reliable and look fantastic. This coupled with a built in 90 day warranty made happy buyers.  Another interesting part of the business model, was the owner had an in-house financing plan that included an aftermarket warranty for 18 months.

luxury used cars

This allowed my department to service the vehicle keeping it on the road despite the high mileage. After somebody started driving around in these classy cars they were approached by people green with envy. These potential clients would ask, how can you afford to drive this high-line luxury car?

Of course the answer was extended financing and high mileage, but the happy customers would tell friends and family about the fantastic experience with the dealership and exactly how to find the best used car business in town. Word of mouth is great advertising.

All of the above is still not what made this business so successful. As with anything sometimes location is the most important component of a successful facility. The business happened (not by accident) to be located directly across the street from a very high end gentleman's club.

The owner adjusted his hours of operation to coincide with the coming and going of the clientele from those businesses across street. His car lot used lighting effects that could be seen from space (Exaggeration).

luxury car up on spinner display

Also the placement of the vehicles in relationship to the lights made them gleam like shooting stars. The cream of the crop of his used car stock was placed up on top of what they call vehicle spinners.

This was basically a rotating carousel to highlight the beauty of the luxury automobile from all sides. Speaking of beauty a large number of the sales force were ex-employees from the gentleman club across the street. This made the clientele very happy.

I'm not coming right out and "saying it" but you can see how the pieces all fit together. Customers would come in several times a month to see the new inventory and chat with their favorite sales girl. This made them feel at home and more open minded to buy a car even if they didn't need one.

Dealership Makes Everybody Happy

From my point of view, my department which was responsible for keeping these high mileage cars running and the customers satisfied with their buying decision was critical in the overall success.

Again the owner of this dealership surprised me by not only realizing this but supporting our department in unique ways. All of the mechanics that worked under me including myself were supplied with demonstration vehicles from the used car lot inventory.

In fact we were allowed to pick any car from the entire stock. These units came with dealer license plates and were covered by the businesses auto insurance policy. The demo's were washed or detailed once a week to keep them looking good. As you can imagine the other mechanics and I working in this department were overjoyed we would receive a car to operate at no charge.

Not just any vehicle, this would be a Lexus, BMW, Cadillac, well you get the idea top-notch rides. Not only was it easy to hire and retain mechanics, but my department had the best in town because of these perks. The most ingenious part of giving everybody a demo was the demonstration units would sell like hotcakes.



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used sports cars

The mechanics would drive them home and around town during off hours. Their friends and neighbors would say "Oh my God" I got have that car. It just so happened it was for sale and in good condition. The employee was motivated to become a part of the sales process as he would split the commission with the house 50/50 on his Demo unit.

You can see how everything the owner did was in the best interest of business growth. Everybody who worked for or was a customer of the dealership had the best possible experience led to even more growth and prosperity. Unfortunately the owner who I have the utmost respect for had some personal problems that wound up crushing the dealership.

You may be familiar with this scenario as it applies to some Hollywood stars that experience the ultimate in success and can't deal with it.

So the story does have a sad ending, but it was still the most excellent used car business model I have ever seen. It was unfortunate the owner wasn't able to deal with the success he created. It was the best job I ever had and all of employee's felt the same way. I shared this story with you, now it's you're turn to share it with others.

I think that the automobile and all things associated with it can be financially rewarding. See more about the techniques I learned from my ex boss about making money with cars.

Discover what's covered on this car questions site on the homepage. This next link takes you more information about the used car business.

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