Any Independent Car Dealers Here?

I am about 17 months away from retirement and have been thinking about getting an independent car dealers license.

It seems fairly straightforward here in North Carolina. Where I live, the zoning would allow me so sell cars at my residence, so the biggest expense of leasing or buying a retail location would not be a necessity, at least at the beginning.

Take the class, buy the surety bond, and get to work. Initially, I wouldn't want more than half a dozen cars in inventory at one time. I envision selling cars via Craigslist/Autotrader/eBay vs. having a high-visibility location.

Of course, I would like to specialize in interesting and/or performance cars.

If you have done this, or are doing this, what do you see as the biggest pitfalls?

I don't have to make a living doing this. My retirement is well funded and I see this as an opportunity to make some travel and project car money.

Thanks in advance.

First, make sure your local zoning laws are not the only regs you have to meet concerning your business location by reviewing the state licensing requirements carefully. In FL at least, the biggest challenge is that you must have a location approved by the state that meets dealer licensing requirements. This may not be the case in NC, but I'd be surprised if it isn't.

The Auto Dealer Associations (franchised and independent) have successfully raised barriers to entry that typically include having a car lot that isn't located within any other business, has dedicated parking/display spaces, and is not adjacent to another dealer.

Next: decide whether you will offer financing (there are different licensing and bond requirements based on this) and have a darn good bead on a market segment if you will be cash-only. The real money in used cars is financing - you secure financing, sell the note, take a commission on placing the loan and if you can, take a 1/2 or a point on the interest so the loan provides income to you over its term. I preferred to be in the busines of selling cars, not lending money at interest, and had to settle for some pretty thin margins on sales.

In my case, my mistake was trying to sell cars in the $5-20k segment, typically 5-10 years old with lots of life left in them. The problem was traditional bank and credit union lending was not available and I didn't offer paper (notes). Most people who could pay cash didn't want an older car, and most people who could only afford an older car couldn't pay cash.

If it was an easy business, more people would do it, but if you plan appropriately you can make some money.

My uncle has done this in his retirement in South Carolina. You really have to do the "buy here pay here" thing to make money, though. He's probably going to make a ton when he sells his receivables.