Pros and Cons of Opening a Brick-and-Mortar Dealership

Opening any business has its benefits and its drawbacks. However, some businesses have a specific tree of decisions that must be made before you decide to proceed. In these sorts of situations, not only does the industry itself present pros and cons but so do the different ways that you can execute your business. 

For example, the digital space isn’t too crowded when it comes to selling vehicles online. This could make it an opportunity for success if you get in on the ground level. At the same time, though, many people are more comfortable operating a traditional dealership with a brick and mortar property. Here are a few pros and cons to keep in mind when opening a brick and mortar car dealership. 

One thing to recognize about opening a car dealership anywhere is that you will need a place to store your vehicles. When it comes to storing your vehicles, if all of your sales are performed online, all that you need is a lot to keep your merchandise in. However, if you are opening a brick and mortar car dealership, you will also need to pay for the proper permits, licenses, and insurance, since people will be visiting your lot to make a purchase. Beyond this paperwork, you will also need to pay for utilities like heat, water, and electricity, as well as the construction of offices and a showroom. When it comes to financing these build-outs, it can be worth investigating various hard money brokers in Texas, since it’s easier to secure your loan with your property’s value. This can give you access to the funding necessary to finance a dealership that is properly outfitted and able to serve customers.

While operating an online car dealership has much less overhead, you will still need employees regardless of which option you choose. Online employees may be able to be a mixture of independent contractors as well as benefits-eligible employees which can keep your labor costs a bit lower. That being said, with innovative commission models for your sales team, it’s possible to save some money on your workforce in a brick and mortar establishment, too. 

It’s also worth noting that in some cases it’s easier to market a brick and mortar dealership than it is an online outfit. This is because people are creatures of habit, especially when it comes to buying something as expensive as a car. Being able to test drive a vehicle before you purchase it is a major reason that most customers still choose to purchase cars in person. This means that convincing them to do otherwise won’t be a challenge for your marketing and sales teams if you’re a brick and mortar establishment. 

Beyond the general marketing challenges of selling a vehicle online, it’s also far easier to market to a local audience than it is a broad audience. Thus, having a geographic location and community of customers you serve are other benefits of opening a brick and mortar car dealership. Brick and mortar dealerships afford you the ability to appeal to a customer’s peace of mind in person, which is hard to achieve, no matter how extensive your paperwork and mechanics’ reports are for an online car listing. 

As you can see, there are some major differences between running an online car sales website and more traditional brick and mortar dealerships. However, even though most would agree that running a website for auto sales is a cheaper business proposition on its face, there are many advantages to a brick and mortar company that may ultimately make having a physical dealership far more profitable. 

While it’s true that some niches such as buyers interested in repo cars for sale can do well in an automotive auction setting, most buyers are looking for a more reliable used car or new vehicle. As a result, you’re better off purchasing repo cars online from businesses like Auto Auction Mall and reselling them in person than trying to flip them via the internet. This is particularly true with an established business like Auto Auction Mall, which has already carved out such a niche.

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