How To Start A Car Dealing Business In Nigeria
How to start a car dealing business in Nigeria. Starting a car dealing business could be very difficult but believe me, it is lucrative. We’d be giving you insight on how to go about the car dealing business.
Car Dealing Business
Cars seem to be the most widely utilized mode of transportation on the planet. Nigeria has a staggering number of vehicles owners. Nearly every day, a large number of cars are purchased. You won’t realize how lucrative it is to be a car dealer until you try it. Some homes have multiple automobiles, while others have only one for a few years before deciding to replace it. Others are purchasing it for the first time. Cars and automobile buyers abound in major cities like Abuja and Lagos.
The automobile resale company, as the name suggests, deals with selling used cars to people who want to buy them. Processability, advertisement, experience in different models, and understanding of automobile prices are all required when dealing with a car resale firm, often known as used car sales. In Nigeria, buying and selling used automobiles may be a lucrative business because buying a new car is more expensive than buying a used one. The latter is preferred by the majority of people.
Purchasing from prior owners at a cheap cost that allows the distributor to benefit is a critical part of this business. You must also have a thorough understanding of business financing, licenses, and legal needs in terms of permits and taxes before establishing this firm.
Read also: Documents to collect when buying a tokunbo car
How much does it cost to start a car dealing business?
However, starting the business could require a huge amount of money depending on the number of automobiles as well as the brand you wish to purchase. The capital for this business ranges between N30 million to N70 million. Sometimes, people who engage in this type of business acquire loans from financial institutions just to follow the trend. The cost variance is due to the differences in expenditure that vary by state in which you will launch your business and the sort of business you will open.
How lucrative is the business?
In Nigeria, the sale and purchase of used automobiles may be a lucrative business because buying a new car is much more costly than a used one. The latter is preferred by the population of individuals. Purchasing from prior owners at a low price that allows the reseller to profit is a critical part of this business.
Steps to start a car dealing business
1. Research on the import market
Purchase of secondhand vehicles and imports from other inexpensive nations including the UK, United States, Germany as well as other parts of Europe. Some people may also buy online via resale sites or stores, and you are connected to shipping businesses once you have purchased from the auction site.
2. Research on the model of cars
Distinct vehicles have different models and production characteristics. Various kinds of vehicles include:
- Toyota
- Nissan
- Chevrolet
- Mazda
- Ford
- Mitsubishi
- Volks Wagen
- Lamborghini
- SUV
- Convertibles
3. Choose the vehicle remarketing services that you desire
In the vehicle resale business, there are many specialized concepts. You need to ensure that you make a choice on the services you wish to provide before beginning your company. You may select which brands you wish to offer to purchasers or what vehicles you want to sell. One or all of the following specialized concepts may be used:
- Antique car dealership shop Bricks and Mortars
- Vintage car dealer shop online
- New luxury car dealership
- Multi-brand and multi-car manufacturers
4. Business plan
To be successful in this company, you must first develop a car dealer business plan. This approach will help you in determining the best way to operate your business. Consider how much capital you’ll need to start a vehicle company, the number of vehicles you’ll import or purchase, whether you’ll sell new or used vehicles, and how you’ll advertise your firm to attract consumers. For instance, the cost of land for a garage. This phase should provide answers to all of your concerns.
A business plan’s aim is to ensure that you’ve covered all of your bases and have a clear vision of how the firm will function. After reading this, you’ll be able to establish your dealership’s goals and budget.
Read also: Top 10 best car tracking companies in Nigeria
5. Capital
The following critical question is how to fund your auto dealership company. The reality is that the automobile industry is capital heavy, much more so in Nigeria, given the current Nigerian currency to the Dollar exchange rate. Your company plan should include a strategy for raising money. The amount of your capital investment is determined by the number of vehicles you plan to sell, whether new or used, the size of your garage, and other factors.
To establish a successful auto dealership company in Nigeria, you’ll need a minimum of 20 million NGN in cash. If you do not have all of the necessary cash at once, you may apply for a loan from a bank or seek investment in your car dealership company from investors. Financing is available via a variety of sources.
- Self-financing: This refers to the improvements are made by the business’s owner.
- Funds from government agencies: Various grants are also available via state and federal government-run programs.
- Bank loans: By developing a comprehensive business plan and registering your company name, you may apply for a variety of bank loans.
- Investors: Investors who have reviewed your business strategy and are certain that your furniture manufacturing operation is successful may invest millions of naira in your venture.
- Finance may also be obtained from family and friends who are ready to provide their support to your company.
6. Register your business
A critical step in setting up your business name with the Nigerian Corporate Affairs Commission. Amongst the most advantageous alternatives is to incorporate your business as a corporate body. This will guarantee that your company is distinct from the proprietors and as such the proprietors’ personal responsibility is not jeopardized.
To become a vehicle dealer in Nigeria, applicants must submit an application and pay a fee for the ‘Car Dealership License.’ It identifies you as an authorized vehicle dealer, which has a number of benefits. This allows you to become a franchisee of a certain business.
7. Choose a location
When selecting a site for your vehicle selling company, there are many critical things to consider. One is that it must be a prominent site with easy access from major thoroughfares and enough parking for both your car inventory and that of your clients. These are just a few of the things to consider when selecting a location for your used car business;
- The location’s demographics
- The buying power of the location’s residents
- The site’s availability
- The proportion of used vehicle businesses in a certain area.
- Local ordinances and regulations applicable to the town or state in where your company is situated
- Congestion, parking, and security
8. Purchase your cars
As a licensed dealer, you may purchase your vehicles at the auctions and bidding sites that are available to you. Automobiles are more affordable at auction than on other sites, or you might plan a vacation to the Benin Republic. Purchase and drive the vehicle all the way to Lagos, which is presently the only legal method to import autos through the Lagos ports. You may hire a driver to transport the vehicle to your location.
When purchasing a vehicle from a foreign nation, the transaction is often conducted over the phone or entirely online, much like an Amazon purchase. You will be prompted to provide your shipping address, which will be the port in this instance due to customs clearance. One possibility is that if you franchise a brand name of the automobile, they will manage the operations for you.
The job will be to sell and reorder. That arrangement, however, is only feasible if you are selling in brand new automobiles.
9. Develop rules for purchases
In developing your inventory, you really have to guarantee that you do not deplete your assets in order to maintain your lot supplied. You will need to establish a minimum or a maximum for how many cars are stored at a certain moment in your business. This is very essential.
10. Hire staff
Whenever you operate a large spot one may require quite so much assistance as a person could need for jobs, including parking the automobiles to and from the storage, vehicle maintenance and sales support. At times even car maintenance. Although two of you might be fine for the entire work if the house is tiny. Consider someone with vehicle experience when recruiting, since this will be useful.
Read also: Car insurance in Nigeria: Tips on getting the right one
Conclusion
The following process offers succinct guidance for starting and running a successful auto company in Nigeria. Need not forget to follow these procedures whenever you want to go to a vehicle dealer. Finally, before entering this business, there are some considerations to keep in mind which include the vehicles for sale, the location of your company, taxes, license and a number of other factors previously stated.
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