Radical Business Model

[aaron@spottedmoose.com]

Hello Everyone,
As you can see i am a new user. I am in the process of researching a new business model that may raise some eyebrows or may have you rolling around on the floor lauging at me. Either way indulge me for a few short minutes.

A friend and i were talking about opening a used car lot here in our small town. I've always like the idea of running a business and used car sales is intreguing to me. Since the odds are good that you're not in my area, thus not my competition i'll let you in on the idea i had.

Im my town there are several vacant lots that attract car owners to display their vehicle for sale. I dont really like seeing these cars up there because it looks trashy and a little redneck-like.

What I would like to do is offer a place for owners of these vehicles to display their vehicles for sale. For a fee they would park the car on our lot and for that fee, we would clean the car up, talk to potiental buyers and help the buyer and seller complete the transaction. WE would NEVER take ownership of the vehicles, simply "rent" the owners a spot to have their car displayed and not have to worry about the car being vandalized, stolen, broken into. this would allow them to live their lives and not have to drop what their doing to take a potiental buyer for a test drive, haggle with the buyer, and worry about closing the deal.

Now my question for you folks are these:

What kind of insurance would i need to carry on the lot
Would the seller need to keep the insurance on their vehicle or would i need to obtain insurance for the vehicles
What types of legal trouble should i look out for?


Do you think that this would be a viable option for people who want to sell their vehicle out right and not take the hit when trading it in? What are your thoughts and or suggestions?

THanks for indulging me!
Aaron Wagner :)

[mchastek]

Aaron -

It sounds like you're talking about selling vehicles "on consignment." I know this happens often with high-end cars. The owners leave the car at a dealership, and when the car is sold, the dealer takes a percentage of the purchase price.

I'll contact a few other members here to see what they think. I love the out-of-the-box thinking, keep it up!

Thanks for joining Auto Industry Forum,

-Mark

[aaron@spottedmoose.com]

That's exactly what I would like to do. My buddy wants to run a detail shop and the two businesses would work perfectly together. The business is modeled after a consignment shop, where a business owner divides up their store and charges booth rent for the space they occupy. THis would work very much in the same way. WE would offer them a spot on our lot, and when the car sales they can either pay us a percent of the sale, or pay us a daily rent rate. Im kind of struggling with how much these should be, it should allow them to still make more money on their car, and allow us to make moeny as well. Rental rate, in my mind should be somewhere between 25-45 per day. So say on a vehicle that would sell for $20k at a lot but would trade in at say $17k, if it sat on our lot for 45 days, the fee would be $1350, and would make the seller an additional $1650 on their car. Or we could do a percent, say 7.5%, the fee would be $1500 and would still make the seller $1500 MORE on their car.

What do you guys think? I think that the business would make it. and we've even takled about buying more land around town and allowing cars to be placed there and having them call us when theyre ready to look at it. just a thought.

Aaron

[Autopub]

Aaron... based on current industry marketing activities and the capabilities of corporate marketing of used vehicles on retail lots, the Internet, and in wholesale auction lanes, your idea or business model may encounter existing sales channels and competitive outlets.

For example, AutoTrader.com and eBay, in effect, offer the service you are contemplating without any "rental" or consignment fees online.. And do involve sales fees.

Your "local', home town access and service may offset this.
Would recommend you develop a "Business Plan" immediately and start doing research about the market, particularly, in your local area.

You might use search engines, www.automotivedigest.com, and industry associations like the National Independent Auto Dealer Association.

[aaron@spottedmoose.com]

Thanks, I am hoping that our local feel and added services will bring people in the door.
Thanks

[aaron@spottedmoose.com]

what about the legal and insurance aspects of this idea. What would i be responsible for?

[mchastek]

Aaron - you might want to try going to a dealership in your area that sells vehicle on consignment. Be friendly with the employees there, and they'd probably be able to give you a lot of great information!

[John Chaney]

Based off of your description of what you plan, and, in the State of Virginia, you would have to get a dealer's license to do what you are planning. Most states limit how many vehicles an individual can "sell" in a year. Surely, you will pass any states' definition of that if you are successful. So, the question is..................how does your state define "selling a car"? Here, your activities would indeed be interpreted as 'selling".

That means you would have to get a dealer's license, garage liability insurance, pass tests,.........the whole gamut !

[RossoCorsaItaly]

Called consignments, I do it all the time for my customers. In fact here's an F355 we're consigning.

http://store.yahoo.com/nonturbo/19fef3gts6s.html

Good luck,
Kevin

[Carmine_Rider]

Aaron, a few things.

People who want to sell their cars "privately" do want top dollar -- so you'd have to help move the car fast -- and show the sellers that they'll net more money, not less, by using you.

The transaction would presumably be between the seller and the buyer -- with a commission to you from the seller, right? So if the seller needs to pay off his car, the buyer has to pay, then wait for the title. Buyers may be reluctant to do this. From the buyer's perspective, he needs to pay a private party the selling price, then wait for the title from the lienholder -- usually only 2 days if done via FedEx, but still, I want my car the day I pay for it.

Finally, the seller needs a car to drive, so how does he get around -- and have the car on your lot at the same time? The consignment shop model works because these are items that are not necessities -- nor do they rapidly depreciate like a car would.

Carmine


That's exactly what I would like to do. My buddy wants to run a detail shop and the two businesses would work perfectly together. The business is modeled after a consignment shop, where a business owner divides up their store and charges booth rent for the space they occupy. THis would work very much in the same way. WE would offer them a spot on our lot, and when the car sales they can either pay us a percent of the sale, or pay us a daily rent rate. Im kind of struggling with how much these should be, it should allow them to still make more money on their car, and allow us to make moeny as well. Rental rate, in my mind should be somewhere between 25-45 per day. So say on a vehicle that would sell for $20k at a lot but would trade in at say $17k, if it sat on our lot for 45 days, the fee would be $1350, and would make the seller an additional $1650 on their car. Or we could do a percent, say 7.5%, the fee would be $1500 and would still make the seller $1500 MORE on their car.

What do you guys think? I think that the business would make it. and we've even takled about buying more land around town and allowing cars to be placed there and having them call us when theyre ready to look at it. just a thought.

Aaron

[Autopub]

The idea of selling cars on consignment is too limited, won't generate enough revenue, will attract people who are "buried" in their cars [ as most people are] and just won't work. :(

[Carmine_Rider]

:D The idea of selling cars on consignment is too limited, won't generate enough revenue, will attract people who are "buried" in their cars [ as most people are] and just won't work. :(

Geez, I gave him a few warning shots in the kneecaps to discourage him. I think you killed him before he had a chance to crawl away!

:D

Aaron, I do think Autopub's correct here. I have a pretty good history with facilitating private party sales -- there are lots of moving parts that you may not be equipped to manage. Money is made in financing, warranty, parts, service -- and recon too. Sales are just too damned freaky.

But keep thinking those ideas, because one of them will hit. (And when you do get that really great idea -- DON'T POST IT HERE!!!)