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Is a used car business profitable? – The answer may surprise you

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Is a used car business profitable? The answer may surprise you.

is a used car business profitable? Selling used cars is more profitable than selling new cars. This is according to the National Automobile Dealership Association which says that on average a used car generates $2,337.00 of gross profit and a new car only $1,959.00. dollars of gross profit. In this guide we will attempt to answer the question is a used car business profitable?

is a used car business profitable

Most used car businesses tend to turn a profit but not always right away. It is important to keep track of your costs and verify your margins with each sale.

Related articles; how to start used car dealership from home, how much do car dealerships make? How much does it cost to start an automobile business?

How much profit is made on a used car?

A used car generates on average 2,337.00 dollars of profit. While a new car only generates $1,959.00 according to the nations automobile dealers association.

Do car dealerships make money in 2023?

Car dealerships are making plenty of money according to car and driver. 2022 was a record-setting year and 2023 looks to be the same. There are lots of reasons for that some of them being, a lack of used car inventory, historically low-interest rates, and extra cash pumped into the economy thanks to covid 19.

Tips for selling a used car for profit

  1. Know your true costs per a car
  2. Research the market
  3. Have a carfax available
  4. Know your bottom price

Tip 1. know your true cost per a car

A lot of new used car dealers get this one wrong, they only think about how much they paid for the car and forget about other costs like transportation, gas, insurance, Carfax, and marketing.

All these costs add up and it can be easy to forget to take your soft or overhead expenses into account when setting the price of a used car

Tip 2. Research the market

You need to know what comparable vehicles in your market are selling for because your customer does. With it so easy to research on the internet, buyers are becoming much more price-conscious and it is harder to sell an overpriced car.

Tip 3. Have a car fax available

Having a car fax available can be the difference between closing a deal for a nice profit or losing the sale because the buyer has no trust in what you are selling. The easiest way to avoid this is to have a Carfax or something similar available.

Tip 4. Know your bottom price

You need to know the bottom price that you are willing to go for each vehicle. In the heat of a negotiation, you cannot lose money on a car unless there are special circumstances that are at play like a vehicle that has sat too long or a cash flow crunch.

The bottom line is a used car business profitable?

Having a profitable used car business doesn’t have to be hard, you just need to make sure you pay attention to the numbers and create some value for your clients.

Troy Watson

Passionate about helping businesses grow their bottom line using marketing, software, and optimization systems. 

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