Ready to launch a dealership?

Expert tips on how to start a car dealership in Canada 

You’ve dreamed of owning your own dealership for years. You’ve carefully thought through the pros and cons, spent time gaining industry experience and building networks. It’s within your reach. You just need a step-by-step plan to get you started. 

I’ve helped many Canadian entrepreneurs reach this goal over the years. While it seems far reaching, with proper consultation, you can make this a reality!

Here are some simple steps to help you get started in your journey. 

Step 1. Market research

Analyze the current automotive industry. Assess what customers look for in their next car purchase and the types of vehicles available today. Is there a gap? Can you fill this gap? New vs Used, ICE vs EV’s, Mainline vs Highline? Through this assessment, you will identify your market niche and target demographic.

Next, assess your competitors. You’ll quickly realize there’s a lot of them in the car business. Prepare a SWOT analysis on each and conclude whether you have what it takes to offer something better to future customers. 

Step 2. Create a plan, register a business and secure financing

This step lays down the foundation for your future success, so take your time and be truthful. 

Include important areas like an Executive Summary (to outline your vision, mission and objectives), your Go-To-Market Strategy (to describe how you will attract customers) and your Financial Projections (to estimate startup costs, revenue forecasts and break-even points). 

Incorporate a business with the proper government regulators and work with your bank to secure funds to get your business running. Use personal savings, bank loans, or investors as needed. At this point, you should have a proper financial plan in place to present people who want to offer you seed capital. 

Step 3. Find a location and obtain licenses and permits

This part could be tricky as traditional OEMs control and stagger where they allow dealerships to be formed. 

If you elected to go the non-traditional route (i.e. used car dealership or specialized EV play) you can select the best location based on visibility and accessibility. Pay special attention to zoning requirements as the automotive space tends to attract various environmental concerns. 

You’ll need a contract with your suppliers (specifically your OEM or other source of vehicle inventory) to ensure you can stock your shelves in a timely manner. OEM agreements, distributorship agreements, etc. are uniquely required in this space. 

Without them, you can’t start a dealership in any capacity so make sure you do your homework in this regard. 

If you’re selling new vehicles, negotiate the franchise agreement as soon as possible, including dealership design and construction requirements. If you’re planning on selling used cars, establish connections for sourcing cars from your local auction houses. 

Step 4. Launch your dealership

Design and develop processes and workflows. Hire sales staff, service technicians, and administrative personnel. Develop your marketing strategy, including branding, to create your unforgettable presence in the community. 

Build a website and establish social media profiles. Plan promotional activities, including online ads, local marketing, and community events. Most importantly, focus on providing excellent customer service to build a loyal client base.

Step 5. Ongoing management and compliance

Once you are rolling, ensure you are keeping up with compliance matters. Track sales, inventory and your financial health using proper systems. Consult with accountants and lawyers and ensure you are filing taxes and other regulatory items as needed. 

Stay positive, create momentum and show leadership. All this is contagious, and you will quickly see your staff following suit! Don’t let the hard work ahead stop you from taking the entrepreneurial journey. It can be rewarding in many ways. 

Follow these simple steps and you’ll be well positioned for success. Reach out to me if you need advice. 

About Robert Arena

Robert Arena, CPA, CA is an automotive and transportation executive and a long standing faculty member in the Automotive Business School of Canada. He can be reached by email at rob.arena@outlook.com

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