Questions

What is a good way to scale an automotive wholesaling business?

Hey everyone. I've been wrestling with a new business here in Canada. In the last 3 or 4 months I've been buying and selling vehicles with the intention to wholesale in volume. I'll be honest, I didn't know a lot about cars before this but I always had an interest. I've been going at it everyday so I've built some business connections (autobody, mechanics, etc...) and I've learnt a lot about cars relative to where I started. I am now focusing on learning about trucks and SUVs to possibly export them into the USA. I've met a couple of guys from the States that come to Canada almost weekly to buy vehicles up here because they are cheaper buy about 30% in Canada. This is a new market due to the fall in the CAD in comparison to USD. I feel like I can move much much faster in this market with a little bit of help. Any sort of advice or help would help me a lot. I'm open to anything at the moment. If anyone has experience in automotive wholesaling or even retail I'd love to get in touch!

3answers

Hello! I am a former automobile dealer, and I had an auto repair shop, body shop, and licensed vehicle inspection station in central Missouri. I am very familiar with this industry. I entered this market at the wrong time, grew quickly, and hit the Great Recession at the wrong time. My goal was similar to yours, to wholesale vehicles, but also to export classic cars to the middle East.

Canada is a great source for people here, because the prices are in fact lower for US buyers. I am still somewhat involved in the automotive niche, and I even recently purchased a replacement engine on a Scion from Canada because it was about one third of the price that I would have paid anywhere close.

One thing you mentioned that stuck out in my mind is focusing on SUVs and trucks. When you specialize, you create your biggest potential. If you can create a name for yourself for supplying a particular size of truck, say a 1/4 ton pickup with an extended cab, you might be able to connect with volume buyers who are looking for low cost alternatives to buying new. This could be municipalities with tight budgets, small transport companies, service industry companies, etc.

Once you find a hot niche, word could spread fast, and if you've mastered the supply side, you will be able to move vehicles super fast. And if you have the capability of doing some mechanical upgrades on the vehicles before you sell them, you'll make a greater return on your investment.

One example of a hot niche is Jeep Cherokees in Colorado. Cherokees sell for 20% to 30% higher in Colorado than what they go for in the Midwest. I know of a person who did nothing but purchase Cherokees and fix them up for selling in Colorado. He had a very solid business.

The advantage to focusing down on a very tight selection of vehicle models is knowing what to expect. You'll know what parts are likely to be worn out at a particular mileage, where these vehicles tend to rust first, what mechanical issues are common, or electrical problems that you can run into. When you are wholesaling and buying anything and everything, you'll heighten your chances of getting burned. I've been there myself, and learned some hard lessons. At the end of my run in the business, I wish I could have hit the rewind button and only scoped out a narrow variety of vehicles that I had the most knowledge on.

I plan on re-entering the business soon. I've got a particular car in mind, the 1995 Ford Mustang. I rebuilt one of these, and I know all of the gory details for this car. Right now, they are a dime a dozen, and you can find them everywhere. My plan is to restore them and sell them, because this body style and the Fox body are the next ones which will become "nostalgic".

Drill down and find out which pickup truck is your best prospect. Factor in common problems, cost of repair, and demand out on the market. Then stick with that model within a certain range of years, and make a name for yourself in that niche. You are guaranteed to have better success if you take that approach!


Answered 6 years ago

Reverse engineer the process, I would start figuring out who you're selling to and all the issues that can get in the way of selling to them. Such as regulatory issues, I worked for BMW for 15 years I remember having to code cars going to Canada differently to the ones here in the United States. So first figure out everything that can get in your way of scaling out and in your case a lot of it is going to be regulatory. After that pricing and attention. The automotive industry is plagued with discount culture, so pricing is a huge issue, next is just marketing and delivering on everything you presented as a value.

Call me so we can talk further!


Answered 3 years ago

Hey, I've been working in the automotive industry for more than 20 years, covering CEOs positions in several European markets.
When you start up it is important to identify a niche/segment where you can exploit the market's opportunities and create gradually your customer base that will be the most valuable asset of your business. Identify clearly your customer base and your unique selling propositions (price ? service ? availability of stock ? quick deliveries ? etc...) and run a marketing campaign enhancing your USP. Particular attention must be put on how to finance your stock, cash flow management is the key to success.
I am available should you want to further discuss this great opportunity. Regards. Alessio


Answered 2 years ago

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