How to start a car dealership (Australia) | finder.com.au

How to start a car dealership

Take your business ambition to the next level by launching a car dealership.

Updated

Fact checked

Register a Company

Lawpath - Register a Company logo
  • Register your company with Lawpath in just 10 minutes.
  • Simple step-by-step process with instructions
  • On-demand phone, email and chat support
Get started

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

Fancy a future of cutting profitable deals, providing stellar customer service and stocking the very best cars for your showroom? Running your own car dealership can be more than just a dream.

Read on for a step-by-step guide that'll take you through how to make your car business a profitable reality.

What skills or knowledge do I need to start a car dealership?

Like many retail businesses, a car dealership requires stock, a physical space – such as a showroom or car yard to display your vehicles – and a savvy salesperson or two to sell them.

To thrive in this fast-paced industry, you'll also need fantastic business acumen, stellar customer service skills and a high amount of capital to buy into the market.

Car dealership

Courses and qualifications to consider

To start a car dealership, you'll first need to apply for a motor dealer licence in your state. While the majority of states In Australia don't require any educational prerequisites, in Queensland (QLD) and Western Australia (WA) there's a legal requirement to pass specific courses through a recognised trainer.

These courses are:

  • Automotive Retail, Service and Repair Training Package (QLD). This course typically costs between $875 and $1,175 and it can take from a day to six weeks, depending on the provider.
  • Dealer/Yard Manager Licence Requirements Course Certificate (WA). This course usually costs $415 to $475 and it can take anything from a day to a week, again, depending on the provider.

Additionally, you could hone your sales skills and gain credibility by completing one of the following optional courses:

  • Certificate III in Automotive Sales
  • Certificate IV in Automotive Management.

These courses typically cost from $5,000 to $8,870. However, the Certificate III in Automotive Sales is subsidised, so it's free for eligible students. Course durations are between six months to three years to complete as full-time courses and these may include the option of studying online.

Promoted
Training.com.au

Want to learn more?

Access thousands of courses from some of Australia's leading providers.

    Which business structures are suitable for a car dealership?

    There are three main business structures applicable to a car dealership. These are:

    • Sole Trader. You can apply for a motor dealer licence as a sole trader, but if you do, all of the financial and legal responsibilities will be solely yours. You'll need to apply for an Australian Business Number (ABN) before applying to become a sole trader.
    • Partnership. A partnership shares the financial and practical responsibilities between two or more people. The distribution of financial profits and losses does not need to be equal. Partnerships also require an ABN.
    • Company. A company structure is more complicated to set up and it requires more up-front capital and frequent reporting. A company is its own legal entity, meaning you and the other directors (partners) are not personally liable for business debts if things go wrong. A company structure also allows for shareholders.

    It can be difficult to choose the right structure when starting a new business, but you are able to change the structure as your car dealership business grows.

    You'll need to line up the right licences for your business. By law, you will require a state-issued motor dealer licence, which you can apply for after registering your business and completing any prerequisites required by your state.

    The links for each state's online application forms are:

    You may also wish to consider some of the below legal documents, which can usually be obtained online from reliable sites such as LegalVision, Lawpath or Sprintlaw.

    Data updated regularly
    Name Product What's offered? Starting price to become a member Annual Fee from Free legal documents available?
    Lawpath
    Legal documents and templates, Access to lawyers, Legal guides, Legal advice
    $79 per month
    Essentials: $288, legal advice: $828
    You can view samples for free and you can create your first document for free.
    Choose an annual plan from just $288 and get unlimited revisions to your legal or business documents. Plus, unlock exclusive partner offers.
    LawDepot
    Legal documents and templates, Legal guides
    $4.99 per month
    $59.88
    Free one week trial available which gives access to hundreds of documents.
    Customise and download legal documents in as little as five minutes. Plus, LawDepot offers peace of mind with two service guarantees.
    Sprintlaw
    Legal documents and templates, Access to lawyers, Legal guides, Legal advice
    $799 per year
    $799
    Some documents are free to download. Get access to all documents with a membership.
    Get 12-month plan that unlocks a host of membership benefits for $799.
    Legal123
    Legal documents and templates, Legal guides
    Varies per template
    N/A
    No
    Legal123 offers a range of individual templates or document packages for consultants, app developers, personal trainers and more.
    LegalVision
    Legal documents and templates, Legal guides, Legal advice
    $49 + GST per week
    $2,548 + GST
    No
    Your business can take advantage of unlimited lawyer consultations, fast turnaround times and free legal templates with LegalVision.
    Law Central
    Legal documents and templates, Legal guides
    Free for the Silver membership
    Gold: $99
    You can view samples and create your own document for free with the Silver membership.
    Law Central offers a large number of legal templates for super, trusts, estate planning, employment and commercial uses.
    loading

    Compare up to 4 providers

    The equipment and software you may need

    The primary equipment you will need to establish a car dealership is, of course, the cars you'll be selling. You can choose to source these in a few ways. These include as follows:

    • Purchasing new or second-hand cars outright from a wholesaler or the public (including at auctions, etc.)
    • Purchasing cars using finance or via investors
    • Sourcing cars via dealership franchising.

    Purchasing cars outright requires a lot of capital, sometimes in the millions of dollars, so most people seek financial backing through a business loan or by finding investors.

    Franchising through a manufacturer may be an option for some. However, it can be a challenge to secure a franchise with a reputable dealer in Australia. If you choose to attempt this route, ensure you have a sturdy business plan to back up your application.

    It's likely you'll need some additional equipment and software, including as follows:

    Decide what to charge your customers

    Factors that influence how you price your stock include whether you're a new or second-hand dealer and whether you are under a manufacturer franchise. A franchise would usually have set recommended retail prices, as would wholesale-purchased vehicles.

    For second-hand dealerships, you will have to take into account the condition of the cars, market availability and popularity, extra features, trade-in prices and warranties you'll offer. You can use RedBook as a guide to help you to evaluate your stock.

    Promoted
    Accept payments from your customers in person and online with Square's card readers, payment terminals, digital invoicing and e-commerce tools.

    Frequently asked questions

    How much money will I need to set up a car dealership?

    Unfortunately, the initial capital required to set up a car dealership is quite high. Second-hand car dealerships would be the cheapest to set up. Generally speaking, you may expect these to start in the low $200,000 range for a very small dealership.

    New car dealerships are priced in the high hundred-thousands to millions. Even franchising manufacturers require you to have enough capital to last a couple of years of slow sales. Having said that, there are anecdotal stories online of people starting with just a couple of cheap second-hand cars and growing their business from there. For everyone else, a good business loan may be the most workable option.

    Is a car dealership profitable?

    People are constantly buying and selling new and used cars, so a car dealership is always a profitable business. Just how profitable depends on the type of dealership, with used-car dealerships making more of a margin, but brand name dealerships profiting from brand recognition, manufacturer support and ongoing after-sales mechanical care.

    How should I advertise to customers?

    Franchise dealerships will always have support from their manufacturer and brand recognition to advertise, but other dealers should build a strong online presence. You can do this by advertising on social media, along with car sales websites and other online marketplaces. Adding your used cars to auction sales, online and off, allows the auction company to do the advertising for you.

    Ask an Expert

    You are about to post a question on finder.com.au:

    • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
    • finder.com.au is a financial comparison and information service, not a bank or product provider
    • We cannot provide you with personal advice or recommendations
    • Your answer might already be waiting – check previous questions below to see if yours has already been asked

    Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
    Go to site