Factors to Consider
Opening a car showroom can be a lucrative business if you have the right resources and strategies in place. Some key things to consider when starting a car showroom include:
- Research your local market to identify which areas are growing fastest and see potential for expansion.
- Plan your layout carefully to make the most of your space and create an inviting atmosphere for customers.
- Securing inventory and relationships with manufacturers are key to getting started.
Cost and Profitability
The cost to open a car showroom can vary, but the minimum investment in India is often around INR 60 lakhs. When it comes to profitability, dealer margins can range widely:
- The commission for car dealerships in India ranges from 2% to 6% on cars, and from 12% to 15% on spare parts.
- As per NADA, the profit of a new car dealership through the early months of 2021 was up to 128.2% compared to the previous year.
- Brands like BMW may offer margins up to 7%, whereas Toyota offers lower margins but compensates with other incentives.
Requirements for Opening a Dealership
Before starting a car dealership business in India, consider several essential points:
- Proper business planning is crucial to avoid failure.
- Be prepared with the necessary budget and make sure to comply with the lengthy documentation process.
- Acquire the necessary documents such as a surety bond, company experience, and correct licensure.