What are the benefits of establishing a car dealership out of your house?

Discussion in 'The Rumble Strip' started by pimp racer, Dec 7, 2007.

  1. pimp racer

    pimp racer

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    I was not sure if this belongs in here but I think it does so here it goes.

    I was browsing some random car forums and like 6speed and Ferrari Chat and what not. I stumbled upon a few people who set up their own car dealership. Now I was wonder Why do they do it? I know simple answer is to make money but do they really make that much off of it? Most of the people I saw owned some fancy cars. So the question is what are the benefits? I see them set it up but they sell the cars after like 2-3 months of ownership why is that? Do they just get tired of it or do they make a reasonable profit? So they save somehow on insurance or no? Also say I were to create my own dealership out of my house would I be able to buy from Honda and people without having to buy in bulk or I would have to get like 10 cars? Also how low below invoice would I be able to get the car(s)?

    I know these questions sound very silly, but I just need to know how much people make off of this and what are the benefits?
    *EDIT*
    BTW when I meant making a car dealership out of your house I meant selling from your house not a physical address where customers come and look around and test drive or anything like that.
     
  2. 1X83Z

    1X83Z Premium

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    On F-chat a lot of people will do that for tax purposes. Owning a "dealership" in some states merely means that you go through a lot of cars quickly. Some of these guys do that anyway just with personal vehicle turnover because they have a lot of money and get bored easily. The advantage of being a "dealership" is that you get a few sets of plates for all your cars - you don't have to pay taxes on each car. It adds up, too.

    Let's say you just bought each of the Ferrari supercars.

    288 GTO: $600,000
    F40: $500,000
    F50: $900,000
    Enzo: $1,200,000

    If my math is right, that's $3.2m for those cars. Calculate the sales tax that you normally spend when registering a car privately - in Colorado (my place of residence) it's 7.2 percent. That's $230,000 for registration. Ouch! A dealer doesn't have to play to register each of his cars, though - just a flat fee for the plates. There's the advantage.

    EDIT: unless you're referring to guys like Michael Sheehan, Joe Sackey, and Roy Cats. In their case they just do it because they love cars. :D
     
  3. pimp racer

    pimp racer

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    That was exactly what I wanted to know. I just couldn't word it properly. Anyways that is pretty interesting. So is there anything else they save on such as insurance or would that just be it? Also lets say I set up my own dealership do you think big name dealerships such as Honda, Lexus, Acura and what not give me any type of discount? (My guess is probably not but it doesn't hurt to ask?)
     
  4. 1X83Z

    1X83Z Premium

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    If your personal collection was the "dealership" you could probably get some deal on dealers' insurance, yes. But most of these guys pay about what you or I pay for our cars to insure their superexotics - they rarely drive them and they often insure a zillion cars with the same company. There are many F-chat threads about Ferrari insurance and quoted figures are always reasonable.
     
  5. Boundary Layer

    Boundary Layer Premium

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    Insurance and sales tax dodges aside, there are other legal implications to consider. Many states & provinces limit the number of vehicles a non-dealer can sell in a single calendar year (I believe the limit is 5 in most places).

    The limit exists to provide some buyer protection and prevent shady individuals from mass dumping lemons on the unsuspecting public, and establishes a metric for determining who must adhere to the 'Used Car Rule' - in that respect it's probably out of context in this thread. But, regardless of car quality, exceeding this limit without a dealer license can bring about some fairly heavy fines and penalties.
     
  6. pimp racer

    pimp racer

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    A few questions. How long do the dealer plates last, as in when do they expire? How much do you think it costs to renew them in Florida? If I get insurance that is under the name of the Dealership can I get full coverage? And can I drive the car around for normal everyday driving? Thanks alot for the help Doug.

    I never knew that thanks for the info. I wonder if trade ins count?
     
  7. 1X83Z

    1X83Z Premium

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    1. Yearly, like normal license plates.
    2. I'm not sure what it costs to renew them anywhere - but nowhere near what it would cost to renew a privately-registered vehicle's plates.
    3. Yes.
    4. Yes, unquestionably.

    Some states put significant barriers on dealer plates, but Florida is notoriously not one of them. Neither is Colorado, my home state. In Ontario (Canada), only dealership owners can drive with the plates on. It varies on a state-by-state basis, but most states turn a blind eye to this obvious tax evasion.

    I just looked through my exotic car photos, and of the images for which I have the license plate information, I noted the following cars on dealer plates:
    - Bentley Arnage (CA)
    - Dodge Viper GTS (CO)
    - Ferrari 360 Modena (CO)
    - Ferrari 360 Modena (GA)
    - Ferrari 550 Maranello (GA)
    - Ferrari F430 Spider (GA)
    - Ford GT (CO)
    - Lamborghini Murcielago LP640 (GA)
    - Lotus Esprit V8 (CO)
    - Mercedes SLR (GA)
    - Porsche 911 GT3 (AL)

    [​IMG]
     
  8. Pupik

    Pupik Staff Emeritus

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    Here's a tip: You learn to hate many of these private dealers with a passion if you work in a dealership service department. They claim to buy "all these cars" from your dealership, so they want free stuff and red-carpet treatment, and you make no money off of them whatsoever, since it's all "internal" work. Meanwhile, they rake in the profits of re-selling a car you've refurbished for them for nothing but sweat and aggravation while they tool around in your loaner car. When they come back for it, they claim you scratched their used car, since they spent about 5 minutes it picking out, without regards to every inch of the exterior.

    Damn them to hell with a pitchfork: The general manager hugs them and I have to bite my lip instead of telling them to hire their own personnel and feck off. I'd see the same guys come in to Lexus week in and week out, so I learned to bravely run away like Sir Robin and let the newbies deal with them because they're slithering scumbags that invade the nether-regions of the dealership. Meanwhile, their customers actually hate these faux-dealers, since they get all sorts of lies and false promises that their sorry asses don't feel like assisting, since there's no incentive to do so.