How to Become a Car Rental Dealership

Starting a car rental dealership requires a large investment, so it’s important to plan carefully. If you want to ensure success, you need to research the area where you plan to operate. You also should be well-informed about the rules and regulations for car rental dealerships in your state. Learn more about the current trends in the car rental industry in your area and find out which car models are in demand so you can supply exactly what rental agencies need.

Devise your business plan. Before you start with any venture, you need to have an adequate plan in mind. Research dealerships through books and Internet resources. Determine a monthly budget and operating hours as well as a marketing strategy to jump-start your venture. At this point, you also will need to decide which manufacturer to work with.

Secure capital and attract investors. Starting a car rental dealership will require significant capital. Vehicle manufacturers such as Ford and General Motors will require their dealers to have a minimum investment before they can approve their application. The amount varies across vehicle brands, but in general, you need to have a budget of at least $400,000. You can take out a loan from the bank, liquidate your assets or invite investors to pay for the costs of dealerships.

Inquire about state requirements for car dealerships. State rules and requirements to start a car rental dealership differ. Contact the local Department of Motor Vehicles to find out what you will need.

Get a dealer license. To start a car rental dealership, you need to have the appropriate licenses coming from your local Department of Motor Vehicles. Take classes in preparation for the licensing exam, and obtain your pass to put up a dealership.

Select a location for your business. Get a building that is spacious enough to display the vehicles. You can either choose to transform a property, or find a property that previously served as a car dealership. Make sure, however, that it did not close down because of its location.

Get zoning permits. Check with your local planning and zoning departments to ensure that your business site complies with all the local laws.

Obtain a dealership franchise. You can either purchase an existing franchise from a dealer who wants to leave the industry, or you can contact a vehicle manufacturer directly for car rental dealerships.

Make financing arrangements with banks and credit unions. Your market is going to be comprised of upcoming and existing car rental agencies in the county, so it would be to your advantage to provide in-house financing packages for your customers.

Hire your staff. You will not be able to run the business on your own. You will need to hire salespeople, a manager and finance staff. You also might want to hire your own maintenance personnel so you can offer this added service to the car rental agencies you will do business with.

Create a buyer’s guide. You will need to draw up disclosure agreements and other forms that you will need to execute sales transactions. Again, the local DMV will give you sufficient information on what you’re going to need, including stickers for any cars that need to be returned to the manufacturer because of defects.

Network with professional organizations. Be part of dealer organizations such as NIADA to find out more about car rental dealerships. These groups can provide you with all the information that you will need to succeed in your dealership venture.

Market your business. To create visibility for your new car rental dealership, you are going to need a local advertising campaign. Place ads in newspapers, radio and television. Develop a website so potential rental agencies and individuals will be able to find you online. Advertise through automobile trade publications, as well.

Contact car rental agencies. To generate business leads, it would be a good idea to start making calls to local car rentals to discuss the possibility of doing business with them.

Tips

  • Hire the right people. Your salespeople will be the ones looking for leads for your business, so it pays to get employees who are already acquainted with the industry.

Warnings

  • Expect to operate your new car rental dealership on a loss during the first few months. That's why sufficient capital is essential.

Resources