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How to Start an Auto Dealership?


India is a country with a growing demand for cars and bikes and with growing demand, it becomes important to match the demand and supply for the continuous growth of the sector. The auto sector here means auto manufacturing and the auto dealership in the country. Starting an auto dealership is something people are not aware of as it requires a detailed procedure and a bunch of documents with the respective company.


Automobiles are one of the most popular topics among young people and enthusiasts alike. Given that the industry is worth over $118 billion and is anticipated to reach $300 billion by 2026, it is clearly one of the shining industries to invest in.

Increasing the auto dealership to fulfil the increasing demand would be a crucial step towards the growth of the sector as well economy. This not only improves the sector but also improve the footprints of the respective auto company in the country, which eventually improve customer satisfaction with buying a car or bike near his locality.

Take a look at how we can start an auto dealership

Take a look at how we can start an auto dealership

The first step towards any business idea starts with a sound business plan and strategies in combination with smart decisions.

First, we need to ask ourselves some important questions before stepping into the idea.

1. How much will it cost to get started and how much will it cost to keep it going?

2. With my car dealership business, who should I target?

3. What should customers be charged?

4. What is the name of my automobile dealership?

Write down answers of these question. It will give you open a broad gate of ideas.

Let's start with the procedure

Let's start with the procedure

Answering the above questions will help you to get a proper understanding and develop a plan for the future course of action. You should be aware of the fact that there is more to starting a business than simply registering with the respective state of your business.

Some of the basic steps that will help you get started with your car dealership venture are discussed further below.

The Security Bond

Step 1

The documentation process is lengthy; you'll need to obtain certain documents, such as a surety bond, business experience, and proper licensing, before starting working in this field.

The filing of a surety bond with the respective state's DMV is the first step in starting your business as an auto dealer. The dealer is then eligible to apply for an auto dealer licence. This licence will be necessary for them to sell vehicles in that state.

Following the acquisition of a licence, the next step is to purchase bonds. A surety bond is frequently referred to as insurance because it protects customers and the state from such dealers' fraud.

Step 2

Securing a premium bond plan is entirely dependent on your banking abilities, making it difficult for dealers to calculate the exact costs of starting a business.

Dealers must obtain their licence in addition to obtaining a bond. The types of licences you may require are determined by the state and locality in which you intend to conduct business.

The standard procedure for starting a car dealership

The standard procedure for starting a car dealership

1. Filling out the application form.

2. Securing a surety bond (the number of security bonds that you might need, depending on your line of business).

3. Buy liability insurance for your vehicles.

4. Apply for a GST tax number

5. Develop your business location.

6. Regulate your dealership's photographs and business signs with the location and ensure that they comply with the state-specific photo and signage rules.

7. Pay the mandated fees.

8. Receive your dealer's tag from the courthouse.

9. Get your sales license to sell vehicles.

Story first published: Monday, November 29, 2021, 14:02 [IST]
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