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Cars are the most widely used form of transport in the world. Nigeria has an incredible population of car owners. Hundreds of thousands of cars are bought every day. You won’t comprehend how profitable it is to become a car dealer until you go into it. Some families owns more than one car in their household, some own one for a few years and decide to replace them. While some are buying it for the first time. The major cities like Abuja and Lagos crawl with cars and car buyers.

SEE ALSO: How To Start Car Business In Nigeria Importing From USA And Canada

Car dealership in Nigeria means buying automobiles from overseas at a cheap rate to sell at a profit in Nigeria. The buying sources vary, the most common being auction/bidding sites. Then there is the Cotonou market in the Republic of Benin, where cars from all over the world are imported there and sold at a very cheap price. In the dealership venture both used and new cars are sought after, you just have to weigh the demand for each specific car before buying them to resell.

What You Need To Become A Car Dealer

1. Pay For A Car Dealership License

To become a car dealer in Nigeria, need to apply for and pay the ‘Car Dealership License’ fee. It certifies you as an authenticated car dealer which comes with numerous advantages. With that, you can become a certain company’s franchise, i.e. selling only their car models. There are bidding sites that accept only certified dealers to their site, where you will come across overwhelming deals. Lastly, you avoid being prosecuted by the law.

The process of registration and other information pertaining to the license can be found in the road safety offices in your respective regions.

2. Buy Your Cars

You may buy your cars at the auction and bidding sites open to you as a certified dealer. Cars are cheaper in auction compared to other sites or you could prepare for a trip to Benin Republic. Buy and drive the car all the way to Lagos which currently is the legal route to bring in cars, through the Lagos ports.

You could hire a driver to deliver the car to your destination. When you buy cars from a foreign country, it is usually through a phone call or completely  online as if you are buying on Amazon. You will be asked to input your shipping address, in this case it will be the port because of custom clearance.

SEE ALSO: How To Import Cars From USA To Nigeria

Another way is when you are franchising for a particular brand of car, they will handle the logistics for you. Yours will be just to sell and order again. However, that arrangement can only be possible if you are dealing in brand new cars.

3. List the Cars Online

There are hundreds of popular websites you can list the vehicles in your inventory as classifieds adverts. Listing them in sites like jiji.com, nairaland.com and olx.com is a smart move because these kind of sites have a lot of reach. It is incumbent to list your cars in car sales sites where other dealers list their cars at a price they want and wait for purchasing customers.

Although the websites provide form fields you can fill but in case they don’t make filling some of the fields compulsory here are a few of the ones you must fill when posting online.

  • Add your location. Customers prefer to buy from where the cars are located to escape paying exorbitant fees for the car delivery.
  • Always add quality pictures of the car.
  • Write a short description of the vehicle, point out its model, mileage, any defects, and any custom-made additions. Specify whether its new or old and any other detail you feel is necessary.
  • Your contact information, perhaps it is the most important.

There might be other fields that are not mentioned here. However, these are the most crucial ones when posting anywhere online. Most of the sites let you post an ad for free but it would be wise if you opt for a paid ad if they have the option.

SEE ALSO: How to Make your Advertisement Very Persuasive

Your ad would be featured and promoted vigorously in the site, appearing at the top of search results. It is preferable to run your paid ad for at least a week to ensure maximum exposure. This will enable you to sell quicker.

4. Find A Plot of Land And Garage

A garage where you simply lock up the cars won’t be enough. You will need a showroom or a piece of land to display your cars in the open. This method is more popular among car dealers in Nigeria.

Garage might have to be built due to shops lacking the appropriate space and facilities to house a car. The garage building could be made of steel with a high rise ceiling as in a steel warehouse building. Also, it might be situated in a different location from the actual place where you display the cars, maybe a short distance drive. The garage should have good security measures in place to avoid incidents.

5. List Of Required Items

This business really depends on your capital. You can start with as little as 1-2 cars to as many as 30-50 cars. Even when it is a franchise, the size of the business may vary depending on the deal that was made with the company. So. we will list the price of the essential things you must get to start your car dealer business. We will omit the price of cars, but just to get a general idea:

A N1.2 million Naira saloon car could be bought at around N650,000.

An N10 million Naira SUV car could be bought at around N6-7million Naira.

Where you could walk away with N500,000 to N3,000,000 in profits.

Item Description Price (Naira)
Dealer’s license Price is according to Lagos state government. 100,000
Land rent 200,000
Garage building A steel warehouse. 456,000
Paid/sponsored ad For a week long advert, price range differently for different websites, this is a general quote. 3,000
Hired help Per person. 20,000
Total = 779,000

6. Hire One Or Tw0 Staff

If you are running a big place you might need as much help as a man may need for labours such as driving the cars in and out of the garage and parking them, cleaning the cars, and help with sales. On occasions even repairs of the vehicles. Although if the place is small two of you might be okay for the whole job. When hiring, consider someone with experience with cars as this will serve well.

7. Profit Margin

For normal saloon cars after custom clearance and all the small fees that comes with bringing in a car into the country, you will make up to N500,000. SUV’s attract more as you could make up to 1million Naira or more from selling a single car. By which we could surmise the profit margin at about 30%, but as Nigeria uses the rising and falling of dollar to calculate the import tax, the margin might change dramatically in a heartbeat.

8. Brief Summary

Capital needed to start business: N779,000 -price of cars.

Profit Margin: 17% – 30%

Suitable location: Beside highways and major roads.

Business tools: Having online presence.

Potential customers: Average citizens.

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