New to trading (~6months). Am I doing it right?

[Dylan 0]

Ive been reading these forums for close to a week now and decided to make an account and ask some real motor traders if im doing anything wrong, or even right!

So, I seriously disliked my job but loved cars and decided to get into motor trading about a year ago, i done months of research but only decided to start buying about 6 months ago.

I'm just a small trader who trades from home but I would love to turn it into a full time job.

As of now, in the past 2 months ive spent roughly £5,500 on cars (from BCA, silver card holder). But ive only made about £400 profit.

 

Heres what I do from start to finish. Day before an auction I read through their catalog and write down some cars im interested in, day of the auction I go check them out and 50% of the time I do end up getting one, I take it home, clean it and stick it on Gumtree (good pictures, descriptions). On avg. it takes me about 1 week to sell the car and I make about £100-£150 on each car, now If I want to turn it into a job obviously I couldn't on that profit, so Im just looking for literally any advice from some real motor traders.

Where I think I'm going wrong is I'm paying to much for cars, for example traders can spend more on a car because they own car lots and can afford to bump up their price and have the car for weeks or even months, where as I can't so I'm forced to drop the price for a quick sale.

Also, not to mention auction fees are killers.

 

 

EDIT: I just realized I think I posted in wrong forum . Sorry!

Edited July 23, 2016 by Dylan

[betginge 73]

Hi Dylan 

I pre warn you, You may get some negative feedback here from some members.  First off the golden rule for any business to have a good chance of success is to know your trade and have experience in it.  I fear you have not come from a motor trade or at least a sales background. If you dont have the experience you have an uphill struggle. 

 

If you are only making a small amount as you suggest, you need to think is this for you. You must by law stand by your vehicles for warranty, if you sell a banger and the clutch goes 1 month later, like it or not you're liable.  Trust me you will be bitten and someone will take you to small claims, For the amount you are making you need to stop or radically change your game plan. 

For cheapies, say 300-£1k in my opinion BCA is not the way, you need a plat card to get the fee's down to the level worthwhile and most people with platinum or black card are not buying bangers.   Try other local independent auctions, there fee's will be much more reasonable and alot of dealers use smaller auctions to get rid of bangers rather than use the BCA or Manhiem. Trust me on that point I used to run a Car Auction. You can try going to dealers and asking for cheapies, beware that if a dealership has cheapies on its pitch and there offering off trade sales, Ask yourself why ? 

Don't be afraid of vehicles that have no mot at an auction, this is common with swappers, you can now check the reg to see if its been in for mot before the auction with the gov app. These sub £1k vehicles can be very cheap as people think they are opening a can of worms. You just need do your homework on the day and make a call, Main agent vehicles thrown in are normally a better standard of car and former owner.

an example, I bought from the block the other day a (Main agent Entry)  2006 Mondeo TDci Edge, very clean car, with 120K, No mot, not been tested since expired, I payed  £140 in the block cost me £200 out the door. it needed a Tyre and a wiper  SIV is £240 I will £1195.  

I also bought a 2006 Punto Grande, clean car with 92K in 5 door. Listed with a clutch fault, for £280 out the door.  The thing was barely moving through the block, A clutch for this car is £48 and  a you can get a mechanic (go on FB and ask about) to throw it in for £100. Lucky for me I own a garage but the point is anyone can do this if the profit margin is there.  

Am not sure what to suggest about your warranty position,  either supply a third party warranty but you need to get your margin up first. You can just try winging it for now but it only takes one screamer to come back and no there rights and you will be in miver. a Limited company will limit your personal liabilities. 

 

Good luck 

 

Lee

Edited July 29, 2016 by betginge

[justina3 518]

Cracking advise from above, and i agree think people will be biting there lips not to answer some of your questions, those of us who have to pay tax vat insurance rent rates and all the other fun stuff we have to pay then still try and compete with people who are happy to earn beer money.

 

 

[Dylan 0]

4 hours ago, betginge said:

Hi Dylan 

I pre warn you, You may get some negative feedback here from some members.  First off the golden rule for any business to have a good chance of success is to know your trade and have experience in it.  I fear you have not come from a motor trade or at least a sales background. If you dont have the experience you have an uphill struggle. 

 

If you are only making a small amount as you suggest, you need to think is this for you. You must by law stand by your vehicles for warranty, if you sell a banger and the clutch goes 1 month later, like it or not you're liable.  Trust me you will be bitten and someone will take you to small claims, For the amount you are making you need to stop or radically change your game plan. 

For cheapies, say 300-£1k in my opinion BCA is not the way, you need a plat card to get the fee's down to the level worthwhile and most people with platinum or black card are not buying bangers.   Try other local independent auctions, there fee's will be much more reasonable and alot of dealers use smaller auctions to get rid of bangers rather than use the BCA or Manhiem. Trust me on that point I used to run a Car Auction. You can try going to dealers and asking for cheapies, beware that if a dealership has cheapies on its pitch and there offering off trade sales, Ask yourself why ? 

Don't be afraid of vehicles that have no mot at an auction, this is common with swappers, you can now check the reg to see if its been in for mot before the auction with the gov app. These sub £1k vehicles can be very cheap as people think they are opening a can of worms. You just need do your homework on the day and make a call, Main agent vehicles thrown in are normally a better standard of car and former owner.

an example, I bought from the block the other day a (Main agent Entry)  2006 Mondeo TDci Edge, very clean car, with 120K, No mot, not been tested since expired, I payed  £140 in the block cost me £200 out the door. it needed a Tyre and a wiper  SIV is £240 I will £1195.  

I also bought a 2006 Punto Grande, clean car with 2K in 5 door. Listed with a clutch fault, for £280 out the door.  The thing was barely moving through the block, A clutch for this car is £48 and  a you can get a mechanic (go on FB and ask about) to throw it in for £100. Lucky for me I own a garage but the point is anyone can do this if the profit margin is there.  

Am not sure what to suggest about your warranty position,  either supply a third party warranty but you need to get your margin up first. You can just try winging it for now but it only takes one screamer to come back and no there rights and you will be in miver. a Limited company will limit your personal liabilities. 

 

Good luck 

 

Lee

Thank you so much for th advice I really do appreciate it. And yeah the thought of people not saying anything was in my mind but you don't ask you don't get, right?

My average car usually costs about 1300-1800. But I am going to search for some small independent auctions and try those out but I have a fear of them selling bad cars that could be massive headaches. As for the warranty I have been giving the 3 months and as of yet no one has had a problem fingers crossed. 

I really do not want to give up and will do whatever it takes, it might sound a bit eager but I don't want to be trading from home for long I hope to have a small car lot one day.

As for the limited company do you think it's what I should do, even though I'm making very little profits?

Anyway I think my first plan of action is to try some local independent auctions.

i really do appreciate your reply, thanks!

Edited July 24, 2016 by Dylan

[andymc1973 199]

you're giving a three month warranty on a car that has yielded £150 profit, you'll be crucified, to be honest, I'd try a year or two as a salesman and get a feel

[Dylan 0]

17 minutes ago, andymc1973 said:

you're giving a three month warranty on a car that has yielded £150 profit, you'll be crucified, to be honest, I'd try a year or two as a salesman and get a feel

Yeah, so far I've been rubbish at car dealing as you can tell. I feel I know my cars and cars value but I have to somewhat overpay on cars to win them which leaves me with next to none profit. Thanks for your advice.

[betginge 73]

The reason  I mentioned about limited company was to protect you from a something going wrong as a sole trader with such little profit in the units you are selling. 

 

There are decent motors out there in the £500-£2000 market,  I am surprised You are making so little per vehicle in this band of price. The only other thing I can add is find out what's selling in the market. 

My personal view, Corsa D's have become cheap sub £1500 at auctions and are good sellers. Punto Grande & Panda have taken a big drop at the Auctions my way, and can be picked up very cheap. 5 Door small cars are Hot in General,  7 Seaters, Zafira's Mazda 5 is also a good vehicle 

I try to keep away from 1.6hdi found in peugeot / citroen and also found in ford as 1.6 tdci (buy ford 1.8 or 2.0 tdci instead) .

I dont by Vauxhall 6 speed box and keep away from 1.3cdti found in fiat and vauxhall. 

 

What type of vehicles have you been trading ???? Im thinking you're paying to much or selling to short or are just not buying the right stock 

 

Lee

Edited July 29, 2016 by betginge

[Dylan 0]

18 minutes ago, betginge said:

The reason  I mentioned about limited company was to protect you from a something going wrong as a sole trader with such little profit in the units you are selling. 

 

There are decent motors out there in the £500-£2000 market,  I am surprised You are making so little per vehicle in this band of price. The only other thing I can add is find out what's selling in the market. 

My personal view, Corsa D's have become cheap sub £1500 at auctions and are good sellers. Punto Grande & Panda have taken a big drop at the Auctions my way, and can be picked up very cheap. 5 Door small cars are Hot in General,  7 Seaters, Zafira's Mazda 5 is also a good vehicle 

I try to keep away from 1.6hdi found in peugeot / citroen and also found in ford as 1.6 tdci (by ford 1.8 or 2.0 tdci instead) .

I dont by Vauxhall 6 speed box and keep away from 1.3cdti found in fiat and vauxhall. 

 

What type of vehicles have you been trading ???? Im thinking you're paying to much or selling to short or are just not buying the right stock 

 

Lee

 

I do try and go for 5 door hatchbacks, here's what ive bought, spent and sold for in the past month and a half. A 1.8tdci Mondeo (2007) it had 149k on the clock, probably my riskiest buy but I paid £1578 including fees, then I sold it for £1700 (advertised at 2000, for a about a week). Then I got a Corsa D, 81k on the clock, 1 year MOT. Cost me £1870 total. Sold for  £2000 2 weeks later, and I've just now got rid of a Seat Leon 1.6, 118k on the clock (petrol). I originally got it for £1365 which I was over the moon with cause I knew including an MOT, which it needed, I would make a few hundred on this car but the MOT was a kick to the teeth and cost me £250 which stood me at £1615, which I sold today for £1700.

Also, I'm not sure if this matters, but I only have 1 car at any 1 time, should I buy more cars at once? I'm not sure this is my problem if I cant manage to shift a car and make decent profit on it, so buying 2 wouldn't make a difference?

By the way, I really do thank you for your advice, you're helping me more than you know!

 

 

Edited July 24, 2016 by Dylan

[Rory RSC 596]

 

I personally think the just starting out stage with minimal obligations and no overheads is the time for most profit. 

Take a few steps back, look at it objectively and what do you think you could do differently ?

 

Edited July 24, 2016 by Rory RSC

[It's me 611]

we all have to start somewhere but going to the big boys auction is not the way

look to buy from ebay or that  bumtree

i started out door knocking on cars abandoned by their owners as uneconomical to repair

then i got up at 5 in the morning to read autotrader hot off the presses

then i advertised we buy any cars before the internet was invented

starting at the bottom you have to invent a way to move forward

i think the post is genuine and i hope you succeed dylon

[Dylan 0]

9 minutes ago, Rory RSC said:

 

I personally think the just starting out stage with minimal obligations and no overheads is the time for most profit. 

Take a few steps back, look at it objectively and what do you think you could do differently ?

 

Thanks Rory for your input. By the way I saw the post before your sneaky edit haha. And yeah when I think of it like that, I think my main problem is the fact that at the auction center I go to, the prices are seriously high, makes me wonder how people make money on them, I saw a 57 Corsa D with either 70 or 80k on clock go for £2250. I think the main problem is my source of cars. But at BCA if you dont buy any cars, the fees wont get cheaper. 

Thanks for your reply!

9 minutes ago, s and b said:

we all have to start somewhere but going to the big boys auction is not the way

look to buy from ebay or that  bumtree

i started out door knocking on cars abandoned by their owners as uneconomical to repair

then i got up at 5 in the morning to read autotrader hot off the presses

then i advertised we buy any cars before the internet was invented

starting at the bottom you have to invent a way to move forward

i think the post is genuine and i hope you succeed dylon

Thanks for your reply, I think this is what I'm going to do try to buy privately, but when I think gumtree or ebay I just think of people asking over the odds for their cars. Is there actually money to be made privately buying? And yeah this post is real, but I can understand why people think its a joke, i do aswell. I made more in 1 week at my job then the total profit ive made car trading.

[Rory RSC 596]

I did edit as it came across as sounding extremely harsh. Then again that's business. 

Try a few private buys. You learn to negotiate with the purchasing which can help you with selling.

[JKG 16]

Unfortunately this is the reality of the motor trade, many of us are struggling & we have overheads to pay, vat e.t.c, It's a struggle to make decent margins on low end stuff from bca, it's really only worthwhile if you have a large forecourt to keep stocked due to the sheer volume that goes through on a daily basis, or high end & ex lease stuff.

 

I've recently been buying a few bits through my local selling pages on facebook, I'm sometimes amazed at the cars that are being given away on there! you can get a half decent motor for 10 quid & a bag of quavers, then stick it on gumtree or ebay where there's a much larger audience & make a decent margin, plus you can view & drive before you buy, any recon costs when you buy from auction kill the profit

[betginge 73]

On 7/24/2016 at 10:08 PM, Dylan said:

 

I do try and go for 5 door hatchbacks, here's what ive bought, spent and sold for in the past month and a half. A 1.8tdci Mondeo (2007) it had 149k on the clock, probably my riskiest buy but I paid £1578 including fees, then I sold it for £1700 (advertised at 2000, for a about a week). Then I got a Corsa D, 81k on the clock, 1 year MOT. Cost me £1870 total. Sold for  £2000 2 weeks later, and I've just now got rid of a Seat Leon 1.6, 118k on the clock (petrol). I originally got it for £1365 which I was over the moon with cause I knew including an MOT, which it needed, I would make a few hundred on this car but the MOT was a kick to the teeth and cost me £250 which stood me at £1615, which I sold today for £1700.

Also, I'm not sure if this matters, but I only have 1 car at any 1 time, should I buy more cars at once? I'm not sure this is my problem if I cant manage to shift a car and make decent profit on it, so buying 2 wouldn't make a difference?

By the way, I really do thank you for your advice, you're helping me more than you know!

 

 

I think you are paying to much for the cars. You need to try other auctions and i Would have 2 up for sale at a time. 

I will give you some examples of my cheap buys today at my local aston barclay

2004 Mazda 3 1,6 110K blue, some minor bubbling to archs long mot £250  (average condtion)

2007 Suzuki Swift, 118k, in red gone faded, no wheel trims, short mot. £400  (average Condition)

2006 chevy matiz, 96K, no mot, checked before hand failed on front brakes and a track rod end. (Average Condtion) £150

2007 Polo 1.4 petrol, 5 door 81K, Black  (watch out for the 1.2 3 cylinder engine, suffers with burnt out valve) wants £100 paint to bumper, £980

2007 Meriva 1.4 petrol, silver, 67K, Clean Clean Car, May need a chain kit, very slight rattle, for sake of what it costs I will do it, Picked up for £640

2008 Astra Estate 1.6 Petrol, 112K, Clean Car Other than dent to tail gate, £80 fix for dent man, Short Mot, Drives Well, No alloys (Shame) But only £600 

2006 Corsa C design 1.2 5 door, 82K Long Mot, Alloys been pinched but clean and will make a car  £350 (corsa C market is dropping, so by cheap as you sell one these days on price, there is so many about punters can be picky. 

 All above include buyers fee's

There out there, you just need to broaded your horizons  

[JKG 16]

On 25/07/2016 at 11:30 PM, betginge said:

I think you are paying to much for the cars. You need to try other auctions and i Would have 2 up for sale at a time. 

I will give you some examples of my cheap buys today at my local aston barclay

2004 Mazda 3 1,6 110K blue, some minor bubbling to archs long mot £250  (average condtion)

2007 Suzuki Swift, 118k, in red gone faded, no wheel trims, short mot. £400  (average Condition)

2006 chevy matiz, 96K, no mot, checked before hand failed on front brakes and a track rod end. (Average Condtion) £150

2007 Polo 1.4 petrol, 5 door 81K, Black  (watch out for the 1.2 3 cylinder engine, suffers with burnt out valve) wants £100 paint to bumper, £980

2007 Meriva 1.4 petrol, silver, 67K, Clean Clean Car, May need a chain kit, very slight rattle, for sake of what it costs I will do it, Picked up for £640

2008 Astra Estate 1.6 Petrol, 112K, Clean Car Other than dent to tail gate, £80 fix for dent man, Short Mot, Drives Well, No alloys (Shame) But only £600 

2006 Corsa C design 1.2 5 door, 82K Long Mot, Alloys been pinched but clean and will make a car  £350 (corsa C market is dropping, so by cheap as you sell one these days on price, there is so many about punters can be picky. 

 All above include buyers fee's

There out there, you just need to broaded your horizons  

Do aston have a fixed buyer fee for all dealers or is it a similar system to bca/manheim & dependant on how many you buy per year?

I never got the account application I requested so still don't have an account with them despite the good things I've heard

[andymc1973 199]

On 7/25/2016 at 7:23 AM, Rory RSC said:

I did edit as it came across as sounding extremely harsh. Then again that's business. 

Try a few private buys. You learn to negotiate with the purchasing which can help you with selling.

youre paying an absolute fortune for your cars and sounds like the auctioneer is running you right up, also have you taken into account the tax man?

[betginge 73]

On 7/28/2016 at 10:54 AM, JKG said:

Do aston have a fixed buyer fee for all dealers or is it a similar system to bca/manheim & dependant on how many you buy per year?

I never got the account application I requested so still don't have an account with them despite the good things I've heard

Hi JKG

They have a set rate card, they will put you on Intermediate rate, Am sure the big buyers can get a further discount. At the min its

500-800 £140 

800-1500- £160

1500- 2500 £200

£2500-£5000 £250 

this is all in with Vat, so Cheaper than BCA by some way unless yo are a black or plat holder. Be warned though they take ages to set up an account, so make sure you keep on at them, as 4-5 weeks is the norm. Silly Really 

 

[JKG 16]

1 hour ago, betginge said:

Hi JKG

They have a set rate card, they will put you on Intermediate rate, Am sure the big buyers can get a further discount. At the min its

500-800 £140 

800-1500- £160

1500- 2500 £200

£2500-£5000 £250 

this is all in with Vat, so Cheaper than BCA by some way unless yo are a black or plat holder. Be warned though they take ages to set up an account, so make sure you keep on at them, as 4-5 weeks is the norm. Silly Really 

 

Thanks mate, appreciate the info