Core Business Models Covered
The course will clearly walk students through:
- Marketing and selling cars on behalf of others (individual or company)
This is the easiest way to enter the market and least in capital investment. You will need to put in the work to build trust, networks and visibility. The starting point is to identify other car dealers who have their own cars to sell. Before you can start selling on behalf of individuals disposing their personal or corporate cars. Traditionally, Nairobi has a car market that happens every Sunday at the Jamhuri ground. This is an amazing place to start creating real connections. The two categories of cars are newly imported used cars, and locally used cars. In most cases, the locally used cars are a good place to start if your target customers are purchasing their first cars with limited budget. Here the customer has a budget of Kes. 400,000-800,000 (USD 3000-6000) in a Kenyan setup. Once you create rapport with sellers, brokers and other car dealers, they are able to share what is available. And you can remarket on social media platforms: Facebook, Instagram, Tiktok and even on WhatsApp. How you engage your customers/suppliers now becomes your advantage. It’s a double-edged sword. Most car yards in Nairobi run on this model. Instead of importing cars and stocking in their shops, suppliers bring them units to be sold on behalf. In this model, Integrity is your biggest asset. You lose it, the system automatically kicks you out. As a dealer you act on behalf of your supplier and your customer. You receive money on their behalf. And so you act in trust here.
- Importing cars on behalf of individuals or resellers
Importing requires understanding the suppliers who are exporters, the countries to import from as per specific regulations in the country you are exporting to, and the taxation policies from the revenue authorities in recipient countries. The focus is on delivering quality and cost efficiency for your customers. But most important is Trust and honesty, and ability to safeguard your customers interest. Import process does not always go as planned, so the ability to communicate effectively and timely to your client is extremely important. Referrals may look old school especially in this digital marketing age, but they work magic in this model of car dealership. Every happy customer is likely to send 6 more over a period of 5 years. And this can exponentially grow your business from a kiosk to an empire. You don’t need an expensive office, but you have to be accessible to your customers. With import business, sourcing is where 70% of your energy goes, engaging export suppliers and negotiating on behalf of your client is where the bulk of your time is spent. When you have mastered this trade, you can now serve other car dealers. Most of them find the process hectic and time consuming. And if you can do the search on their behalf, you will have a bigger market to serve. The margins may be smaller, but volumes will be high. Most importers don’t engage in this business full time, they most likely have their main hustles and this is their secondary trade. They look at it as an investment of their excess liquidity. Giving them recommendations of units that can make them margins and sell easier, will give you a unique edge.
- Buying locally used cars and reselling at a profit
In the previous models, have you noticed we have not talked about injecting your financial capital yet? Buying means you need money/capital, you can raise it by using the above models and now get your own stock. This does not necessarily mean you have to open a shop yet. You can put your stock in other people’s shops/yards and allow them to sell on your behalf as you also market, or you can go full blast and open a shop. How you price your cars is important- you can target high end units, or popular brands in your country with lower margins. You will need to be known by other dealers/customers for something. You can start small with a unit and grow to tens and hundreds of units
- Importing and reselling cars directly
You can choose to move from one level to another, or come straight to this level. At this point, your ability to finance your stock and cashflow will determine how successful you become. At this level the secret is: you don’t make money when selling, you make when buying. So you need to buy right- in quality and cost. The reality is that the lead time between ordering and selling is something most traders have not internalized by the time you get to this model. So profits made need to be distributed over these months to get the real picture of business performance.
