car business plan

Car Dealership Business Plan Template

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 4,000 entrepreneurs create business plans to start and grow their car dealerships. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a car dealership business plan template step-by-step so you can create your plan today.

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What Is a Business Plan?

A business plan provides a snapshot of your car dealership as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start a car dealership or grow your existing car dealership you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your car dealership in order to improve your chances of success. Your car dealership business plan is a living document that should be updated annually as your company grows and changes.

Source of Funding for Car Dealership Businesses

With regards to funding, the main sources of funding for a car dealership are personal savings, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for a car dealership is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan.

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Your business plan should include 10 sections as follows:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of car dealership you are operating and the status; for example, are you a startup, do you have a car dealership that you would like to grow, or are you operating a chain of car dealerships.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the car dealership industry. Discuss the type of car dealership you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

In your company analysis, you will detail the type of car dealership you are operating.

For example, you might operate one of the following types:

• New Car Dealers : this type of car dealership business typically sells both new and used passenger vehicles. Usually, this type of dealership also has a service department and also sells parts.
• Used Car Dealership : this type of car dealership sells used passenger vehicles, including cars, light trucks, sports utility vehicles (SUVs) and passenger vans.
• Online Car Dealership : this type of car dealership retails automobiles online to consumers and businesses and provides services to aid in the purchase of automobiles. Some players offer their customers trade-in, car financing and car selling services.

In addition to explaining the type of car dealership you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the car dealership business.

While this may seem unnecessary, it serves multiple purposes.

First, researching the car dealership industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards vehicles, it would be helpful to ensure your plan calls for plenty of options.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your car dealership business plan:

• How big is the car dealership business (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your car dealership. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your car dealership business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: college students, soccer moms, baby boomers, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of car dealership you operate. Clearly baby boomers would want a different atmosphere, pricing and product options, and would respond to different marketing promotions than college students.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most car dealerships primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other car dealerships.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This primarily includes private sellers. You need to mention such competition to show you understand that not everyone in the market for a car shops at a dealership.

With regards to direct competition, you want to detail the other car dealerships with which you compete. Most likely, your direct competitors will be car dealerships located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What types of automobiles do they offer?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to stand outside your competitors’ locations and ask customers as they leave what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide superior products and/or services?
• Will you provide cars that your competitors don’t offer?
• Will you make it easier or faster for customers to acquire your products?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a car dealership business plan, your marketing plan should include the following:

Product : in the product section you should reiterate the type of car dealership that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to selling new cars, will you offer leasing options?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the inventory you will maintain and the price ranges.

Place : Place refers to the location of your car dealership. Document your location and mention how the location will impact your success. For example, is your car dealership located next to a high-traffic retail area, or on a main thoroughfare, etc. Discuss how your location might provide a steady stream of customers.

Promotions : the final part of your car dealership marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Making your car dealership extra appealing to attract passing customers
• Pay per click advertising
• Advertising in local papers and magazines
• Reaching out to local bloggers and websites
• Social media advertising
• Local radio advertising
• Banner ads at local venues

Building Trust

Building trust between a car dealer and its customers is vital to a successful sales strategy. This should be clear in the business plan, where funders look to see the feasibility of the company once it’s launched. Earning customer trust is important because of the bad reputation, deserved or not, for car salespeople to try to take advantage of customers and because of the high amount of stress which the purchase of a large item like a car causes for buyers.

Below are the best ways to build trust in your customers.

Referrals and Testimonials

Running a dealership with a heavy focus on satisfied customers referring other potential customers can create positive word-of-mouth between contacts who already know and trust each other. An additional element to this is securing testimonial statements (either written or videotaped) from happy customers. This requires having those happy customers in the first place, as customers can sense if the testimonials are canned and will mistrust even further.

Transparency

If auto dealerships were extremely clear about all pricing, fees, and costs of ownership up front, customers might change their opinion of these companies. However, too often there is a great focus on a low sticker price to attract customers who later on feel they’ve been lied to when all of the add-on charges are explained. Can your dealership change this industry practice and make transparency into a competitive advantage?

Taking Your Time

By taking the sales process at a rate that the customer is comfortable with, you recognize that it is a difficult step for customers to walk into the world of the dealer and play on his home turf, so to speak. They will be feeling defensive and a bit thrown off, so tell them that you will take the time to answer any questions they have and to make sure they understand and have considered their options before moving forward.

Operations Plan

While the earlier sections of your car sales business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your car dealership such as serving customers, completing necessary paperwork, keeping the dealership clean, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 1,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.

Management Team

To demonstrate your car dealership’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in the car dealership business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in car dealerships and/or successfully running retail and small businesses.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you serve 20 customers per week or 75? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your car dealership, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a $1,000,000 fleet order, that would cost you $500,000 to fulfill. Well, in most cases, you would have to pay that $500,000 now for inventory, transportation, employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.

In developing your Income Statement and Balance Sheets, be sure to include several of the key costs needed in starting or growing a car dealership:

• Location build-out including design fees, construction, etc.
• Cost of equipment like computer hardware and software, etc.
• Cost of maintaining an adequate amount of supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your store design blueprint or location lease.

Car Dealership Business Plan Summary

Putting together a business plan for your car dealership is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the car dealership business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful car dealership business.

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You can download our car dealership business plan PDF here . This is a business plan template you can use in PDF format.

Car Dealership Business Plan FAQs

What is the easiest way to complete my car dealership business plan.

Where Can I Download a Car Dealership Business Plan PDF?

You can download our car dealership business plan PDF template here . This is a business plan template you can use in PDF format.

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How to write a business plan for a car dealership?

Whether you are starting up a new dealership or looking to grow and improve the profitability of an existing one, having a well-crafted and comprehensive business plan is essential.

In this guide, we will cover why it's important to write a business plan for your car dealership, what information you need to include in it, the structure and format of such plans, as well as the tools that can help you create one quickly and easily. 

With these resources at hand, you'll be able to confidently start or grow your own car dealership with success!

In this guide:

Why write a business plan for a car dealership?

• Information needed to create a business plan for a car dealership
• What goes into your car dealership's financial forecast?
• The written part of a car dealership business plan
• What tool should I use to write my car dealership business plan?

Writing a business plan for your car dealership forces you - the entrepreneur - to think critically about your objectives over the next 3 to 5 years, and create actionable plans to achieve them. 

The business plan, therefore, serves as the roadmap for the expansion of your car dealership.

Once the plan is in place, you can compare your financial performance to what was planned and recalibrate your financial forecast as time goes by in order to maintain visibility on your future cash flows.

This process is crucial in helping you ensure that you know where the business is headed and have sufficient capital to fund operations and expansion.

Additionally, having a comprehensive car dealership business plan is mandatory if you need to attract potential investors (or lenders) who can provide vital capital to accelerate growth. 

Investors will be looking for evidence that investing in your car dealership can generate a good return on investment. Therefore, they will want to see healthy growth, profitability and cash generation outlined clearly in the business plan.

Similarly, banks will use this document to assess whether or not you have what it takes to repay their loan and ensure that your dealership succeeds. 

Now that we know why writing the business plan matters, let’s have a look at the information needed to assemble it.

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What information is needed to create a business plan for a car dealership?

Carrying out market research for your car dealership.

Carrying out market research is an essential step prior to drafting any car dealership business plan.

It helps identify target markets and understand customer needs, and allows you to evaluate the competitive landscape and develop strategies for positioning your dealership in a way that will give it a competitive edge in the marketplace. 

Having this data is key in order to accurately forecast potential revenues, and to present a compelling commercial opportunity in the written presentation of your business plan.

Developing the marketing plan of your car dealership

Creating a sales and marketing plan is another prerequisite that ensures that your financial forecast includes an accurate budget for sales and marketing expenses. 

This budget should include specific details regarding costs associated with advertising, promotions, sponsorships, and incentives in order to maximize the dealership’s sales. 

The staff and equipment required for your car dealership

Comprehensive recruitment and investment plans also need to be outlined prior to writing your business plan as they will be needed when creating your financial forecast. 

You will need to think thoroughly about how many staff members are required for the business to operate and what equipment will need to be purchased, and cost it all as accurately as possible.

Once you have gathered the necessary information for creating a business plan for your car dealership, it is time to move on to developing the financial forecast. 

What goes in the financial forecast for a car dealership?

The financial forecast of a car dealership includes a Profit and Loss (P&L) statement, a Balance Sheet, a Cash Flow Statement, and Sources and Uses table. 

Let’s have a look at each of these financial tables in a bit more detail.

The projected P&L statement of your car dealership

The projected P&L statement for a car dealership shows how much growth and profit are expected in the years to come. 

The projected balance sheet of your car dealership

The balance sheet is an important financial report that provides insight into the overall financial health of a car dealership. 

It includes all assets owned by the dealership, such as cars, inventory, buildings and equipment, as well as liabilities such as accounts payable, loans and other debt. 

This document gives an overview of what the company owns and owes at any given time, and how much your equity is worth.

The balance sheet is especially useful for lenders and investors, who want to understand the solvability and liquidity of the car dealership. It provides insight into how much money is available to pay creditors or invest in new projects. 

For example, if there are more liabilities than assets on the balance sheet, it could signal that the business is over-leveraged or that there is a need for more capital. 

On the other hand, if there are more assets than liabilities, the dealership may have enough money to invest in new projects and give lenders peace of mind.

For car dealership owners, the balance sheet can be used to identify potential risks, gauge financial performance and make plans for future growth. It provides an overall picture of the dealership’s financial health and can help owners understand if their business is on track or needs to be improved. 

The projected cash flow statement of your car dealership

A forecasted cash flow statement for a car dealership is a document that shows how money comes in and out of the business. 

It is useful because it helps people understand how much money the dealership makes and spends, which helps make decisions about financing. 

The initial financing plan

An initial financing plan is like a money map that shows where the money at the beginning of your car dealership business plan will come from and how it will be used. 

It is important to have an initial financing plan when starting a car dealership so you can make sure you have enough money to cover all of your initial investments. 

The plan should include information such as the total cost, who will provide the funds, what kind of loans or investments are needed, and other sources of capital such as grants or credit from suppliers. 

Having this information in advance helps ensure that there are no financial surprises down the road.

Now that you have a better idea of what goes in the financial forecast for your car dealership, it is time to look at what goes in the written presentation which provides the context needed to understand how these projections were made and how they fit into the larger picture.

The written part of a car dealership plan

 The written part of a car dealership plan is composed of the 7 main sections:

• The executive summary
• The presentation of the company
• The products and services section
• The market research analysis
• The strategy section
• The operations section
• The financial plan

Let’s dive into each section!

1. The executive summary

The executive summary of a car dealership plan should include the following key points: business overview, market overview, key financials, and the “ask” i.e. how much funding is required. 

The business overview section should provide an overall description of the business, including its vision and objectives. 

This includes information about the size of the dealership, type of vehicles sold, and any unique features the dealership may offer. 

The market overview should include information about the size of the addressable market, current trends in the vehicle industry, and how the car dealership’s offerings intend to meet customer demand. 

Next come the key financial highlights where you will include a brief description of the dealership’s financial situation and any expected future profits or losses. 

Finally, the “our ask” section should include a thorough explanation as to what you are looking for from the reader of your plan. It is also important to detail how these funds will be used and what kind of return on investment can be expected. 

2. The presentation of the company

The presentation of the company should start with detailed information about the structure and ownership of the company. 

You should clearly explain what legal entity has been created to run the business, and who owns what percentage. 

Additionally, it is important to state the exact location of the dealership, as well as give details about the management team that will be responsible for the day-to-day operations and implementation of the business plan. 

3. The products and services section

When writing the products and services section of a car dealership's business plan, it is important for you - the business owner - to provide detailed information about the types of vehicles you offer, along with any additional services such as repairs or financing. 

The goal of this section should be to show potential investors or lenders that customers will have access to quality cars, parts and service at competitive prices.

The type of vehicles offered by the car dealership should be clearly outlined in the business plan. This includes identifying which makes and models are available, as well as whether used cars are also sold. 

It is also helpful to include information on who supplies these vehicles so investors can assess their reliability and reputation in the marketplace. 

Additionally, if there are special features that make certain vehicle models stand out from competitors, those details should be included in this section as well.

4. The market analysis

The presentation of your market analysis should include information about demographics and segmentation, target markets, competition, barriers at entry, and regulation. 

This will help provide potential investors or banks with an understanding of the size of the local market and how your car dealership is best positioned to capture market share.

The demographics and segmentation section will focus on the demand side, explaining how many customers are in the local market and what their expectations and preferences are.

In the target market section you will explain who you are targeting and why your offering fits the needs of these customers.

The competition part will focus on your competitors and you will explain how and why customers will prefer your dealership over theirs.

You will then explain what barriers at entry exist on the market, if any. This could include licensing requirements with car manufacturers or an important upfront investment to enter the market.

5. The strategy section

When crafting the strategy section of your car dealership's business plan, you should focus on the following key elements in order to appeal to potential investors or lenders: competitive edge, pricing strategy, marketing plan, milestones and risks and mitigants.

Having a unique competitive edge is essential for success in any competitive industry. This could include offering special promotions or services that are not available from competitors.Or you could benefit from territorial exclusivity with a car manufacturer preventing other competitors from selling the same vehicles you offer. 

A clear pricing strategy should also be outlined as well which details how prices will be set and adjusted over time based on market conditions. 

Your marketing plan will then outline how customers will learn about the dealership’s offerings and how customer loyalty can be maintained over time. 

Finally, you should outline achievable milestones as well as strategies for dealing with potential risks or issues that may arise during operations. 

Addressing these topics within the strategy section of your business plan will help demonstrate to lenders and investors your knowledge of the industry as well as show the steps you’ve taken to reduce risk associated with running your business.

6. The operations section

The operations section of your car dealership business plan should include detailed information about the staffing team and roles of staff members, recruitment plan, opening hours, key assets and intellectual property that the business needs to operate, as well as the suppliers it plans to work with.

When detailing the staffing team and roles of staff members, the plan should include information about the number of employees, their job titles and descriptions, as well as any qualifications needed for each position. 

Additionally, it should include a recruitment plan that outlines how new staff members will be hired and onboarded into the business.

The operations section should also outline the opening hours of the dealership: when it opens and closes, as well as any special operating hours for specific services. 

Furthermore, the plan should include information about key assets and property needed to run the business, such as a dealership license, customer databases, technology platforms or software licenses. Finally, it should list all of its suppliers that are critical to the running of the dealership.

By having a comprehensive operations section, the business owner can show potential lenders or investors that they have planned ahead and are well-prepared to successfully run their dealership. 

7. The presentation of the financial plan

The financial plan section is where you will show the financial forecast that we talked about before. 

Now that we have an understanding of the content a car dealership business plan should include, let's take a look at the tools and resources available to help us create one. 

What tool should I use to write my car dealership's business plan?

In this section, we will review the different solutions for creating a business plan for your car dealership, including using Word and Excel, hiring a consultant or using an online software.

Create your car dealership's business plan using Word or Excel

Using Excel and Word to write a car dealership business plan can be an effective solution for some, but it should not be the first choice. 

While Excel is cheap, creating a financial forecast without expert accounting knowledge is challenging to say the least. Creating a financial forecast on excel is often long and tedious and difficult to keep updated.

Using Word can help to create a plan from scratch, but it is time consuming as you have to start from a blank page and it requires hours of formatting the document once written. 

Hire a consultant to write your car dealership's business plan

Outsourcing your car dealership business plan to a consultant or accountant is another potential solution. 

Consultants are experienced in writing such plans and accountants are knowledgeable about creating financial forecasts that are accurate and free from errors though they may lack the industry expertise to forecast sales with precision.

The main drawback of outsourcing a plan though is the steep cost. Budget at least $2,000 (or £1,500) for a first iteration, more if revisions are needed after initial meetings with lenders and investors.

Overall, this is a good solution if you need your plan fast and are trying to raise a significant amount of capital.

Using a business plan software to write your car dealership business plan 

Another alternative is to use online business plan software . There are several advantages to using specialized software:

• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can be inspired by already written business plan templates
• You can easily make your financial forecast by letting the software take care of the financial calculations for you without errors
• You get a professional document, formatted and ready to be sent to your bank
• The software will enable you to easily track your actual financial performance against your forecast and update your forecast as time goes by

If you're interested in using this type of solution, you can try our software for free by signing up here .

We hope that this article has helped you to better understand how to write the business plan for a car dealership. If you still have questions, do not hesitate to contact us.

Also on The Business Plan Shop

• Car wash business plan template
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Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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Building a Profitable Car Dealership Business from Scratch: A Step-by-Step Guide

• November 16, 2023
• Automotive Lead Generation

If you are passionate about cars and have a strong entrepreneurial spirit, starting your own car dealership business can be an exciting and lucrative venture. However, building a profitable car dealership business from scratch requires careful planning, market understanding , and a solid financial foundation. In this step-by-step guide, we will explore the key aspects of starting a car dealership business and provide valuable insights to help you succeed.

Understanding the Car Dealership Business

Starting a car dealership business requires a comprehensive understanding of the industry and its dynamics. The car dealership industry involves the buying and selling of new and used vehicles to consumers or other businesses. It encompasses various segments, such as passenger cars, commercial vehicles, and luxury automobiles.

As a car dealer, your primary goal is to acquire vehicles at wholesale prices and sell them at a profit. However, this is just the tip of the iceberg. To succeed in this competitive market, you will need to establish strong relationships with suppliers, manage your inventory effectively, negotiate prices, and provide exceptional customer service .

Let’s delve deeper into the key aspects of the car dealership business.

The Basics of the Car Dealership Industry

The car dealership industry is a complex and multifaceted sector that requires a deep understanding of market trends and consumer preferences. It is essential to keep up with the latest developments and technological advancements in the automotive industry to stay ahead of the competition.

When it comes to the types of vehicles you can sell, the possibilities are vast. From compact cars to SUVs, from electric vehicles to hybrid models, the choices are endless. Understanding the different vehicle segments and their unique characteristics will help you cater to a wide range of customer preferences.

Moreover, the car dealership business is not limited to just selling vehicles. Many dealerships offer additional services such as maintenance and repairs, financing options, and extended warranties. These value-added services can significantly enhance customer satisfaction and loyalty.

Key Players in the Car Dealership Market

To navigate the car dealership market successfully, it is crucial to be aware of the key players in the industry. Understanding their roles and characteristics will help you identify opportunities and develop a competitive edge.

Franchise Dealerships are one of the major players in the market. These dealerships have exclusive rights to sell new vehicles from a specific brand or manufacturer. They often offer additional services like maintenance and repairs, making them a one-stop-shop for customers.

Independent Dealerships, on the other hand, are not affiliated with any particular brand. They typically specialize in selling used vehicles and have more flexibility in terms of inventory selection and pricing. This flexibility allows them to cater to a broader range of customer budgets and preferences.

In recent years, online car marketplaces have gained significant popularity. These platforms connect buyers and sellers, facilitating transactions and providing extensive vehicle listings. Online car marketplaces offer convenience and a vast selection of vehicles, making them a preferred choice for many customers.

By understanding the strengths and weaknesses of these key players, you can position your dealership strategically and differentiate yourself from the competition.

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Profitability Factors in the Car Dealership Business

While the car dealership business can be profitable, several factors contribute to your success. It is essential to consider these factors and implement effective strategies to maximize profitability .

Market Demand plays a crucial role in determining the success of your dealership. Assess the demand for vehicles in your target market. Are there specific vehicle types or brands that are highly sought after? Understanding market trends and consumer preferences will help you make informed decisions regarding your inventory selection.

Location is another critical factor. Choose a strategic location that ensures visibility, accessibility, and proximity to potential customers. A well-chosen location can significantly impact foot traffic and customer reach.

Pricing Strategy is a delicate balance. Set competitive prices that attract buyers while still allowing for a reasonable profit margin. Conduct market research and analyze your competitors’ pricing strategies to determine the optimal pricing for your vehicles.

Effective Inventory Management is essential to minimize holding costs and maximize turnover rate. Keep track of your inventory, analyze sales data, and adjust your purchasing decisions accordingly. Maintaining a diverse inventory that caters to different customer preferences can also help attract a wider customer base.

Customer Experience is a key differentiator in the car dealership business. Provide exceptional customer service and build long-term relationships with buyers. A satisfied customer is more likely to become a repeat customer and refer your dealership to others.

By considering these factors and implementing effective strategies, you can increase the profitability of your car dealership business. Remember, success in this industry requires continuous adaptation to changing market dynamics and a relentless focus on customer satisfaction.

Planning Your Car Dealership Business

Identifying your target market.

It is essential to identify your target market before launching your car dealership business. Consider factors such as demographics, income levels, preferences, and local competition. By understanding your target market’s needs and preferences, you can tailor your inventory and marketing efforts to attract the right customers.

Moreover, conducting market research will help you identify trends, predict demand, and adjust your business strategy accordingly.

Choosing the Right Location

The location of your car dealership can significantly impact your success. Look for areas with high foot traffic, easy access, and visibility. Consider the proximity to major roads, commercial hubs, and residential neighborhoods.

Additionally, check local zoning laws and regulations to ensure that your chosen location allows for car dealership activities. Consult with a real estate professional to find the best-fit location for your business.

Deciding on New or Used Cars

Another critical decision is whether to focus on selling new or used cars . Both options have their advantages, and your choice will depend on factors like market demand, available resources, and competition in your area.

Selling new cars might require establishing partnerships with specific manufacturers, meeting certain sales quotas, and complying with brand guidelines. On the other hand, selling used cars allows for more flexibility in terms of pricing, selection, and sourcing.

Legal Considerations for Car Dealerships

Necessary licenses and permits.

Before opening your car dealership, you must obtain the necessary licenses and permits to operate legally. Consult with your local licensing agency or business regulatory authority to identify the specific requirements for your area.

Common licenses and permits typically include a dealer license, salesperson license, and potentially additional permits for vehicle storage, display, and vehicle registration.

Understanding Zoning Laws

Car dealerships are subject to zoning laws, which regulate the types of activities that can take place in specific areas. Ensure that your chosen location is zoned for car dealership activities or obtain the necessary permits or variances.

Consult with a legal professional or local zoning authorities to navigate the zoning regulations and avoid any potential issues.

Insurance Requirements for Car Dealerships

Obtaining comprehensive insurance coverage is crucial to protect your car dealership business from potential risks and liabilities. Insurance requirements may vary depending on your location and the type of vehicles you sell.

Common insurance policies for car dealerships include general liability insurance, inventory insurance, garage liability insurance, and workers’ compensation insurance. Consult with an insurance professional to design an insurance package that suits your specific needs.

Financing Your Car Dealership Business

Startup costs for a car dealership.

Starting a car dealership requires a significant upfront investment to cover various expenses. These may include:

• Property or lease costs for your dealership location.
• Initial inventory purchase.
• Licensing and permit fees.
• Office equipment, furniture, and signage.
• Marketing and advertising expenses.
• Insurance premiums.

Ensure you have a detailed business plan and secure adequate funding to cover these startup costs and sustain your business until it becomes profitable.

Securing Financing for Your Business

If you don’t have the necessary capital to finance your car dealership business, securing financing options can be a viable solution. Explore traditional banking options, government-backed loans, or private investors who specialize in financing car dealership startups.

Prepare a comprehensive business plan, financial projections, and supporting documents to increase your chances of obtaining financing. Demonstrate your knowledge of the industry, market analysis, and strategies for profitability to instill confidence in potential lenders or investors.

Managing Cash Flow in the Car Dealership Business

Effective cash flow management is vital in the car dealership business to ensure ongoing operations and sustained growth. Some key practices include:

• Implementing a robust accounting system to track revenue, expenses, and inventory.
• Regularly reviewing financial statements to identify trends, bottlenecks, and areas for improvement.
• Establishing relationships with reliable suppliers and negotiating favorable terms.
• Minimizing holding costs by optimizing inventory turnover.
• Being diligent with expenses and prioritizing cost control measures.

By continuously monitoring and managing your cash flow, you can navigate potential challenges and position your car dealership for long-term profitability.

Starting a profitable car dealership business from scratch requires careful planning, market understanding, and financial preparedness. By following this step-by-step guide, you can make informed decisions, overcome challenges, and build a successful car dealership enterprise. Remember to continuously adapt to market trends, provide exceptional customer service, and prioritize profitability to thrive in the competitive car dealership industry.

Want to improve your sales and move cars off the lot faster? Book a test drive with AutoRaptor to see how our simple dealership CRM software can help you close more deals effectively.

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How to Start a Car Rental Business

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If you’re considering starting a business in the auto industry, you have a lot of choices, including starting a car rental business.

But what exactly do you need to do to get this type of business off the ground? There are a lot of moving pieces to consider, but if you take the time to prepare and follow your state and local guidelines, your road to a successful car rental business can be smoother than most.

To help you prepare, we’ve created this guide on how to start a car rental business. Read on to learn everything you need to know.

Step 1: Pick a type of car rental business

Before you can start your car rental business, you need to know what type of business you want to own. You might want to own a franchise, build your own brand, purchase an existing business, or work with a car dealership.

Each type of car rental business has its pros and cons, you just have to find the one that’s right for you. Let’s take a closer look at some of your options.

If you decide on a car rental franchise, you will purchase the rights to use the brand name and business model of an existing car rental business. Options for a car rental franchise include Hertz, Dollar Thrifty, Enterprise, Budget, and many others. There are disadvantages and advantages to franchising that you’ll want to consider before taking the leap.

One of the benefits of starting a franchise is the simplicity of setting up the business. While there might be a higher cost to entry, you get the added support of a well-known and successful brand name, as well as guidance as you launch and grow your location. Plus, you have franchise financing options to help relieve some of this burden.

The drawback to owning a franchise is that you lose some autonomy over your business and you may face some higher costs—the initial franchise fee alone can be tens of thousands of dollars. As well, the franchisor will have a degree of control over your business decisions, since each franchise location will more or less follow the same model.

Another option for how to start a car rental business is to set up an agreement with a car dealership to offer rentals to customers who bring in their cars for repair.

This type of car rental business offers a very limited pool of customers to work with, but it also means that you don’t need a large fleet of cars to get started, which can lower the initial cost of starting your business.

Independent small business

One of the advantages of starting your own small business is that you’re not beholden to anyone. You get to make decisions that are best for you and your business. With that added power, comes added responsibility, though. If you’re the sole owner of your business, you’re also on the line for any problems the business has.

You’ll need to build your brand from the ground up and find customers while competing with the big names (like the franchises we mentioned above). Plus, you’ll need a substantial cushion of cash to support your initial purchases and operations.

Existing business

If you don’t want to build a business from the ground up, but you don’t like the restrictions that come with a franchise, you might consider buying an existing independent car rental business whose owners are looking to sell.

The benefit of buying an existing rental car business is that many of the basic business structures are already in place and there’s likely a loyal customer base as well.

One of the pain points of purchasing an existing business is the research it requires. Plus, you’ll need to figure out if the business is successful because it fills a market need in an otherwise underserved market, or if its success depended on relationships built by the previous owner.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Step 2: Determine your target audience

Another factor you need to consider when thinking about how to start a car rental business is what type of customer you plan to serve.

The target audience of your rental car business could be:

Loaner cars for a car dealership or auto mechanic

Long-term rentals

Short-term rentals for business travelers

Ensuring that there is, in fact, a market need for your business is the first step. And beyond that, you can determine who your target demo is by looking at your location and needs of the local population. Once you have this demo in mind, you can better inform your business plan, marketing efforts, and more.

Step 3: Write your business plan

Now that you know what kind of car rental business you plan to start and who you’ll serve, you’re ready to write your business plan. A business plan is essential for both you and any potential investors or partners you may work with down the line.

When writing your business plan you’ll want to lay out a plan for how you will transform your idea into a profitable company. This will involve detailing the type of car rental business you’re starting, what products and services you’ll offer, what fees you’ll charge, how much of your own money you plan on putting into the business, how much funding you’ll need, an outline of your marketing plan, and financial projections for the next few years. By taking the time to think through all of these steps, you’ll essentially create a roadmap that you can consult throughout the startup phase of your business to help keep you on track.

Step 4: Register and license your business

With this internal work completed, it’s time to complete some external processes to legally create your company. This includes choosing a business entity and registering it with the state in which you’ll operate your car rental business. The specific registration process will vary depending on your state, but this can typically be completed online through your secretary of state or chamber of commerce by filing the appropriate forms and paying a nominal fee.

Common business entities include sole proprietorships, LLCs, and corporations. While a sole proprietorship is the easiest entity to set up (as it does not need to be registered at all), this is likely not the best choice for a car rental business, as you will be exposing your personal assets to any legal action taken against your business. An LLC or corporation will lower this risk and separate your business and personal assets.

Next, you’ll likely need to obtain the appropriate business licenses and permits through your state and local agencies. If you have not consulted with a business attorney yet, this is a good time to do so to ensure you’re properly licensed to operate a car rental business. You should also obtain the appropriate business insurance to make sure your business will be covered in the event of accidents, natural disasters, and more.

Step 5: Get your finances in order

You’re almost ready to open your (car) doors, but before you do that, you’ll need to get your finances in order. Different types of business require varying amounts of upfront costs, but in the case of a car rental business, you will likely have steep startup costs, from purchasing a fleet of cars, to leasing the lot and storefront, to employing mechanics, to insuring the entire operation.

Open a business bank account and credit card

Even if you’re using your personal money to fund the launch of your business, you’ll still want to open a separate business checking account and business credit card . Once you’ve done this, make sure to only conduct business-related transactions with these accounts. Not only will this make things easier come tax time, but it will also reinforce the separation of your business and personal assets in the event of a lawsuit.

You will likely also want to obtain an employer identification number, or EIN, which is like your business’s version of a social security number. This number will be used to open your business bank accounts and will also help you start to build business credit, which will be necessary if you seek outside funding.

Look for outside funding

In addition to the startup funding that you might have saved to start your car rental business, you can look for outside funding to supply additional money. There are many different types of business loans to choose from—from term loans to lines of credit to equipment financing—so be sure to find the one that’s right for you.

A business auto loan can help you finance your fleet of cars, while more broad equipment financing may help you finance the computers and other equipment your business will need to operate. This type of financing is generally easier to qualify for since the equipment you buy with the loan also serves as collateral.

Step 6: Find the right location

Once you’ve organized your finances, it’s time to find where you’ll operate your business. There are several factors to consider, chief among them being the size of the property and its proximity to other businesses or services. For example, if you’re looking to work with business travelers, you need to be located near the airport.

Step 7: Create a rental contract

One of the most important documents for someone who will be operating a car rental business is the rental contract.

The rental agreement is a contract between the rental car company (you) and the customer who is renting the car. This contract will cover liabilities, what happens in the case of an accident, and an explanation of who is responsible for what. To make sure your rental contract is fully protecting your business and your customers, you should run this by a legal professional who has experience with businesses in the car rental industry.

Step 8: Build your operations team

Once you have a space to operate your car rental business, you need employees and a support system to operate the business. You might need employees to run the front office and answer phones, an accountant to track your numbers, and mechanics to maintain your car fleet.

Beyond finding the right people, you will also need to understand your responsibilities as an employer, including what types of insurance (like workers compensation and unemployment) you’ll need to obtain.

Step 9: Create an online presence

A must-do for any business is to establish an online presence so customers can discover your business. In addition to a business website, you should consider setting up pages on business review sites such as Yelp and Google, as well as social media pages where customers can contact your business with questions and leave reviews for other potential customers to see.

This will both establish your business’s brand, as well as attract new customers. After all, if no one knows your company exists, you can’t expect to have much business.

Step 10: Provide exceptional service

All of your planning and preparation may be behind you, but your work is far from over. In order to make your business profitable you need to attract and retain customers. To do this, you’ll want to provide your customers with a high-quality product, stellar customer service, and build a strong relationship with your local community.

If you provide an exceptional service that people can trust, word will soon spread and you’ll be turning a profit in no time.

Start Your Dream Business

The bottom line

When you’re just learning how to start a car rental business, the number of steps that you need to take and details that must be accounted for can feel overwhelming. But with some patience and attention to detail, you can make your car rental business a reality.

On a similar note...

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Auto Repair Service Business Plan

Start your own auto repair service business plan

Quick and Dirty Auto Repair

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">, opportunity.

Between having a high level of commuting traffic, and an equally high level of tourism traffic on local highways, there is a constant significant demand for auto repair services and auto parts. Convenience is a must for most middle and upper-class consumers and travelers. Where can they go to meet their needs?

Quick and Dirty Auto Repair aims to offer high-quality auto repair services and a full range of auto parts. QDAR focuses on personalized service to its customers by offering convenience and rapid service. Additionally, QDAR is technologically savvy with computerized monitoring of all parts inventory, to ensure that parts are always in stock while keeping a balanced level of inventory to maximize inventory turnover. Finally, QDAR has strong vendor relationships with the most service conscious vendors who are capable of shipping major parts rapidly (on an overnight timeline in most cases).

The market of auto repair services and parts sales is very fragmented. The majority of auto shops usually offer either repair services or parts inventory. The niche where QDAR positions itself represents auto centers that offer both auto services and parts at one convenient location. Middle and upper class customers to whom QDAR will cater its services are less price sensitive as they value the convenience of quick turnaround (on any model/make of car) and high quality of services.

CompetitionWhy Us? Quick and Dirty Auto Repair aims to offer high-quality auto repair services and a full range of auto parts. QDAR focuses on personalized service to its customers by offering convenience and rapid service. Additionally, QDAR is technologically savvy with computerized monitoring of all parts inventory, to ensure that parts are always in stock, while keeping a balanced level of inventory to maximize inventory turnover. Finally, QDAR has strong vendor relationships with the most service conscious vendors who are capable of shipping major parts rapidly (on an overnight timeline in most cases).

There are over 400 auto repair and auto parts competitors in the local area. Only a quarter of these competitors offer both auto repair services and auto parts inventories. Among these, only a few are major national chains. The remainder are small privately-owned establishments. QDAR will compete well by focusing on convenience and offering a high level of customer service. Additionally, its honest reputation will be a major factor in repeat business and building a large base of regular, loyal customers.

Quick and Dirty Auto Repair aims to offer high-quality auto repair services and a full range of auto parts. QDAR focuses on personalized service to its customers by offering convenience and rapid service. Additionally, QDAR is technologically savvy with computerized monitoring of all parts inventory, to ensure that parts are always in stock, while keeping a balanced level of inventory to maximize inventory turnover. Finally, QDAR has strong vendor relationships with the most service conscious vendors who are capable of shipping major parts rapidly (on an overnight timeline in most cases).

Expectations

QDAR’s analysis is based on the averages of the first-year figures for total sales by units, and for operating expenses. These conservative assumptions make for a more accurate estimate of real risk.

Financial Highlights by Year

Financing needed.

Our investment is $250,000:

Jake Brakes $62,500

Blair Horn $62,500

Yugo Ford $62,500

Gaz Motor $62,500

Problem & Solution

Problem worth solving.

Between having a high level of commuting traffic, and an equally high level of tourism traffic on local highways, there is a constant significant demand for auto repair services and auto parts. Convenience is a must for most middle and upper-class consumers and travelers. Where can they go to meet their needs

Our Solution

Target market, market size & segments.

QDAR has a focus on meeting the demand of a regular local resident customer base, as well as towed vehicle drop-ins from local and freeway traffic traveling on nearby freeways. QDAR has established relationships with a few major local tow truck companies for referral business of stalled vehicles requiring a tow to an auto repair facility.

The company estimates that about 80% of revenues will come from the established local clientele and 20% from the local and freeway traffic tow-ins. The table below further estimates the total market potential of the type of services rendered by QDAR in the Portland metropolitan area.

4.1 Market Segmentation

QDAR focuses on the middle and upper-income markets. This market looks for high quality, rapid service with as much convenience as possible. Most individuals in this market segment are willing to pay an extra premium within the pricing of auto repair services to avoid the common inconveniences of having a vehicle tied up in a repair shop.

Local residents regular customer base QDAR wants to establish a significantly large regular customer base. This will establish a healthy, consistent revenue base to ensure the stability of the business.

Emergency towing local and freeway traffic Emergency towing of local and freeway traffic comprises approximately 20% of revenues. Convenience, regular referrals from tow truck companies, and high quality, rapid service are critical to capturing this segment of the market.

Current Alternatives

There are over 400 auto repair and auto parts competitors in the local area. Only a quarter of these competitors offer both auto repair services and auto parts inventories. Among these, only a few are major national chains. The remainder are small privately-owned establishments. QDAR will compete well by focusing on convenience and offering a high level of customer service. Additionally, its honest reputation will be a major factor in repeat business and building a large base of regular, loyal customers.

Primary competitors are engaged principally in the retail sale of automotive parts, tires and accessories, automotive maintenance and service and the installation of parts. Larger competitors have adopted the "supercenter" store model, a freestanding, "one-stop" shopping automotive warehouse that features state-of-the-art service bays. These "supercenters" carry thousands of stock-keeping units and serve the automotive aftermarket needs of the "do-it-yourself," the "do-it-for-me" (automotive service), tire and "buy-for-resale" customer sectors.

Large competitors’ stores typically carry the same basic product line, with variations based on the number and type of cars registered in the different markets. A full complement of inventory at a typical supercenter includes an average of approximately 25,000 items.

Automotive product lines usually include:

• Suspension parts.
• Ignition parts.
• Exhaust systems.
• Engines and engine parts.
• Oil and air filters, belts, hoses, and air conditioning parts.
• Wiper blades.
• brake parts.
• Chemicals, including oil, antifreeze, polishes, additives, cleansers and paints.
• Mobile electronics, including sound systems, alarms, and remote vehicle starters.
• Car accessories, including seat covers, floor mats, and exterior accessories.
• Hand tools, including sockets, wrenches, ratchets, paint and body tools, jacks and lift equipment, automotive specialty tools and test gauges.
• A selection of truck, van, and sport utility vehicle accessories.

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Additionally, a number of competitors have electronic work order systems available amongst their various service centers. This type of system creates a service history for each vehicle, provides customers with a comprehensive sales document, and enables the service center to maintain a service customer database.

Our Advantages

QDAR’s competitive edge is the heavy focus on customer convenience by offering unlimited shuttle service, rapid turnaround on auto repair jobs, and a referral network of a few local major tow truck companies.

Keys to Success

Our keys to success will include:

• Expedient and convenient auto repair services.
• Growing and maintaining a referral network of local towing service companies.
• A wide range of auto parts inventory that is (nearly) never out of stock.
• Rapid order and delivery of major auto parts items.

Marketing & Sales

Marketing plan.

QDAR will focus on its target market, the middle and upper-class market, and establish a reputable image from that target market’s perspective, by offering convenience, expedient auto repair services, customer service excellence, and by working with local towing companies.

QDAR will focus its sales strategy on effectively reaching the target customer segment of upper and middle-class customers. For this purposes, the company will employ direct sales staff. At the same time, the company will further strengthen its relationships with the tow truck companies to capture auto repair needs of the local and highway traffic.

QDAR has the core competencies amongst its large crew to work on all makes and models of domestic and foreign vehicles. With ten service bays at each location and all employees focused on superior customer service, a quick turnaround is always the standard at QDAR. QDAR strives to be accurate and honest with customers in terms of quoting cost estimates and repair completion time estimates. QDAR employees focus on delivering what they promise. This focus on building strong customer relationships based on trust and integrity will be the catalyst in establishing a strong regular customer base.

QDAR utilizes the highest degree of technology in managing a full range of auto parts inventory. The goal is to never be out of a specific part while maximizing inventory turnover. Strong vendor relationships have been established with the most reputable vendors in terms of shipping time of major parts.

Milestones & Metrics

Milestones table, key metrics.

Our Key metrics are: 

• Average gross margin
• Average revenue per engagement
• Repeat business
• cost of inventory and training 
• # of tweets and retweets which tell us which customers are saying what 
• # of return customers 
• # of business relationships 

Ownership & Structure

QDAR is incorporated in the state of Oregon. It is privately owned by Jake Braques, Blair Horne, Hyugo Ford and Gaz Môder. To attract additional financing, the owners may consider taking QDAR public several years down the road.

Management Team

QDAR has a strong management team that will allow them to execute on this exciting idea. QDAR has four partners, Jake Braques, Blair Horne, Hyugo Ford, and Gaz Môder. Jake has a background of sales, 12 years at the nation’s second largest Ford dealership. He will be overseeing the sales and marketing for the organization. Blair’s background is in management from Siemen’s automobile division where he was a Vice President overseeing a department of 565 people. Hyugo is also a product of the auto industry, specifically the auto repair and parts sales industry. Hyugo spent six years at NAPA Auto Parts and then seven years at Repair-It, Oregon’s largest independent auto repair facility. At both organizations Hyugo had multiple roles within the organization allowing him to bring to QDAR a broad skill set. Lastly, Gaz brings QDAR 10 years of finance and administration experience. Gaz was trained at GM and later in his career took a position at Delco Parts. The incredible breadth of skill sets and knowledge that the management team possesses will allow QDAR to accomplish their lofty sales goals.

QDAR is an exciting business opportunity that addresses the unmet need of having a full service auto repair facility that also has a complete retail parts center. These distinct but complimentary services will have benchmarked customer service, something that the industry is not known for having. QDAR will be led by a seasoned management team of four, all of whom have extensive industry experience.

Personnel Table

Financial plan investor-ready personnel plan .">, key assumptions.

Our key assumptions are: 

• People need cars to get to their jobs on time and make money. 
• Cars break down 
• Not everyone has the ability to pay for new parts and expensive service. 

Revenue by Month

Expenses by month, net profit (or loss) by year, use of funds.

We will be buying $350K long term assets mainly shop equipment. The rest of the money will be spent on legal fees. 

Sources of Funds

Each of the founders will contribute a fourth of the initial investment of $250K. We are also taking on a long-term loan and some credit card debt.

Projected Profit & Loss

Projected balance sheet, projected cash flow statement.

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Auto Repair Business Plan Template & Guidebook

If you're starting a new auto repair business, a detailed and comprehensive business plan is essential. Many entrepreneurs know they need a business plan, but don't have the time or know-how to craft one on their own. The #1 Auto Repair Business Plan Template & Guidebook provides an easy-to-use template and guidebook that offers all the information needed to create a successful plan while minimizing the time and effort required. With this powerful tool, new auto repair business owners have access to expert advice every step of the way to ensure their success.

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• How to Start a Profitable Auto Repair Business [11 Steps]
• 25 Catchy Auto Repair Business Names:
• List of the Best Marketing Ideas For Your Auto Repair Service:

How to Write a Auto Repair Business Plan in 7 Steps:

1. describe the purpose of your auto repair business..

The first step to writing your business plan is to describe the purpose of your auto repair business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a auto repair business:

The mission of our Auto Repair business is to provide quality, reliable, and fairly priced auto repair services to our community while creating a positive and comfortable professional environment for staff and customers alike. We strive to foster long-term relationships with each person we serve, so we can continue to be their go-to auto repair resource for years to come.

2. Products & Services Offered by Your Auto Repair Business.

The next step is to outline your products and services for your auto repair business. 

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

• What is my business?
• What are the products and/or services that I offer?
• Why am I offering these particular products and/or services?
• How do I differentiate myself from competitors with similar offerings?
• How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your auto repair business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals. 

A good marketing plan for your auto repair business includes the following elements:

Target market

• Who is your target market?
• What do these customers have in common?
• How many of them are there?
• How can you best reach them with your message or product?

Customer base 

• Who are your current customers? 
• Where did they come from (i.e., referrals)?
• How can their experience with your auto repair business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

• How does it work, what features does it have, and what are its benefits?
• Can anyone use this product or service regardless of age or gender?
• Can anyone visually see themselves using this product or service?
• How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

• Which companies are competing with yours today (and why)? 
• Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
• What specific advantages does each competitor offer over yours currently?

Marketing channels

• Which marketing channel do you intend to leverage to attract new customers?
• What is your estimated marketing budget needed?
• What is the projected cost to acquire a new customer?
• How many of your customers do you instead will return?

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4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations. 

In it, you should list:

• The equipment and facilities needed
• Who will be involved in the business (employees, contractors)
• Financial requirements for each step
• Milestones & KPIs
• Location of your business
• Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a auto repair business?

• Diagnostic and Repair Tools
• Computer Software
• Business License/Permits
• Insurance Coverage

5. Management & Organization of Your Auto Repair Business.

The second part of your auto repair business plan is to develop a management and organization section.

This section will cover all of the following:

• How many employees you need in order to run your auto repair business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
• The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
• How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Auto Repair Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a auto repair business varies based on many different variables, but below are a few different types of startup costs for a auto repair business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your auto repair business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your auto repair business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses. 

Here are some steps you can follow to devise a financial plan for your auto repair business plan:

• Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
• Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
• Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
• Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
• Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
• Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

Frequently Asked Questions About Auto Repair Business Plans:

Why do you need a business plan for a auto repair business.

A business plan for an auto repair business provides a roadmap of the business’s current and future operations. It outlines the necessary information to achieve success, including the market analysis, organizational structure, financial projections, marketing strategy, and operational plans. By developing a comprehensive plan for your auto repair business, you can set goals, track progress, and make changes to ensure that you are staying on track to reach your desired results.

Who should you ask for help with your auto repair business plan?

You should ask a business consultant, mentor, or financial planner for help with your auto repair business plan. Additionally, you can find resources online such as templates and sample business plans to help you structure your business plan.

Can you write a auto repair business plan yourself?

Yes, it is possible to write an auto repair business plan yourself. Writing a business plan can require a lot of research and strategizing, but it can be done with the right preparation and knowledge. When writing a business plan for an auto repair business, you should include an executive summary that outlines your overall vision for the business, as well as any key objectives; a market analysis to define your target audience and consider the potential competitors in the area; a description of your services and pricing; a risk analysis for potential threats; financial projections for initial investments, overhead costs, and revenue forecasts; a description of any required labor or equipment; and finally, an action plan that details how you will implement your strategy.

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I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.

Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.

From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

Auto Repair Business Plan

Written by Dave Lavinsky

You’ve come to the right place to create your Auto Repair shop business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Auto Repair shops.

Auto Repair Business Plan Example

Below is a template to help you create each section of your Automotive Repair business plan.

Executive Summary

Business overview.

Tim’s Timely Auto Repair is a startup auto repair shop located in St. Louis, Missouri. The Company is founded by Tim Martinez, an experienced auto mechanic who has gained valuable knowledge on how to manage an auto repair shop during the past 15 years while working at Fast Cars Auto Repair. Now that Tim has experienced managing an auto repair shop, he is ready to start his own company, Tim’s Timely Auto Repair. Tim is confident that his auto repair skills, combined with his understanding of business management, will enable him to run a profitable auto repair shop of his own. Tim is recruiting a team of highly qualified professionals to help manage the day-to-day complexities of auto repair shop operations – sales and marketing, customer service, and financial reporting.

Tim’s Timely Auto Repair will provide reliable auto repair services for customers in the St. Louis area. Tim’s Timely will be the go-to auto repair shop in St. Louis for convenient scheduling, quality work, and timely repairs. The Company will be the ultimate choice for busy individuals, providing the best customer service in the area.

Product Offering

Auto Repair will provide the following repair services for most vehicle makes and models:

• Brake repair
• Powertrain repair
• Muffler & exhaust repair
• Heating repair
• Electrical system repair
• Wheel alignment and repair
• Preventative repair & maintenance

Customer Focus

Tim’s Timely Auto Repair will target personal vehicle owners in St. Louis. The Company will also target small businesses who use a vehicle for their company’s operations such as delivery drivers, plumbers, and other mobile businesses. No matter the customer, Tim’s Timely Auto Repair will deliver the best communication, service, and results.

Management Team

Tim’s Timely Auto Repair will be owned and operated by Tim Martinez. Tim is a graduate of Missouri University with a Bachelor’s degree in Automotive Technology. He has 15 years of experience working as an auto repair technician and manager of another local shop. Tim will be the Company’s CEO and the Head Auto Repair Technician. He will oversee the day-to-day operations, auto repair equipment management, and auto technician staff’s activities.

Tim has recruited his former administrative assistant, Jen Jackson, to be the Company’s Chief Operations Officer and help oversee the auto repair shop’s daily operations and customer relations. Jen has a Master’s degree in Business Administration. She has worked in the auto repair industry for many years and understands what it takes to effectively run this type of business.

Success Factors

Tim’s Timely Auto Repair will be able to achieve success by offering the following competitive advantages:

• Skilled team of auto repair technicians who will be able to diagnose and repair a wide variety of vehicle issues in a timely manner.
• Tim’s Timely Auto Repair makes it easy for customers to schedule appointments, pay for service, and check on the status of their vehicle through a user-friendly customer app.
• The Company offers competitive pricing and discounts for regular customers.

Financial Highlights

Tim’s Timely Auto Repair is seeking $250,000 in debt financing to launch its auto repair business. The funding will be dedicated towards securing the auto repair shop and purchasing auto repair equipment and supplies. Funding will also be dedicated towards three months of overhead costs to include payroll of the staff and marketing expenses. The breakout of the funding is below:

• Auto repair shop build-out: $100,000
• Equipment, supplies, and materials: $40,000
• Three months of overhead expenses (payroll, utilities): $90,000
• Marketing costs: $10,000
• Working capital: $10,000

The following graph below outlines the pro forma financial projections for Tim’s Timely Auto Repair.

Company Overview

Who is tim’s timely auto repair.

Tim’s Timely Auto Repair is a newly established auto repair business in St. Louis, Missouri. Tim’s Timely will be the first choice for vehicle owners in St. Louis and the surrounding communities for its reliable and timely repair services. The Company is able to service almost any vehicle make and model and has the ability to accommodate customers’ busy schedules.

Tim’s Timely Auto Repair will be able to guarantee the quality of its repairs thanks to the latest and most reliable auto repair equipment and technology combined with stringent quality control standards. The Company’s team of highly qualified professionals experienced in a wide range of automotive issues will be able to provide timely diagnosis and repair. Customers can easily schedule appointments, check on their vehicle, and make payments using the Company’s customer app.

Tim’s Timely Auto Repair History

Tim’s Timely Auto Repair is owned and operated by Tim Martinez, an experienced auto mechanic who has gained valuable knowledge during his 15 year tenure working as an auto repair technician and manager at another local auto repair shop. Now that Tim has gained the experience and knowledge of how to manage an auto repair shop, he is ready to start one of his own. Tim has begun recruiting a team of highly qualified professionals to help manage the day to day complexities of running an auto repair shop – sales and marketing, customer service, and financial reporting.

Since incorporation, Tim’s Timely Auto Repair has achieved the following milestones:

• Registered Tim’s Timely Auto Repair, LLC to transact business in the state of Missouri.
• Has begun negotiations to purchase the warehouse that will become the shop.
• Reached out to numerous contacts to include past customers, local businesses, and friends and family members to start spreading the word about the new shop.
• Began recruiting a staff of accountants, auto repair technicians, maintenance workers, and sales personnel to work at Tim’s Timely Auto Repair.

Tim’s Timely Auto Repair Services

Industry analysis.

The United States auto repair market is valued at $78B with approximately 280,000 businesses in operation and over 614,000 employees working in the industry across the country. The auto repair industry has grown steadily over the past five years. Much of this growth can be attributed to more vehicles on the road combined with an increasing age of the vehicles in service. Additionally, rising disposable incomes have led to more people foregoing DIY repairs, and instead, taking their vehicles to industry operators when they need to be repaired.

One of the biggest challenges facing the auto repair industry is the growing shortage of technicians as many are retiring and there are not enough new technicians joining the field to fill the vacancies. Additional challenges include increased digitization and evolving technologies. Industry operators will need to keep up with the latest innovations to remain competitive.

Customer Analysis

Demographic profile of target market.

Tim’s Timely Auto Repair will target vehicle owners in St. Louis. The Company will also target small businesses who use a vehicle for their company’s operations such as delivery drivers, plumbers, and other mobile businesses. No matter the customer, Tim’s Timely Auto Repair will deliver the best communication, service, and results..

The precise demographics for St. Louis, Missouri are:

Customer Segmentation

Tim’s Timely will primarily target the following customer profiles:

• Individual vehicle owners
• Delivery drivers
• Mobile service providers who use vehicles for their business operations (e.g., plumbers, HVAC, mobile pet grooming, non-emergency medical transport, solar panel installers, etc.)

Competitive Analysis

Direct and indirect competitors.

Tim’s Timely Auto Repair will face competition from other companies with similar business profiles. A description of each competitor company is below.

Fast Cars Auto Repair

Established in 1975, Fast Cars Auto Repair is one of the largest auto repair companies in Missouri. The company provides a wide range of repair and maintenance services for many vehicle makes and models, with a focus on sports cars, luxury cars, and race cars. Fast Cars Auto Repair’s leadership team continuously introduces new technology and repair training for its staff to ensure all technicians are equipped to repair the latest model vehicles. The company has four locations in St. Louis, with more being built in the near future.

JP’s Affordable Auto Repair

JP’s Affordable Auto Repair is a small auto repair shop catering to local vehicle owners in St. Louis, Missouri and surrounding areas. JP’s Affordable Auto Repair provides efficient service at affordable prices. The company provides same day and 48-hour repairs for an extra fee. The owners of JP’s Affordable Auto Repair have been in the automotive business for over 40 years, so they keenly understand the ins-and-outs of running an auto repair shop.

Dependable Dan’s Auto Repair

Dependable Dan’s Auto Repair is a trusted St. Louis, Missouri-based auto repair shop that provides superior service to vehicle owners in St. Louis and the surrounding areas. The company is able to provide a wide variety of repair services for both personal and commercial vehicles. Dependable Dan’s Auto Repair has been family owned and operated since 1999. The company prides itself on being the number one choice for quality auto repair services at competitive prices.

Competitive Advantage

Tim’s Timely Auto Repair will be able to offer the following advantages over the competition:

• Skilled team of auto repair technicians who are highly skilled and trained in a wide variety of vehicle issues to provide reliable results for almost any make or model.
• Tim’s Timely Auto Repair makes it easy for customers to obtain the Company’s services. Customers can schedule appointments, check on their vehicle, and make payments through the convenience of the customer app.

Marketing Plan

Brand & value proposition.

Tim’s Timely Auto Repair will offer the unique value proposition to its clientele:

• Tim’s Timely Auto Repair provides reliable results in a timely manner for most vehicle makes and models.

Promotions Strategy

The promotions strategy for Tim’s Timely Auto Repair is as follows:

Social Media Marketing

The Company will enlist the help of a marketing director to create accounts on social media platforms such as Linkedin, Twitter, Instagram, Facebook, TikTok, and YouTube.  The marketing director will ensure Tim’s Timely maintains an active social media presence with regular updates and informative content.

Professional Associations and Networking

Tim’s Timely Auto Repair will become a member of professional associations such as the Automotive Service Association, Auto Care Association, National Automobile Dealers Association, and the International Automotive Technicians Network. The leadership team will focus their networking efforts on expanding the Company’s customer network.

Print Advertising

Tim’s Timely Auto Repair will invest in professionally designed print ads to display in programs or flyers at industry networking events. The Company will also send direct mailers to local businesses who may be interested in auto repair services.

Publications

The Company will invest in advertisements in major industry publications such as Auto Body Repair News Magazine, Auto Inc., and Auto Service Professional publications. Additionally, the Company will invest in local advertising through newspapers, magazines, and community newsletters.

Website/SEO Marketing

Tim’s Timely Auto Repair will create a company website. The website will be well organized, informative, and list all the services that Tim’s Timely is able to provide. The Company’s marketing director will also manage the Company’s website presence with SEO marketing tactics so that when someone types in a search engine “St. Louis auto repair shop” or “auto repair shop near me”, Tim’s Timely Auto Repair will be listed at the top of the search results.

The pricing of Tim’s Timely Auto Repair will be moderate and on par with competitors so customers feel they receive value when purchasing the Company’s superior repair services.

Operations Plan

The following will be the operations plan for Tim’s Timely Auto Repair.

Operation Functions:

• Tim Martinez will be the CEO and Head Auto Repair Technician. He will oversee the auto repair technicians, repair process, and the auto repair equipment maintenance. Tim has spent the past year recruiting the following staff:
• Jen Jackson – Chief Operating Officer who will manage the bookkeeping, customer relationships, and help oversee the daily operations for the Company.
• Andrea Miller – Accountant who will provide all accounting, tax payments, and monthly financial reporting.
• Bill Smith – Marketing Director who will oversee all marketing strategies for the Company and manage the website, social media, and outreach.

Milestones:

Tim’s Timely Auto Repair will have the following milestones complete in the next six months.

11/1/2022 – Finalize contract to purchase property.

11/15/2022 – Finalize personnel and staff employment contracts for the Tim’s Timely Auto Repair management team.

12/1/2022 – Begin build-out of the shop and purchase equipment and supplies.

12/15/2022 – Begin networking at industry events and implement the marketing plan.

1/15/2023 – Finalize contracts for auto repair technicians.

2/15/2023 – Tim’s Timely Auto Repair officially opens for business.

Financial Plan

Key revenue & costs.

The revenue drivers for Tim’s Timely Auto Repair are the fees charged to customers in exchange for the Company’s auto repair services.

The cost drivers will be the overhead costs required in order to staff an auto repair shop. The expenses will be the payroll cost, utilities, auto repair equipment and supplies, and marketing materials.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Average number of vehicles serviced per month: 450
• Average fees per month: $15,000
• Overhead costs per year: $140,000

Financial Projections

Income statement, balance sheet, cash flow statement, auto repair business plan faqs, what is an auto repair business plan.

An auto repair  business plan is a plan to start and/or grow your auto repair company business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your auto repair  business plan using our Auto Repair  Business Plan Template here .

What are the Main Types of Auto Repair Companies?

There are a number of different kinds of auto repair companies , some examples include: Auto Service Shop, Transmission Repair Shop, and Body Repair Shop.

How Do You Get Funding for Your Auto Repair Business Plan?

Auto repair companies are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding. A thorough  business plan for auto repair shop will show investors you are well-prepared to start a business on your own.

How To Write a Successful Car Rental Business Plan + Template

Creating a business plan is essential for any business, but it can be especially helpful for car rental businesses that want to improve their strategy and/or raise funding.

A well-crafted business plan not only outlines the vision for your company, but also documents a step-by-step roadmap of how you are going to accomplish it. In order to create an effective business plan, you must first understand the components that are essential to its success.

This article provides an overview of the key elements that every car rental business owner should include in their business plan.

Download the Ultimate Car Rental Business Plan Template

What is a Car Rental Business Plan?

A car rental business plan is a formal written document that describes your company’s business strategy and its feasibility. It documents the reasons you will be successful, your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.

Why Write a Car Rental Business Plan?

A car rental business plan is required for banks and investors. The document is a clear and concise guide of your business idea and the steps you will take to make it profitable.

Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.

Writing an Effective Car Rental Business Plan

The following are the key components of a successful car rental business plan:

Executive Summary

The executive summary of a car rental business plan is a one to two page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.

• Start with a one-line description of your car rental company
• Provide a short summary of the key points in each section of your business plan, which includes information about your company’s management team, industry analysis, competitive analysis, and financial forecast among others.

Company Description

This section should include a brief history of your company. Include a short description of how your company started, and provide a timeline of milestones your company has achieved.

If you are just starting your car rental business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your car rental firm, mention this.

You will also include information about your chosen car rental business model and how, if applicable, it is different from other companies in your industry.

Industry Analysis

The industry or market analysis is an important component of a car rental business plan. Conduct thorough market research to determine industry trends and document the size of your market. 

Questions to answer include:

• What part of the car rental industry are you targeting?
• How big is the market?
• What trends are happening in the industry right now (and if applicable, how do these trends support the success of your company)?

You should also include sources for the information you provide, such as published research reports and expert opinions.

Customer Analysis

This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.

For example, the customers of a car rental business may include business travelers, vacationers, people relocating for work, or those without a personal vehicle.

You can include information about how your customers make the decision to buy from you as well as what keeps them buying from you.

Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or car rental services with the right marketing.

Competitive Analysis

The competitive analysis helps you determine how your product or service will be different from competitors, and what your unique selling proposition (USP) might be that will set you apart in this industry.

For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive differentiation and/or advantage; that is, in what ways are you different from and ideally better than your competitors.

Below are sample competitive advantages your car rental business may have:

• Lower prices
• Easy online booking
• Special offers and discounts
• A wider selection of cars
• 24/7 customer service

Marketing Plan

This part of the business plan is where you determine and document your marketing plan. . Your plan should be clearly laid out, including the following 4 Ps.

• Product/Service : Detail your product/service offerings here. Document their features and benefits.
• Price : Document your pricing strategy here. In addition to stating the prices for your products/services, mention how your pricing compares to your competition.
• Place : Where will your customers find you? What channels of distribution (e.g., partnerships) will you use to reach them if applicable?
• Promotion : How will you reach your target customers? For example, you may use social media, write blog posts, create an email marketing campaign, use pay-per-click advertising, launch a direct mail campaign. Or, you may promote your car rental business via word-of-mouth marketing.

Operations Plan

This part of your car rental business plan should include the following information:

• How will you deliver your product/service to customers? For example, will you do it in person or over the phone only?
• What infrastructure, equipment, and resources are needed to operate successfully? How can you meet those requirements within budget constraints?

The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present.

Finally, and most importantly, in your Operations Plan, you will lay out the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters, and then each year for the following four years. Examples of milestones for a car rental business include reaching $X in sales. Other examples include expanding to new locations, adding new product/service offerings, or launching a new marketing campaign.

Management Team

List your team members here including their names and titles, as well as their expertise and experience relevant to your specific car rental industry. Include brief biography sketches for each team member.

Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities you plan to hire for in the future.

Financial Plan

Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix). 

This includes the following three financial statements:

Income Statement

Your income statement should include:

• Revenue : how much revenue you generate.
• Cost of Goods Sold : These are your direct costs associated with generating revenue. This includes labor costs, as well as the cost of any equipment and supplies used to deliver the product/service offering.
• Net Income (or loss) : Once expenses and revenue are totaled and deducted from each other, this is the net income or loss.

Sample Income Statement for a Startup Car Rental Business

Balance sheet.

Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:

• Assets : All of the things you own (including cash).
• Liabilities : This is what you owe against your company’s assets, such as accounts payable or loans.
• Equity : The worth of your business after all liabilities and assets are totaled and deducted from each other.

Sample Balance Sheet for a Startup Car Rental Business

Cash flow statement.

Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include:

• Cash Flow From Operations
• Cash Flow From Investments
• Cash Flow From Financing

Below is a sample of a projected cash flow statement for a startup car rental business.

Sample Cash Flow Statement for a Startup Car Rental Business

You will also want to include an appendix section which will include:

• Your complete financial projections
• A complete list of your company’s business policies and procedures related to the rest of the business plan (marketing, operations, etc.)
• Any other documentation which supports what you included in the body of your business plan.

Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your car rental company. It not only outlines your business vision but also provides a step-by-step process of how you are going to accomplish it.

A well-crafted car rental business plan is a valuable tool for new and existing businesses alike. In addition, a detailed financial plan will give you a clear understanding of the resources you will need to achieve your goals. By following these tips, you can write a successful car rental business plan that will help you launch and grow your business.  

Finish Your Car Rental Business Plan in 1 Day!

Wish there was a faster, easier way to finish your car rental business plan?

With our Ultimate Car Rental Business Plan Template you can finish your plan in just 8 hours or less!

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How to Start a Profitable Car Rental Business: A Step-by-Step Guide

Free Car Rental Business Plan Template

11 Min Read

The car rental industry offers plenty of business opportunities, and starting a car rental business could be your dream ride. With careful planning and following local regulations, you can navigate the process smoothly.

But why should you think about starting your own car rental business?

Because the future looks bright! Experts think that by 2028, more than 51 million people in the US will be renting cars. That’s a massive market just waiting to be tapped.

So, how do you get in the game and start a successful car rental business?

This guide is your roadmap. We’ll cover everything you need to know to shift your car rental dreams into reality. Let’s get started!

Car Rental Industry Outlook

The car rental industry is zooming ahead and is expected to reach $134 billion by 2027.

But what’s driving this growth? Two key trends:

Tech takeover

AI, smart parking, and even driverless cars are changing the game, helping companies stay competitive and potentially cut costs.

Car rental businesses that use the latest tech, meet international service standards, and take complete control of the rental experience will be the leaders. Travelers want it easy, and tech is the answer!

Changing preferences

Ditching car ownership, people opt for flexible options like subscriptions, self-drive rentals, and car/ride sharing. Companies that offer diverse vehicles and prioritize customer loyalty will lead the pack.

People are realizing that owning a car is not always worth it because of the costs, maintenance, and insurance hassles.

On the other hand, car rentals offer freedom without the headaches, with options for drivers, self-drive, short-term needs, and even long-term subscriptions.

What cars are popular?

Economy cars are still king ( 33% of the market in 2022), thanks to their affordability and size. But SUVs are rising stars, expected to grow the fastest (11.5%) because they’re spacious, safe, and comfortable for families and road trippers.

So, now that you know about the car rental industry insights let’s see how you can start this business in 8 easy steps.

How to start a car business in 9 easy steps

• Select a car rental business type
• Create a business plan
• Figure out financing
• Find the right location
• Make it legal
• Get the necessary licenses and permits
• Get a business insurance
• Build a core team
• Outline a marketing plan

1. Select a car rental business type

Before you rev your engine on a car rental business dream, deciding your path is crucial! Each model has its perks and pitfalls. Let’s explore your options:

Joining a major franchise can streamline your entry into the car rental business. It’s like joining a team with a big name, such as Hertz or Enterprise, instantly tapping into their brand and business model.

This path makes starting up easier because the brand is already known and loved. However, the initial franchise fee can be pricey, and you’ll have less control over your individual business decisions.

Car dealership

Another route is partnering with a car dealership. This means you offer rental cars to customers who are in for repairs.

It’s a smaller market, requiring fewer cars, which can be easier on your budget.

Independent small business

If you’re in complete control, starting your own car rental business brand is the way to go. You’re the boss from day one but remember; you’ll be handling everything – from making your brand known to find customers.

It’s a lot of work, and you’ll need a good amount of start-up cash.

Existing business

Lastly, buying an existing rental business could be a smart move. It’s like taking over a shop that’s already up and running.

You skip the early struggles but make sure you understand the business inside out to keep it successful.

2. Create a business plan

Your car rental business plan is your roadmap to hitting the open road and making a profit. It’s where you decide on your fleet, nail those operational details, and design a marketing strategy that’ll have customers revving their engines.

A great plan should cover:

• Your Fleet: What kinds of cars will you offer? What makes your selection stand out?
• Smooth Operations: Figure out staffing, vehicle maintenance, location logistics…the works!
• Marketing that Matters: How will you reach potential renters and beat out the competition?
• Know Your Rivals: Who else is in the race and how will you leave them in the dust?
• The Bottom Line: Project your finances – you’re here to turn a profit, not just offer joyrides!

The best part? The planning process forces you to understand your ideal customer. Are you catering to business travelers? Adventurous tourists? Knowing them puts you in the driver’s seat.

Not very good at writing? Need help with your plan?

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3. Figure out financing

Starting your car rental business is exciting, but don’t forget the financial map! Start-up costs vary depending on location, fleet size, and services offered. In general, it can cost anywhere between $99,000 and $470,000. 

So, how do you turn that dream into reality? Here are your funding options:

• Bank Loans: A business auto loan from a bank is the classic choice but requires a solid plan and strong credit.
• SBA-Guaranteed Loans: The Small Business Administration can be your wingman, helping you secure that bank approval.
• Government grants: Explore government programs that might fuel your entrepreneurial journey.
• Friends & Family: While borrowing from loved ones can be tempting, be cautious. Having clear legal agreements in place protects everyone involved.
• Crowdfunding: Platforms like Kickstarter let passionate donors support your vision.
• Savings & Assets: Bootstrapping your business with personal resources is always an option.

For the car rental business, bank and SBA loans are strong contenders, along with friends and family (with proper legal guidance). Crowdfunding can be an excellent fit for innovative concepts.

4. Find the right location

Location, Location, Location! Remember this old real estate mantra? It applies to car rental businesses, too! Your location is your lifeline, connecting you to your target market.

But choosing the perfect spot isn’t just about finding space; it’s also about understanding how your location will shape your clientele.

There are two main approaches:

Location dictates audience

Let the available space guide your target market. A prime spot near an airport might attract business travelers, while an industrial zone could be perfect for a commercial car rental business.

The target market sets the location

Identify your ideal customers first, then find a convenient location that serves them best. It could be close to their workplaces, tourist attractions, or residential areas.

5. Make it legal

Before you start renting out cars, let’s get the paperwork out of the way. You’ll need to make sure your car rental business is set up legally.

Our business startup checklist has all the details, from picking a name for your business to getting the right licenses.

Here’s a quick look at what you’ll need to get started:

• Registering a Business Name
• Applying for the right licenses and permits
• Choosing your business structure
• Getting the right insurance and setting up how you’ll handle payments

6. Get the necessary licenses and permits

Missing required permits and licenses can lead to hefty fines or even shutdowns. So, car rental companies must have all the permits and licenses before they begin.

Here are some essential legal requirements you might need for your vehicle rental business:

Vehicle Renting License

This DMV-issued permit is your green light to rent out vehicles. The process varies by state but typically involves an application and a fee (around $100).

Business License

Every state requires this to operate any business. Again, the process varies, but expect another application and a fee (around $50).

Driver’s License

Depending on your fleet, you might need a Commercial Driver’s License (CDL) for larger vehicles like vans or buses.

Local Permits

Check with your city or county for additional permits specific to the car rental business.

7. Get a business insurance

Getting your cars out there is thrilling, but smart insurance is your backup plan. You’ll likely need what your state requires for each vehicle, but here’s why you might want more:

• Commercial Fleet Insurance:   Protects your whole fleet from damage and accident claims. It’s ideal if you have several cars.
• General Liability Insurance:  This covers you if your rental car causes injury or property damage to someone else.
• Excess Liability Insurance:   An extra layer of protection for those big, unexpected claims that could go beyond your other policies.

Remember, most states require renters to be at least 21, and some require 25 for insurance

8. Build a core team

The success of your car rental business hinges on its people. So, buckle up for a smooth ride with these key steps:

Know Your Needs

Firstly, identify the roles you need to fill. Do you require customer service representatives, rental agents, maintenance staff, or a combination?

Outline their specific responsibilities to ensure everyone understands their part.

Cast Your Net

Post your job ads on relevant platforms like job boards, company websites, and social media. Consider local newspapers and industry publications for broader reach.

Beyond the Resume

Skills are important, but don’t forget soft skills! Assess candidates for communication, problem-solving, customer service magic, and teamwork spirit.

Background checks and reference verification ensure you’re hiring the right people.

Verify & Select

Conduct thorough background checks to ensure references and qualifications are accurate. Offer positions to the candidates who best align with your needs and company culture.

Welcome Aboard

Extend offers to your chosen candidates and provide a comprehensive onboarding process. Train them on company policies, procedures, and software systems.

9. Outline a marketing plan

Ready to put your car rental business on the fast track? Let’s dive into some key tips for drawing in customers and keeping them hooked:

Build Your Digital Showroom

Create a website that’s your online storefront. Show off your fleet, offer clear pricing, and let customers book directly. Make sure it’s search engine friendly to attract more visitors looking for car rental services. In addition, make sure it’s easy to navigate for a smooth booking experience.

Partner Up & Reach Further

Team up with online travel agencies and car rental business platforms like Expedia or Turo. Leverage their massive customer base and marketing reach to get your cars seen by more people.

Target the Right Drivers

Get in front of people already searching for car rentals in your area. Platforms like Google Ads and social media let you focus on location, demographics, and even the keywords potential customers use when searching.

Price-wise, not just cheap

Know your competition, then make your prices work to attract renters. Consider offering discounts for longer trips, deals during certain seasons, or those little extras like GPS that make life easier.

Good reviews = free marketing

Your happiest customers are your best sales team. Make it easy for them to share their love on Google, Yelp, etc. Show you care by responding to all feedback, whether it’s praise or a problem.

Team up with local businesses

From hotels to event planners, businesses in your community also deal with travelers. Work together on discounts or special packages – it’s a win for everyone!

Get Social & Stay Connected

Be active on platforms like Facebook and Instagram. Share beautiful photos of your fleet, promote offers, and engage with customers through contests and spotlights. Let your social media presence drive excitement!

The keys to success lie in preparation: market research, understanding your ideal customers, and handling those licenses and permits.

Add a solid business plan, smart financing, and a great website, and you’ll be well on your way to opening your car rental business.

Ready to dive deeper? Explore the car rental business plan template to streamline the process and get your business off the ground faster.  And remember, our guide is always here to help you navigate the road ahead!

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks, AI-assistance, and automatic financials make it easy.

Frequently Asked Questions

Is a car rental business profitable.

Absolutely! Small car rental businesses in the US can earn a cool $50,000-$100,000 on average each year. But this number depends on how many cars you have, where you set up shop, who your competition is, and how you manage your costs.

How can I fund my car rental business?

Funding your car rental business can come from various sources. Here are some sources that you can tap into:

• Your personal savings
• Ask friendly faces for a loan
• Use credit cards strategically
• Secure bank loans from the Small Business Administration (SBA)

Crowdfunding could also be an option if you’ve got a truly innovative idea.

How much capital is needed to start a car rental business?

Starting your car rental business can cost between $99,000 and $470,000 . Remember, things like where you operate, the types of cars you offer, and how many cars you start with will impact your initial investment.

How do I choose the right vehicles for my fleet?

Choosing your fleet is like picking the perfect travel companions! Here are some points to consider:

• How they’ll be used
• Their overall cost (including parts, maintenance, and fuel)
• The comfort level for drivers (including any accessibility needs)
• Ease of maintenance
• Warranty coverage.

How to start a car rental business from home?

Sure! All you need is one car, a license to operate, and some parking space (even your garage will do it initially). As your car rental business grows, you can add more cars, rent a bigger space, or even buy your own!

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Elon Musk denies report that Tesla's $25,000 car is dead

• Elon Musk denied a Reuters report that Tesla was scrapping plans for a $25,000 car.
• The inexpensive model has been an important part of Tesla's plans for several years.
• Tesla shares were down by about 3% on Friday.

Tesla CEO Elon Musk denied a report that the electric-vehicle company was scrapping plans for a long-awaited $25,000 model .

Reuters reported Friday, citing sources familiar with the matter and company messages, that Tesla was throwing in the towel on its long-planned more-affordable model.

"Reuters is lying (again)," Musk posted on his social-media platform, X, formerly Twitter, in response to the story.

Despite this denial from Musk, Reuters cited Tesla's own internal company messages halting the project.

In one case, a Tesla program manager told staff that "suppliers should halt all further activities related to H422/NV91," referring to code names for the project, Reuters reported.

Two sources also told Reuters that the decision to scrap the affordable Tesla, sometimes known as the Model 2, was announced in a meeting attended by "scores of employees."

The report said the small-vehicle platform that would have carried the $25,000 Tesla would remain in development as part of the company's plans for self-driving robo-taxis.

Related stories

Tesla shares were down by about 3% in trading on Friday afternoon.

The history of the $25,000 Tesla

Tesla's plans for a more affordable model have factored heavily into its plans as a mass-market car company. Scrapping the Model 2 could change investors' view of the company's growth trajectory.

Musk has long touted the importance of an affordable compact crossover, which he recently said would start production at Tesla's Austin Gigafactory near the end of 2025.

On an earnings call with analysts, Musk hedged this timeline, saying his optimism "should be taken with a grain of salt."

A sub-$30,000 Tesla has been teased as part of Tesla's plans since 2020 . At the time, Musk said the affordable price point would be achieved by halving battery- and cell-manufacturing costs.

Why Tesla needs an affordable car

There's a particular need for more-affordable electric cars right now, as the average EV shopper becomes more frugal and practical.

Tesla already sells one of the most affordable EVs with its Model 3, which starts at about $38,990. That's well below the average transaction price for any new vehicle in March, which was $44,186, according to JD Power.

Industry data indicates the average price paid for an electric vehicle is even higher, at well over $50,000.

Even with the competitive pricing on the Model 3, Tesla doesn't appear to be keeping up with the next wave of EV adopters.

This week, Tesla reported its lowest quarterly deliveries since 2022 and notched its biggest miss compared with analyst expectations for the quarter.

A recent survey from Boston Consulting Group suggests the next generation of EV shoppers places more importance on vehicle running costs and on buying from well-established brands. Many of these shoppers also gravitate to hybrids , which Tesla does not sell.

Watch: How did Tesla's bulletproof Cybertruck become so expensive and so delayed?

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Tesla CEO Elon Musk accused Reuters of "lying" on Friday after the outlet reported the electric vehicle behemoth is abandoning its long-touted plans to produce a budget-friendly starter car.

Citing three unnamed "sources familiar," Reuters reported that Tesla has scrapped its initiative to roll out an inexpensive car for the masses, purportedly called Model 2, that was expected to start at $25,000. The outlet said it had reviewed several internal Tesla documents confirming the project's demise.

Tesla CEO Elon Musk accused Reuters of "lying" on Friday after the outlet published a report claiming Tesla has abandoned its plan for an inexpensive entry-level vehicle. (REUTERS/Gonzalo Fuentes / Reuters Photos)

In reaction to the report, Musk wrote on X, "Reuters is lying (again)."

TESLA MAY HAVE A FEW ACES UP THEIR SLEEVE: STEVE WESTLY

Reuters added Musk's response to its article, and noted that "[h]e did not identify any specific inaccuracies." The outlet also pointed out that Tesla's stock price fell by nearly 5% following its report.

Tesla, Inc.

FOX Business has reached out to Tesla for comment.

TESLA'S WEAK FIRST-QUARTER DELIVERIES AN ‘UNMITIGATED DISASTER’ FOR MUSK

Musk has teased for years that a lower-cost Tesla model would be coming, and has slashed costs on existing models over the past year amid a global price war for EVs as the industry competes to attract more budget-conscious consumers amid elevated interest rates.

New Tesla electric vehicles fill the car lot at the Tesla retail location in Smithtown, New York, on July 5, 2023. (John Paraskevas/Newsday RM via Getty Images / Getty Images)

The price-cutting wars are particularly pronounced in the Chinese EV market , where Tesla has a major presence and domestic manufacturers are rolling out models that retail for as low as $10,000, per Reuters. 

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How Tesla Planted the Seeds for Its Own Potential Downfall

Elon musk’s factory in china saved his company and made him ultrarich. now, it may backfire..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

From “The New York Times,” I’m Katrin Bennhold. This is “The Daily.”

[MUSIC PLAYING]

Today, the story of how China gave Tesla a lifeline that saved the company — and how that lifeline has now given China the tools to beat Tesla at its own game. My colleague, Mara Hvistendahl, explains.

It’s Tuesday, April 9.

So, Mara, you’ve spent the past four months investigating Elon Musk and his ties to China through his company, Tesla. Tell us why.

Well, a lot of American companies are heavily invested in China, but Tesla’s kind of special. As my colleagues and I started talking to sources, we realized that many people felt that China played a crucial role in rescuing the company at a critical moment when it was on the brink of failure and that China helps account for Tesla’s success, for making it the most valuable car company in the world today, and for making Elon Musk ultra rich.

That’s super intriguing. So maybe take us back to the beginning. When does the story start?

So the story starts in the mid 2010s. Tesla had been this company that had all this hype around it. But —

A lot of people were shocked by Tesla’s earnings report. Not only did they make a lot less money than expected, they’re also making a lot less cars.

Tesla was struggling.

The delivery of the Model 3 has been delayed yet again.

Tesla engineers are saying 40 percent of the parts made at the Fremont factory need reworking.

At the time, they made their cars in Fremont, California, and they were facing production delays.

Tesla is confirming that Cal/OSHA is investigating the company over concerns over workplace safety.

Elon Musk has instituted a kind of famously grueling work culture at the factory, and that did not go over well with California labor law.

The federal government now has four active investigations involving Tesla.

They were clashing with regulators.

The National Transportation Safety Board will investigate a second crash involving Tesla’s autopilot system.

Billionaire entrepreneur Elon Musk — friends are really concerned about him. That’s what Musk told “The New York Times.”

And by 2018, he was having all of these crises.

According to “The Times,” Musk choked up multiple times and struggled to maintain his composure during an hour-long interview about turmoil at his electric car company, Tesla.

So all of this kind of converged to put immense pressure on him to do something.

And where does China come in?

Well, setting up a factory in China, in a way, would solve some of these problems for Musk. Labor costs were lower. Workers couldn’t unionize there. China provided access to this steady supply of cheaper parts. So Elon Musk was set on going to China. But first, Tesla and Musk wanted to change a key policy in China.

Hmm, what kind of policy?

So they wanted China to adopt a policy that was aimed at lowering car emissions. And the idea was that it would be modeled after a similar policy in California that had benefited Tesla there.

OK, so explain what that policy actually did. And how did it benefit Tesla?

So California had this system called the Zero-Emission Vehicle program. And that was designed to encourage companies to make cleaner cars, including electric vehicles. And they did that by setting pollution targets. So companies that made a lot of clean cars got credits. And then companies that failed to meet those targets, that produced too many gas-guzzling cars, would have to buy credits from the cleaner companies.

So California is trying to incentivize companies to make cleaner cars by forcing the traditional carmakers to pay cleaner car makers, which basically means dirtier car makers are effectively subsidizing cleaner cars.

Yes, that’s right. And Tesla, as a company that came along just making EVs, profited immensely from this system. And in its early years, when Tesla was really struggling to stay afloat, the money that it earned from selling credits in California to polluting car companies were absolutely crucial, so much so that the company structured a lot of its lobbying efforts around this system, around preserving these credits. And we talked to a former regulator who said as much.

How much money are we talking about here?

So from 2008, when Tesla unveiled its first car, up until the end of last year, Tesla made almost $4 billion by selling credits in California.

Wow. So Musk basically wants China to recreate this California-style program, which was incredibly lucrative for Tesla, there. And they’re basically holding that up as a condition to their building a factory in China.

Right. And at this point in the story, an interesting alliance emerges. Because it wasn’t just Tesla that wanted this emissions program in China. It was also environmentalists from California who had seen the success of the program up close in their own state.

If you go back to that period, to the early 2010s, I was living in China at the time in Beijing and Shanghai. And it was incredibly polluted. We called it airpocalypse at times. I had my first child in China at that point. And as soon as it was safe to put a baby mask on her, we put a little baby mask on her. There were days where people just would try to avoid going outside because it was so polluted. And some of the pollution was actually wafting across the Pacific Ocean to California.

Wow, so California is experiencing that Chinese air pollution firsthand and, in a way, has a direct stake in lowering it.

That’s right. So Governor Jerry Brown, for example — this became kind of his signature issue, was working with China to clean up the environment, in part by exporting this emission scheme. It was also an era of a lot more US-China cooperation. China was seen as absolutely crucial to combating climate change.

So you had all these groups working to get this California emissions scheme exported to China — and the governor’s office and environmental groups and Tesla. And it worked. In 2017, China did adopt a system that was modeled after California’s.

It’s pretty incredible. So California basically exports its emissions-trading system to China, which I imagine at the time was a big win for Californian environmentalists. But it was also a big win for Tesla.

It was definitely a big win for Tesla. And we know that in just a few years Tesla, made almost $1 billion from the emissions-trading program he helped lobby for in China.

So Elon Musk goes on, builds a factory in China. And he does so in Shanghai, where he builds a close relationship with the top official in the city, who actually is now the number-two official in all of China, Li Qiang.

So according to Chinese state media, Elon Musk actually proposed building the factory in two years, which would be fast. And Li came back and proposed that they do it in one year, which — things go up really quickly in China. But even for China, this is incredibly fast. And they broke ground on the factory in January 2019. And by the end of the year, cars were rolling off the line. So then in January 2020, Musk was able to get up on stage in Shanghai and unveil the first Chinese-made Teslas.

Really want to thank the Tesla team and the government officials that have been really helpful in making this happen.

Next to him on stage is Tesla’s top lobbyist who helped push through some of these changes.

Thank you. Yeah, everybody can tell Elon’s super, super happy today.

[SPEAKING CHINESE]

And she says —

Music, please.

Cue the music. [UPBEAT MUSIC]

And he actually broke into dance. He was so happy, a kind of awkward dance.

[UPBEAT MUSIC]

And what is the factory like?

The Shanghai factory is huge. 20,000 people work there. Tesla’s factories around the world tend to be pretty large, but the Shanghai workers work more shifts. And when Tesla set up in China, Chinese banks ended up offering Tesla $1.5 billion in low-interest loans. They got a preferential tax rate in Shanghai.

This deal was so generous that one auto industry official we talked to said that a government minister had actually lamented that they were giving Tesla too much. And it is an incredibly productive factory. It’s now the flagship export factory for Tesla.

So it opens in late 2019. And that’s, of course, the time when the pandemic hits.

Yes. I mean, you might think that this is really poor timing for Elon Musk. But it didn’t quite turn out that way. In fact, Tesla’s factory in Shanghai was closed for only around two weeks, whereas the factory in Fremont was closed for around two months.

That’s a big difference.

Yes, and it really, really mattered to Elon Musk. If you can think back to 2020, you might recall that he was railing against California politicians for closing his factory. In China, the factory stayed open. Workers were working around the clock. And Elon Musk said on a podcast —

China rocks, in my opinion.

— China rocks.

There’s a lot of smart, hardworking people. And they’re not entitled. They’re not complacent, whereas I see —

We’ve seen a lot of momentum and enthusiasm for electric vehicles, stocks, and Tesla certainly leading the charge.

Tesla’s stock price kept going up.

Tesla has become just the fifth company to reach a trillion-dollar valuation. The massive valuation happened after Tesla’s stock price hit an all-time high of more than $1,000.

So this company that had just a few years earlier been on the brink of failure, looking to China for a lifeline, was suddenly riding high. And —

Tesla is now the most valuable car company in the world. It’s worth more than General Motors, Ford, Fiat, Chrysler.

By the summer, it had become the most valuable car company in the world.

Guess what? Elon Musk is now the world’s richest man.

“Forbes” says he’s worth more than $255 billion.

And Elon Musk’s wealth is tied up in Tesla stock. And in the following year, he became the wealthiest man in the world.

So you have this emission trading system, which we discussed and which, in part, thanks to Tesla, is now established in China. It’s bringing in money to Tesla. And now this Shanghai factory is continuing to produce cars for Tesla in the middle of the pandemic. So China really paid off for Tesla. But what was in it for China?

Well, China wasn’t doing this for charity.

What Chinese leaders really wanted was to turn their fledgling electric vehicle industry into a global powerhouse. And they figured that Tesla was the ticket to get there. And that’s precisely what happened.

We’ll be right back.

So, Mara, you’ve just told us the story of how Elon Musk used China to turn Tesla into the biggest car maker in the world and himself — at one point — into the richest man in the world. Now I want to understand the other side of this story. How did China use Tesla?

Well, Tesla basically became a catfish for China’s EV industry.

A catfish, what do you mean by that?

It’s a term from the business world. And, essentially, it means a super aggressive fish that makes the other fish in the pond swim faster. And by bringing in this super competitive, aggressive foreign company into China, which at that point had these fledgling EV companies, Chinese leaders hoped to spur the upstart Chinese EV makers to up their game.

So you’re saying that at this point, China actually already had a number of smaller EV companies, which many people in the West may not even be aware of, these smaller fish in the pond that you were referring to.

Yes, there were a lot of them. They were often locally based. Like, one would be strong in one city, and one would be strong in another city. And Chinese leaders saw that they needed to become more competitive in order to thrive.

And China had tried for decades to build up this traditional car industry by bringing in foreign companies to set up joint ventures. They had really had their sights set on building a strong car industry, and it didn’t really work. I mean, how many traditional Chinese car company brands can you name?

Exactly none.

Yeah, right. So going back to the aughts and the 2010s, they had this advantage that many Chinese hadn’t yet been hooked on gas-guzzling cars. There were still many people who were buying their first car ever. So officials had all these levers they could pull to try to encourage or try to push people’s behavior in a certain direction.

And their idea was to try to ensure that when people went to buy their first car, it would be an EV — and not just an EV but, hopefully, a Chinese EV. So they did things like — at the time, just a license plate for your car could cost an exorbitant amount of money and be difficult to get. And so they made license plates for electric vehicles free. So there were all these preferential policies that were unveiled to nudge people toward buying EVs.

So that’s fascinating. So China is incentivizing consumers to buy EV cars and incentivizing also the whole industry to get its act together by chucking this big American company in the mix and hoping that it will increase competitiveness. What I’m particularly struck by, Mara, in what you said is the concept of leapfrogging over the conventional combustion engine phase, which took us decades to live through. We’re still living in it, in many ways, in the West.

But listening to you, it sounds a little bit like China wasn’t really thinking about this transition to EVs as an environmental policy. It sounds like they were doing this more from an industrial-policy perspective.

Right. The environment and the horrible era at the time was a factor, but it was a pretty minor factor, according to people who were privy to the policy discussions. The more significant factor was industrial policy and an interest in building up a competitive sphere.

So China now wants to become a leader in the global EV sector, and it wants to use Tesla to get there. What does that actually look like?

Well, you need sophisticated suppliers to make the component parts of electric vehicles. And just by being in China, Tesla helped spur the development of several suppliers. Like, for example, the battery is a crucial piece of any EV.

And Tesla, with a fair amount of encouragement — and also various levers from the Chinese government — became a customer of a battery maker called CATL, a homegrown Chinese battery maker. And they have become very close to Tesla and have even set up a factory near Teslas in Shanghai. And today, with Tesla’s business — and, of course, with the business of some other companies — CATL is the biggest battery maker in the world.

But beyond just stimulating the growth of suppliers, Tesla also made these other fish in the pond swim faster. And the biggest Chinese EV company to come out of that period is one called BYD. It’s short for Build Your Dreams.

We are BYD. You’ve probably never heard of us.

From battery maker to the biggest electric vehicle or EV manufacturer in China.

They’ve got a lot of models. They’ve got a lot of discounts. They’ve got a lot of market growth.

China’s biggest EV maker just overtook Tesla in terms of worldwide sales.

BYD 10, Chinese automobile redefined.

I’ve actually started seeing that brand on the streets here in Europe recently, especially in Germany, where my brother actually used to lease a Tesla and now leases a BYD.

Does he like it?

He does. Although he did, to be fair, say that he misses the luxury of the Tesla, but it just became too expensive, really.

The price point is a huge reason that BYD is increasingly giving Tesla a run for its money. Years ago, back in 2011 —

Although there’s competitors now ramping up. And, as you’re familiar with, BYD, which is also —

— Elon Musk actually mocked their cars.

— electric vehicles, here he is trying to compete. Why do you laugh?

He asked an interviewer —

Have you seen their car?

I have seen their car, yes.

— have you seen their cars? Sort of suggesting, like, they’re no competition for us.

You don’t see them at all as a competitor?

Why is that? I mean, they offer a lower price point.

I don’t think they have a great product. I think their focus is — and rightly should be — on making sure they don’t die in China.

But they have been steadily improving. They’ve been in the EV space for a while, but they really started improving a few years ago, once Tesla came on the scene. That was due to a number of factors, not entirely because of Tesla. But Tesla played a role in helping train up talent in China. One former Tesla employee who worked at the company as they were getting set up in China told me that most of the employees who were at the company at the time now work for Chinese competitors.

So they have really played this important role in the EV ecosystem.

And you mentioned the price advantage. So just for comparison, what does an average BYD sell for compared to a more affordable Tesla car?

So BYD has an ultra-cheap model called the Seagull that sells for around $10,000 now in China, whereas Tesla Model 3s and Model Ys in China sell for more than twice that.

Wow. How’s BYD able to sell EVs at these much lower prices?

Well, the Seagull is really just a simpler car. It has less range than a Tesla. It lacks some safety measures. But BYD has this other crucial advantage, which is that they’re vertically integrated. Like, they control many aspects of the supply chain, up and down the supply chain. When you look at the battery level, they make batteries. But they even own the mines where lithium is mined for the batteries.

And they recently launched a fleet of ships. So they actually operate the boats that are sending their cars to Europe or other parts of the world.

So BYD is basically cutting out the middleman on all these aspects of the supply chain, and that’s how they can undercut other car makers on price.

Yeah. They’ve cut out the middleman, and they’ve cut out the shipping company and almost everything else.

So how is BYD doing now as a company compared to Tesla?

In terms of market cap, they’re still much smaller than Tesla. But, crucially, they overtook Tesla in sales in the last quarter of last year.

Yeah, that was a huge milestone. Tesla still dominates in the European market, which is a very important market for EVs. But BYD is starting to export there. And Europe traditionally is kind of automotive powerhouse, and the companies and government officials there are very, very concerned. I interviewed the French finance minister, and he told me that China has a five - to seven-year head start on Europe when it comes to EVs.

Wow. And what has Elon Musk said about this incredible rise of BYD in recent years? Do you think he anticipated that Tesla’s entry into the Chinese market could end up building up its own competition?

Well, I can’t get inside his head, and he did not respond to our questions. But —

The Chinese car companies are the most competitive car companies in the world.

— he has certainly changed his tune. So, remember, he was joking about BYD some years ago.

Yeah, he’s not joking anymore.

I think they will have significant success.

He had dismissed Chinese EV makers. He now appears increasingly concerned about these new competitors —

Frankly, I think if there are not trade barriers established, they will pretty much demolish most other car companies in the world.

— to the point that on an earnings call in January, he all but endorsed the use of trade barriers against them.

They’re extremely good.

I think it’s so interesting, in a way — of course, with perfect hindsight — the kind of maybe complacency or naivete with which he may not have anticipated this turn of events. And in some ways, he’s not alone, right? It speaks to something larger. Like, China, for a long time, was seen as kind of the sweatshop or the manufacturer of the world — or perhaps as an export market for a lot of these Western companies. It certainly wasn’t putting out its own big brand names. It was making stuff for the brand names.

But recently, they have quite a lot of their own brand names. Everybody talks about TikTok. There’s Huawei. There’s WeChat, Lenovo. And now there is BYD. So China is becoming a leader in technology in certain areas. And I think that shift in some ways has happened. And a lot of Western companies — perhaps like Tesla — were kind of late to waking up to that.

Right. Tesla is looking fragile now. Their stock price dropped 30 percent in the first quarter of this year. And to a large degree, that is because of the threat of companies like BYD from China and the perception that Tesla’s position as number one in the market is no longer guaranteed.

So, Mara, all this raises a much bigger question for me, which is, who is going to own the future of EVs? And based on everything you’ve said so far, it seems like China owns the future of EVs. Is that right?

Well, possibly, but the jury is still out. Tesla is still far bigger for now. But there is this increasing fear that China owns the future of EVs. If you look at the US, there are already 25 percent tariffs on EVs from China. There’s talk of increasing them. The Commerce Department recently launched an investigation into data collection by electric vehicles from China.

So all of these factors are creating uncertainty around what could happen. And the European Union may also add new tariffs against Chinese-made cars. And China is an economic rival and a security rival and, in many ways, our main adversary. So this whole issue is intertwined with national security. And Tesla is really in the middle of it.

Right. So the sort of new Cold War that people are talking about between the US and China is, in a sense, the backdrop to this story. But on one level, what we’ve been talking about, it’s really a corporate story, an economic story that has this geopolitical backdrop. But it’s also very much an environmental story. So, regardless of how Elon Musk and Tesla fare in the end, is BYD’s rise and its ability to create high-quality and — perhaps more importantly — affordable EVs ultimately a good thing for the world?

If I think back on those years I spent living in Shanghai and Beijing when it was extremely polluted and there were days when you couldn’t go outside — I don’t think anyone wants to go back to that.

So it’s clear that EVs are the future and that they’re crucial to the green energy transition that we have to make. How exactly we get there is still unclear. But what is true is that China did just make that transition easier.

Mara, thank you so much.

Thank you, Katrin.

Here’s what else you need to know today.

[CROWD CHEERING]

Millions of people across North America were waiting for their turn to experience a rare event on Monday. From Mexico —

Cuatro, tres, dos, uno.

— to Texas.

Awesome, just awesome.

We can see the corona really well. Oh, you can see —

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Oh, and we are falling into darkness right now. What an incredible sensation. And you are hearing and seeing the crowd of 15,000 gathered here in south Illinois.

Including “Daily” producers in New York.

It’s like the sky is almost —

— like a deep blue under the clouds.

Wait, look. It’s just —

Oh my god. The sun is disappearing. And it’s gone. Oh. Whoa.

All the way up to Canada.

Yeah, that’s what I’m talking about. That’s what I’m talking about.

The moon glided in front of the sun and obscured it entirely in a total solar eclipse, momentarily plunging the day into darkness.

It’s super exciting. It’s so amazing to see science in action like this.

Today’s episode was produced by Rikki Novetsky and Mooj Zadie with help from Rachelle Bonja. It was edited by Lisa Chow with help from Alexandra Leigh Young, fact checked by Susan Lee, contains original music by Marion Lozano, Diane Wong, Elisheba Ittoop, and Sophia Lanman and was engineered by Chris Wood.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for “The Daily.” I’m catching Katrin Bennhold. See you tomorrow.

• April 11, 2024   •   28:39 The Staggering Success of Trump’s Trial Delay Tactics
• April 10, 2024   •   22:49 Trump’s Abortion Dilemma
• April 9, 2024   •   30:48 How Tesla Planted the Seeds for Its Own Potential Downfall
• April 8, 2024   •   30:28 The Eclipse Chaser
• April 7, 2024 The Sunday Read: ‘What Deathbed Visions Teach Us About Living’
• April 5, 2024   •   29:11 An Engineering Experiment to Cool the Earth
• April 4, 2024   •   32:37 Israel’s Deadly Airstrike on the World Central Kitchen
• April 3, 2024   •   27:42 The Accidental Tax Cutter in Chief
• April 2, 2024   •   29:32 Kids Are Missing School at an Alarming Rate
• April 1, 2024   •   36:14 Ronna McDaniel, TV News and the Trump Problem
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• March 28, 2024   •   33:40 The Newest Tech Start-Up Billionaire? Donald Trump.

Hosted by Katrin Bennhold

Featuring Mara Hvistendahl

Produced by Rikki Novetsky and Mooj Zadie

With Rachelle Bonja

Edited by Lisa Chow and Alexandra Leigh Young

Original music by Marion Lozano ,  Diane Wong ,  Elisheba Ittoop and Sophia Lanman

Engineered by Chris Wood

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When Elon Musk set up Tesla’s factory in China, he made a bet that brought him cheap parts and capable workers — a bet that made him ultrarich and saved his company.

Mara Hvistendahl, an investigative reporter for The Times, explains why, now, that lifeline may have given China the tools to beat Tesla at its own game.

On today’s episode

Mara Hvistendahl , an investigative reporter for The New York Times.

Background reading

A pivot to China saved Elon Musk. It also bound him to Beijing .

Mr. Musk helped create the Chinese electric vehicle industry. But he is now facing challenges there as well as scrutiny in the West over his reliance on China.

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We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

Fact-checking by Susan Lee .

The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Renan Borelli, Maddy Masiello, Isabella Anderson and Nina Lassam.

Katrin Bennhold is the Berlin bureau chief. A former Nieman fellow at Harvard University, she previously reported from London and Paris, covering a range of topics from the rise of populism to gender. More about Katrin Bennhold

Mara Hvistendahl is an investigative reporter for The Times focused on Asia. More about Mara Hvistendahl

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No more 'just walk out' at Amazon grocery stores. The new bet is smart shopping carts

Alina Selyukh

The first Amazon Fresh grocery store in London opened in 2021. The company is replacing its "Just Walk Out" technology at U.S. stores with smart shopping carts, but leaving it in the U.K. Leon Neal/Getty Images hide caption

The first Amazon Fresh grocery store in London opened in 2021. The company is replacing its "Just Walk Out" technology at U.S. stores with smart shopping carts, but leaving it in the U.K.

As far as Amazon's gee-whiz technology goes, "Just Walk Out" is in the pantheon: Early shoppers marveled at the concept of grabbing stuff off grocery shelves and simply leaving, tracked by cameras that calculate the eventual receipt.

Amazon banked big on this to propel its sprouting grocery business past competitors — and in the process transform the industry.

Now, it's taking this tech out of its Amazon Fresh stores in the U.S . (It's staying in the U.K.) Many experts wondered what took so long: The experiment clearly failed to spread widely. The "just walk out" revolution did not come to Amazon's own Whole Foods, let alone the industry.

That's a big admission of defeat, though certainly the company does not accept that term. The technology will still live on at Amazon Go convenience stores and dozens of other smaller shops at airports, arenas, amusement parks and hospitals.

But Amazon's cashier-free grocery ambitions are only shapeshifting, even as the retailer scales back its push to automate the entire supermarket experience. It's now betting that the smart shopping cart could still change how we shop for food.

"This is a failure; however, let's not forget that Amazon's success is built on failures," says Guru Hariharan, CEO of CommerceIQ and a former Amazon manager. "That's the ironic part of it."

Tech has yet to help Amazon win the grocery race

Grocery, a multibillion-dollar market that calls for physical stores, has long been the final frontier for Amazon .

The retailer entered the game late, opening Amazon Go minimarts in 2016 , buying Whole Foods in 2017 and launching Amazon Fresh grocery stores in 2020 . There are now more than 40 Fresh stores, and just over half use the "just walk out" technology.

The marvel did not draw crowds. Shoppers often said they felt weary passing through entry gates and being tracked by omnipresent cameras and sensors. Amazon says people also wanted to see the running tally of prices and discounts as they shopped — not later, after leaving.

Amazon may have met its match in the grocery aisles

The tech is also expensive and complex. Outfitting every nook and cranny of a large store with smart computer vision proved unreasonable. And it still required some human involvement, with people behind the scenes helping machines learn to interpret video and clarify uncertainties.

"The accuracy expectations from the consumer on this are unbelievably high," Hariharan says. "Is it 100% accurate, 100% of the time? If it's not, then it starts to lead to consumer trust issues."

Enter the smart shopping cart

The smart shopping cart gave Amazon a scaled-back tech solution.

In recent years, the company has been overhauling Amazon Fresh, laying off workers at the stores, closing some stores and revamping others. It's also changed its design of the smart Dash Cart , reeling in its tech complexity.

The cart is now essentially a self-checkout on wheels. Shoppers can hold up products to built-in scanners, a scale can weigh produce, a touch screen can show real-time updates to the receipt.

Amazon has rolled out the Dash Carts to a handful of Whole Foods stores, but has not said when or whether they'd become ubiquitous. The high-tech carts would face competition from several smaller companies offering smart carts.

Retailers howled about theft last year. Why not now?

Amazon potentially could sell its cashier-less carts to many retailers, including rival grocers. And Hariharan sees a big financial opportunity in marketing on the cart's screens, with advertising becoming one of Amazon's fastest-growing businesses.

All this, of course, depends on shoppers' learning curve with new technology, says Uttara Ananthakrishnan, who teaches about the digital transformation of the grocery industry at Carnegie Mellon University.

Lately, retailers have been reconsidering their approach to self-checkout because it's prone to thefts and mistakes by shoppers. Ananthakrishnan says grocery stores are a particularly hard place to introduce new tech.

"There is so much product variety. Not everything has a code. A lot of things need to be weighed," she says. "And then you kind of place the onus on the customers, and a lot of people don't like that."

Editor's note : Amazon is among NPR's financial supporters.

• grocery business
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• Whole Foods

Analysis-Swiss Banking Plan Leaves 'Relieved' UBS Out of Immediate Firing Line

Analysis-Swiss Banking Plan Leaves 'Relieved' UBS Out of Immediate Firing Line

A logo of Swiss bank UBS is seen in Zurich, Switzerland March 29, 2023. REUTERS/Denis Balibouse

By John Revill

ZURICH (Reuters) - UBS could take years to feel the bite of new regulations after the Swiss government set out plans aimed at keeping the "monster bank" in line that were light on detail and heralded a tortuous political process to enshrine them in law.

Shares in the Zurich-based lender took a knock on Wednesday after the finance ministry said its "too big to fail" recommendations envisaged tougher capital requirements for UBS and other systemically important banks following the rescue of its stricken rival Credit Suisse in 2023.

But the government left open the precise impact it expected from the plan, and analysts said there was little likely to cause UBS great alarm in the pledges to strengthen the market watchdog FINMA, monitor excessive pay and improve backstops.

"The measures proposed by the Federal Council are not enough to finally regulate the banking sector effectively," said Cedric Wermuth, co-leader of the centre-left Social Democrats (SP), the second-biggest party in the Swiss parliament.

"The decision not to introduce stricter capital adequacy criteria is completely negligent and makes a mockery of taxpayers who will have to foot the bill," he added.

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Switzerland said that capital demands could be adjusted to reflect exposure to international subsidiaries, as well as lenders' governance, complexity and profitability, without setting specific thresholds.

The government said it was "difficult to reach a final judgement on the exact impact" of its mooted higher capital requirements, but argued Swiss banking would benefit.

"The Federal Council is convinced that the report presented today points the way to a significant improvement," Finance Minister Karin Keller-Sutter told a press conference.

Still, a person familiar with UBS's thinking said the bank was "relieved" by the plan set out and hoped to lobby for less stringent terms during the unfolding political process.

UBS declined to comment.

A person familiar with the government's thinking said legislative changes would not be implemented before 2026 and the back and forth of politics in Switzerland meant that whatever finally passed might not have any effect on UBS until later.

The measures were not intended to be a major shake-up, but a series of steps aimed at putting more safeguards in place to reduce risk in the banking sector, the person said.

The government said it wants to present two packages for implementation in the first half of 2025: one with changes at ordinance level which can be approved by the cabinet, and then more far-reaching draft legislation for parliament.

Swiss authorities orchestrated the takeover of Credit Suisse last year, allowing UBS to buy its competitor for 3 billion Swiss francs ($3.3 billion) and creating what critics dubbed a "monster bank" that could capsize the economy if it unravelled.

The sum was a fraction of what Credit Suisse had recently been worth and triggered a subsequent 60% rally in UBS stock.

The supercharged lender now has a balance sheet of around $1.7 trillion, twice the size of the Swiss economy.

Peter V Kunz, a regulatory expert at the University of Bern, described the proposals as a typically Swiss compromise.

"Between the lines I read: 'Let's cross (our) fingers and hope nothing happens with UBS'," he said.

Effective measures would need to be international, he said, noting: "Switzerland cannot do everything on its own."

Analysts say that tougher capital requirements could constrain returns for investors even as details remain vague.

"Much more detail is needed to be definitive," said Thomas Hallett, analyst at KBW.

The uncertainty carries some risk.

A top 10 shareholder told Reuters in January that if UBS wants to remain a Swiss bank, resolving the debate around regulation in its home country is crucial.

Watchdog FINMA and the central bank need to be comfortable with its business model, otherwise there could be friction over the risks that a bank of its size poses, the shareholder added.

The Swiss Bankers Association said the plan threatened to usher in "a wave of regulation that would impose a massive burden on banks and the economy as a whole."

Adriel Jost, a fellow at the Institute for Swiss Economic Policy, said the proposals showed "subsidies" for banks remained in place.

"This will cost Switzerland dearly in the next crisis, be it through the provision of emergency liquidity, a takeover of bad assets, refinancing or temporary nationalization," he said.

"It is a bold bet that slightly increased supervision in advance can change this."

($1 = 0.9122 Swiss francs)

(Reporting by John Revill; Additional reporting by Oliver Hirt, Noele Illien and Stefania Spezzati; Editing by Dave Graham and Peter Graff)

Copyright 2024 Thomson Reuters .

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