How much it costs to open a second-hand car dealership in South Africa – TopAuto
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Tuesday / 27 July 2021
HomeFeaturesHow much it costs to open a second-hand car dealership in South Africa

How much it costs to open a second-hand car dealership in South Africa

If you would like to open a second-hand car franchise with a reputable brand, you will need at least R4 million in capital.

This is according to InspectaCar, which provides franchise opportunities to interested parties.

InspectaCar, which is certified by WesBank, said there are many advantages to taking part in a franchise arrangement.

This includes becoming part of a dealership network that’s “trusted and respected” by South African car buyers.

Dealership owners will also get access to financial support, administrative systems, and marketing drives run by InspectaCar.

Cost breakdown

A breakdown of the costs to open an InspectaCar franchise, as listed on the company’s website, is detailed below.

Establishment costs include:

  • Initial joining fee – R200,000 (ex VAT) per dealership
  • Dealership conversion costs – R800,000 to R1,050,000
  • Dealership launch – Up to R50,000
  • Website – From R10,000
  • Software licences, telephone system/PABX – Variable
  • Promotional material – R17,000 to R45,000
  • Stationery – Variable
  • Vehicle stock recommendation – At least R3,000,000
  • Training costs – Estimated at R30,000
  • Marketing contribution – R300 (ex VAT) per vehicle sold
  • Uniforms and marketing collateral – R9,000 per month

Other ongoing costs include:

  • Franchise fee – R1,045.75 (ex VAT) per vehicle sold
  • Website – Up to R6,800 per month

The image below details the costs and application process for interested parties. Click on the image to enlarge it.

Used car purchases

The second-hand car market is performing well in South Africa, according to InspectaCar, which stated that more consumers are choosing to purchase pre-owned vehicles rather than new cars in 2021.

As a result, the company said it has seen an increase in interest in used-car franchises.

“While demand is currently higher than supply, we are hoping that this will improve in the coming months, turning this segment of the market around into a flourishing one for used car buyers,” said the company.

“In the face of this challenging operating environment, it is heartening to see a renewed interest in pre-owned franchise ownership.”

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