How Much Does It Cost To Open A Car Dealership In South Africa?
Initial joining fee – R200,000 (ex VAT) per dealership ·
Dealership conversion costs – R800,000 to R1,050,000 ·
Dealership launch – Up to R50,000.
How much does a Dealer principal make in South Africa?
The average dealer principal salary in South Africa is R 630 000 per year or R 323 per hour. Entry-level positions start at R 517 500 per year, while most experienced workers make up to R 1 200 000 per year.
What happens during a typical day at a car dealership?
Day-to-day activities include checking invoices, talking to prospects and customers on the lot, negotiating deals, and managing a sales force. Dealerships have a strong sales culture and interpersonal communication skills are important. So salespeople (including the owner) who work for a dealership may spend most of their day speaking with prospects face-to-face.
What is the growth potential for a car dealership?
Small dealerships are usually used car dealers. These types of dealerships purchase used vehicles at auctions and mark them up for resale to consumers. This type of business can be highly profitable and doesn’t require a lot of overhead or inventory.
A larger dealership might secure a contract with a major manufacturer to sell new and certified used vehicles. This type of dealership business is typically large scale, requires significant upfront costs (including franchise fees), and may require high volume sales to keep the manufacturer’s contract.
What are the steps to start a car dealership?
Once you’re ready to start your car dealership, follow these steps on how to start a car dealership to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. A few important topics to consider are:
What are the initial costs?
Who is your target market?
How long it will take you to break even?
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2. Form a legal entity & Register for taxes
You have to be registered with the South African Revenue Services (SARS). If you’ve registered your company with CIPC, you’ll automatically be registered as a tax payer with SARS.
- When? Within 60 days of starting your business.
- How? By completing an IT77 form, at the SARS office or online.
Registering for tax
SARS wants to benefit small businesses that create employment and stimulate local manufacturing by taxing such businesses at specially reduced rates. You will also be allowed to depreciate certain assets used for manufacturing at a rapid rate, offering sufficient tax benefits. To qualify, your small business must:
Be registered as a private company
Have a turnover below R20 million
None of the shareholders may have interests in any other companies
All shareholders must be natural persons
The company cannot derive income from investments or services
Registering as a VAT Vendor
If your turnover is – or is likely to be – R1 million a year or more, you need to register as a VAT (Value Added Tax) vendor. This is done by completing and submitting a VAT101 form, which is available at any SARS office.
STEP 3. Open a business bank account
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 4. Set up business accounting system
It’s a crucial step that allows you to monitor the growth of your business, build financial statements, keep track of deductible expenses, prepare tax returns, and support what you report on your tax return. Right from the beginning, you should establish a system for organizing receipts and other important records.
STEP 5. Get Business Insurance
Insurance is highly recommended for all business owners.