Starting a dealership
How much does it cost to start a dealership?
A realistic breakdown of what it costs to launch a UK independent used car dealership — stock, premises, insurance, software and fees.
TL;DR
A home-based online dealership can launch for £15,000–£30,000 including a small stock float. A leased forecourt with 15–25 cars typically needs £75,000–£150,000. Stock is by far the biggest line — everything else is a rounding error next to it.
One-off setup costs
- Company formation: £12–£100.
- ICO registration: £52 per year for most small dealers.
- FCA authorisation (if offering finance): £600–£1,500 application plus annual fees.
- Trade plates and DVLA notifications: £165 per set of plates.
- Website, logo and photography kit: £500–£3,000 depending on how much you DIY.
Stock — the main line
Average retail price of a UK used car is around £16,000, but most first-time dealers start below that in the £4,000–£10,000 sweet spot where demand is highest and cash tied up per unit is lowest. Reconditioning typically adds £300–£900 per car.
Monthly running costs
- Motor trade insurance: £150–£400/month.
- Premises rent and utilities (if applicable): £500–£3,000/month.
- AutoTrader and other listing fees: £300–£1,500/month.
- DMS / software: £50–£300/month.
- Accountancy: £80–£250/month.
Two example budgets
Home-based, 3 cars: £18,000 stock + £2,500 setup + £800/month running costs. Realistic launch capital: £22,000.
Leased pitch, 20 cars: £120,000 stock (part stock-funded) + £8,000 setup + £4,500/month running costs. Realistic launch capital: £80,000–£140,000 depending on stocking arrangements.
Figures are indicative for 2026 and vary by region, stock profile and lender. Get quotes before committing.
Frequently asked questions
Can I start with less than £10,000?
Technically yes — one or two cars, home-based, no premises — but the margin on such a small stock rarely covers the fixed costs of insurance and marketing. £15,000 is a more realistic floor.
What is the biggest cost?
Stock. Everything else — insurance, software, marketing, premises — usually totals less than a single mid-range vehicle.
Do I need to buy stock outright?
No. Stocking loans from specialists like NextGear or Blue Motor Finance let you buy more units, but interest reduces your gross per unit.
How much is motor trade insurance?
A first-year road-risk-only policy typically starts around £1,500–£3,000. Combined policies with premises and stock cover run higher.
What ongoing costs should I plan for?
Insurance, listing fees, software, accountancy, valeting, reconditioning, banking and finance interest. Budget 10–15% of turnover to running costs.
Related guides
What is a Dealership Management System (DMS)?
The foundational guide to DMS software, its core modules, and why independent dealers need one.
Switching from spreadsheets to a DMS
A step-by-step migration plan for dealers moving from Excel and Google Sheets to Lotra.
Vehicle inventory management for car dealers
How modern inventory management works — from auction purchase to sold, without spreadsheets.
See it inside Lotra
Lotra is the operating system for independent dealerships. Inventory, CRM, finance, listings and AI insights in one workspace.