Starting a dealership
How to start a used car dealership in the UK
A step-by-step guide to launching a UK used car dealership — from picking a business structure to closing your first sale.
TL;DR
Register a business with HMRC, get motor trade insurance, source stock you can actually sell, sort out a small pitch or unit, and — if you plan to offer finance — apply for FCA authorisation. Everything else follows from these five decisions.
Pick a business structure
Most UK independent dealers start as either a sole trader or a limited company. Sole trader is cheaper and simpler; a limited company gives you personal liability protection and is often preferred by finance houses and trade suppliers. If you plan to grow beyond a handful of cars, register a limited company from the start — changing later means reissuing insurance, bank accounts and finance agreements.
Sort the regulatory basics
There is no single "dealer licence" in the UK, but you still have a stack of obligations:
- Register with HMRC as self-employed or a limited company.
- Take out motor trade insurance (road risk as a minimum, combined if you have premises).
- Comply with the Consumer Rights Act 2015 and the Consumer Protection from Unfair Trading Regulations.
- Apply for FCA authorisation if you introduce or arrange finance.
- Register with the ICO for data protection.
Fund the first round of stock
Cash is the single biggest constraint on a new dealership. Options include personal savings, a business loan, a stocking loan from a specialist lender (NextGear, Blue Motor Finance, etc.) or a mix. Stocking loans let you buy more cars but eat into gross per unit — model the interest into your target margin before you commit.
Decide on premises
You do not need a forecourt to start. Many dealers begin online-only, delivering cars from a small unit or even a driveway. If you want walk-in trade, look for a low-cost pitch with good visibility, planning permission for vehicle sales, and enough space for appraisal and photography.
Set up systems from day one
Even at three cars, spreadsheets fall apart quickly. A dealership management system like Lotra keeps stock, costs, enquiries, deals and invoices in one place — and grows with you without a data migration.
Launch and first sale
Get three or four cars photographed properly, list on AutoTrader, Facebook Marketplace and your own site, and reply to every enquiry within 15 minutes. The first sale is a matter of preparation and speed, not luck.
This guide is general information for UK dealers, not legal advice. Confirm current rules with HMRC, the FCA and your local trading standards office.
Frequently asked questions
Do I need a licence to sell used cars in the UK?
There is no single 'dealer licence' in the UK. You need to register your business with HMRC, comply with consumer law and trading standards, hold motor trade insurance, and — if you offer finance — be authorised by the FCA.
Can I start from home?
Yes. Many independents start selling from home or a shared unit. Check local planning rules if cars will be stored or displayed on the street, and make sure your insurer knows the address.
How much stock do I need to start?
Most first-time dealers begin with 3–10 cars. It is more important that the stock turns quickly than that the pitch looks full.
Do I need to be VAT-registered?
Only if your taxable turnover exceeds the VAT threshold, but many dealers register voluntarily to use the VAT margin scheme for second-hand vehicles.
How long does it take to open?
From decision to first sale, most independents take 4–12 weeks depending on premises, insurance and FCA approvals.
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
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