Starting a Car Dealership in Canada: Everything You Need to Know

Starting a Car Dealership in Canada

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Are you planning to start a business in Canada? Well, you’re in luck because there are various industries to choose from. Canada is one of the best economies in the world and one of the most successful business ideas today is starting a car dealership.

Why Start a Car Dealership?

Starting a car dealership can be a great opportunity for you to sell something people are familiar with and want badly. Being among the largest countries in the world, people want to own a car to move around easily. Plus, you get to become the boss of your own.

A car dealership is a business that relies on buying vehicles wholesale and selling them on retail. Depending on your options, you can also seal a direct contract with a car manufacturer to sell new vehicles. However, if you aim to become a used car dealer, you have to obtain their stock from the automarket through auctions. 

You might be wondering if starting a car dealership is a good idea during the COVID-19 pandemic. Like most industries, the automobile industry also took a hit during the first and second quarter of 2020. However, since the third quarter, things are getting back on track. Plus, a car dealership can offer a greater return on investment (ROI) compared to many businesses. Even selling a used car can get you a profit of 13% or higher. 

Starting a Car Dealership in Canada

Here is everything you need to know before starting a car dealership in Canada:

Registering a Company

To start a car dealership in Canada, local or foreign entrepreneurs must first register a corporation or limited liability company. Most car dealerships are usually set up as medium or large enterprises. If you want to start one, you should:

  • Register the company with a local Trade Register in the city where you plan to operate. 
  • Find a suitable and central location to display the vehicles for sale. 
  • Apply for a car dealership license and register with the Canadian Automobile Dealers Association.
  • Conclude contracts with manufacturers to sell different makes and models. 

Starting a car dealership in Canada is also a great opportunity for foreign entrepreneurs looking to add to the Canadian economy. This country has a large auto market, and residents regularly upgrade their cars, especially with the rise of electric cars. 

Licencing Requirements

Every Canadian province has certain regulations regarding car dealership licenses. To obtain one, your company must:

  • Be registered with the local Company Register. 
  • In some provinces, a car dealer must sell a minimum number of vehicles to apply for a license. 
  • Your company must also obtain a dealer license issued to your dealership manager. 
  • Applicants must have clean criminal records, according to the law.
  • Applicants must also complete specific courses to obtain a salesperson or car dealer license. 
  • Foreigners must have their Canadian Residence Permit before they apply for the license. 

Need More Information?

Canada is one of the best countries in the world for starting a business. What better business to start than a car dealership? However, starting a car dealership requires careful planning and consideration. 

We recommend you try the services of MyAutoLenders to learn more about obtaining a car dealership license, starting your dealership, and trending auto market insight.

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