How to Start a Car Dealership Business in India?

There is no end to the demand for automobiles in a country with many automobile industries. Cars are a popular topic among both young people and car enthusiasts. The dealership for cars industry is worth around $118 billion and is expected to reach $300 billion by 2026; it is one of the brightest sectors to invest in.

How Can We Start a Car Dealership in India? 

Assume you’ve found the ideal business opportunity with a car manufacturer and are ready to take the next step. Interestingly, you should be aware that there is more to running a business than simply registering with the state. Some of the fundamental steps that will assist you in getting started with your car dealership venture are discussed further below. If you interested in starting a car washing centre.

What is Initial Startup & Ongoing Costs? 

There are many such states where becoming a car dealer is difficult due to many clauses and conditions. While the documentation process is lengthy, you will need to obtain certain documents to establish your foothold in this industry, such as a surety bond, business experience, and proper licensing.

The bonds listed below are some examples of which you should be aware of and have access. These bonds are critical to the smooth operation of your business. Some examples of general bonds are:

  • Bonds for the DMV.
  • Bonds for RVs
  • Bonds issued by wholesale car dealers.
  • Bonds for used car dealers
  • Bonds for motorcycle dealers

Steps to take once you have access to the bonds you require:

  • The bond’s required amount.
  • Your financial assets and credentials
  • If you decide to finance the premium, there will be additional costs.
  • Your credit rating.

Dealers must obtain licensing in addition to getting a bond. The various licenses you may require depend on the state and locality you intend to conduct business.

The following are the license categories as defined by the majority of states:

  • A new car dealership
  • Licenses for reconditioners
  • Dealer in used automobiles (retailers)
  • Rebuilder certification
  • License for wholesalers
  • Ongoing expenses for a car dealership

The cost of running a dealership is directly proportional to the bond and insurance you have, as you will be able to offer discounts to attract customers on both. While you can get started with your dealership for as little as Rs.10 lakhs for securing a contract and the GSTIN registration, you will need at least Rs.50 lakhs to confirm inventory. Furthermore, each car manufacturer charges a different fee for their dealership.

Right Charge for the Customer

To understand this, you must first understand the profit model of a car dealership. A dealership generates revenue and profits by selling vehicles higher than the dealer’s invoice price. Another way they make money is by servicing the cars they sell, including installing a washing plant for the vehicles. 


Using both physical and online advertisements to attract customers to your car dealership is one of the most effective ways to do so. While ads play an essential role in your business, referrals also play a crucial role in the success of your car dealership.