How to Start Automobile Spare Parts Business

If you want to start a retail business related to an automobile business, which will be profitable, you might consider starting an automobile spare parts business. Your profit margin can be as high as 30 to 40 percent, as this has a good opportunity. As, during the entire lifespan of the vehicle, every automobile spare parts require frequent changes and modification. This single reason makes the automobile spare parts industry profitable, lucrative, and evergreen.

Is a solid business plan important?

As an entrepreneur you must need to have a solid business plan if you wish to learn how to start an automobile parts business. Having a meticulously drafted action plan ensures to meet the goals. We might be able to help you with that if you’re interested. 

How do you start a business selling automobile spare parts?

A business can be started in a variety of ways depending on your investment capacity, just like any other business. As, to be successful in a business, continuous dedication and effort are required. Also, the trick is to never attempt to start your business as a part-timer. Having developed an automobile business plan is the next step to figuring out how to start an automobile spare parts business. After deciding what type of business you want to start. By developing the business plan, you can keep track of all the essential details related to the business that you need to consider. There are a few basic details that should be included in your automobile spare parts business plan:  

Market Research and Understanding the Industry:

To understand the market conditions and opportunities, you must conduct a market feasibility study first. Although there is no specific educational requirement for this, still you will need to have some knowledge about the industry. You must have a clear understanding of the specifications of the different spare parts, as you might need to advise your customers about what to buy and whatnot. These all demand specific knowledge about the spare parts industry. Doing good market research and understanding the industry is the most important aspect you must consider before commencing any business.

Moreover, this will assist you in understanding the competition from other operators. Also, it will enable you to develop winning strategies that will help you get break-even within a few months of starting a business. Furthermore, you can identify the most popular spare part brands in your local market. Moreover, you will also need to identify the different models of bikes and cars that are common in the city. For all this, working with other established owners might enhance your trade knowledge.  

Planning and Calculating the Cost

For a successful automobile spare parts business, you need to create a detailed business plan. Which will be defining the goal and the path of reaching there. This will serve as a blueprint but most importantly, it will help in securing the startup. Your business plan should include information about your operations and marketing plans. If you have any specialties, mention them and how you plan to open and maintain your business. How you will obtain your car parts, and how you will price them to earn a profit.

The marketing part should include information about your target audience and your local competition. As well as how you intend to reach your target audience. You must calculate startup capital after receiving knowledge and finalizing the business model. In general, you have to consider the rent of the retail space, store setup costs, and purchasing the spare parts from the wholesaler or manufacturer. It is also important to calculate and keep track of operating expenses. It will help you in calculating the breakeven and expected ROI of your business. As an alternative, you can hire a professional to assist you in making this plan. 

Starting up

• Paper Work : Licensing and Registration might vary from state to state and country to country. You can register your company either as a limited liability company or a sole proprietorship business. Checking up the registration and licensing issues of your state is the first thing you need to do. To start an automobile spare parts business in Bangladesh, trade license and tax identification numbers along with other local requirements. If you follow zoning requirements, you’ll get all the necessary paperwork that you need. Also, there may be a value-added tax on some of your inventory. As the paper works are essential, you can’t start your business without them. But, there is another option that you can talk to your lawyer if you’re not familiar with the terms.

• Supply Sources of Spare Parts: The parts you need and where to find them depend largely on your business plan. You might decide, for instance, to stock new parts or old parts only. However, make sure clients know exactly what they are buying and give them full disclosure, this will help you to achieve their trust and long-time clients. For this, all you need to do is explain how used and new parts differ in price, merits, and demerits.

China for new parts and junkyards for used ones are the best sources of spare parts. If you approach the manufacturers of spare parts, they will welcome you as new distributors and wholesalers. Another source of used parts is purchasing used vehicles and scrapping.

• Having a Retail or Online Store: The most traditional and profitable way of starting this business is through a retail store. You can, however, open an online automobile parts store if you don’t want to run a brick-and-mortar store and at first, want low startup capital investment. To open a retail store, you will need to find retail space that is in a good location. From that retail counter, you will sell spare parts to your customers. Additionally, this business model can be run and operated from home for both retail and online stores.

• Store with Workshop and Franchise: Entrepreneurs have another lucrative opportunity here. In an auto spare parts store with a workshop, customers can buy parts and repair them. It does require some experience, though. It is better to start your business as a franchisee if you have no prior experience in the automobile industry. Furthermore, you can consider spare parts distribution, dealerships, and franchises. These are both cash-intensive businesses. Both can be initiated with significant capital investment and strategic planning.
  
• Hire the right manpower. In any startup business, the initial employees play a crucial role in its success. Also, if you plan to open the store with a workshop, you might need to hire a freelance automobile engineer.
  
• Promoting business: It requires a lot of promotion and advertising in the beginning. In addition, the success of this type of niche business is high dependence on B2B networking. It is imperative to network with other businesses in the field. For instance, automobile workshops buy spare parts in bulk frequently. Considering offering a discount to them might help you better to create an impact.

Also, think about selling online. The internet audience is too important to ignore in today’s digital world. Your own online store or an online marketplace can be used to sell auto spare parts.

What’s the key to growing the automobile spare parts business?

Providing quality spare parts is the key to growing the business. Though quality automobile spare parts are more expensive, they are more durable, so they are a better alternative to cheap parts of low quality. The reason is that it’s hard to find and attract premium prices. Moreover, it requires the constant replacement of high-volume parts. Yet, choosing quality over quantity will be a wise decision.

Apart from the above steps relating to starting an automobile spare parts business, other things might help you. Such as offering wholesale/retail both, building an Inventory of spare parts, offering delivery services, obtaining insurance, etc.