A number of independent operators and franchises have recently entered to vehicle spares marketplace. There has been an increased demand for reliable suppliers in this space. This has proved to be a good opportunity for many to enter into the automotive industry. There are some things to take into consideration if you intend getting involved in this industry. Here are some of the main factors to keep in mind:
New Vehicle Spares
The spares supply market is heavily reliant on just in time delivery. When someone needs a spare part for their vehicle they don’t want to have to wait for it. This means that you will need to keep stock of a variety of spares. Good understanding of the industry is needed to that you can keep stock of the spares people regularly need while not holding items that are unlikely to sell. Suppliers in this industry also compete with online spares suppliers so stock holding and relationships with your customers are very important. If you are importing the spares yourself you need to be aware of any import duties as these will affect your selling price and profit. You will also need to take exchange rates into account if you are transacting in foreign currencies.
The high cost of new spares has led to a boom in the recycled, or second hand, spares market. While the cost of these spares can be lower, the hard to get spares can command a good price with decent profit margins. Access to a good supply chain in this market is crucial. You will need to have good relationships with junk yards and car breakers around the country and possibly even in other countries. There is also an opportunity in this space to focus on specific makes and models of cars that are particularly tough to source parts for.
Dealing With Junk Yards
If you supply recycled parts then you will inevitably be dealing with junk yards and scrap car dealers. There are so many opportunities to make mistakes when dealing in this industry. It is important to make sure that the supplier of your spares conducts his business in a completely legal way. The big money in second hand spares has also led to some people using illegal means to access them. Stolen cars are often the source of these spare parts. If you buy these parts without doing your due diligence then you could find yourself on the wrong end of the law.