How To Start a Car Export Business

by Chosen Caleb
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In recent years, we have come to see the important role that cars play in human society. It has become a necessity in today’s society and, as such, is in high demand. This has led to a need for the car export business. Car export involves the acquisition of cars locally and exporting them to people who will buy them in other countries. Though it is a complex business, it is one that is sure to profit you in the long run.

Photo by Tobias Tullius on Unsplash

What Does Having a Car Export business entail?

When starting a car export business, there are several things to take into consideration:

  • One of the vital things to put into consideration is where you will get cars to export. It is important because if you don’t have the cars to export, then there is no car export business. Cars can be sourced from individuals, auctions, car dealers, and manufacturers. It is important to source on-demand vehicles for the country you want to export to.
  • Another thing to consider is learning “how to trade in cars” and the regulations involved in exportation and international trade. It is important because the car export business is not just about selling vehicles; it is also about being able to negotiate properly and understanding logistics.

How Profitable is the Business?

The car export business is a highly profitable one. With increased demand for cars in developing countries, this business sector has been on the rise. In 2021, the car manufacturing market was valued at a staggering $2.86 trillion and the car export business value in the EU alone was at a peak of 158 billion euros in 2022. However, it is important to note that although it is highly capital-intensive, with the right strategy and understanding of the market, you can make a fortune from the car export business.

Pros and Cons of Car Export Business

As it is with any type of business, there are always pros and cons to be considered before venturing. This is important so as to take calculated risks and avoid making costly mistakes. Below are the pros and cons of the car export business:

Cons

  • High Cost: Exportation of goods from country to country is highly costly. Both direct and indirect costs are incurred as a result of the exportation of cars. From shipping and logistics to customs duties to fluctuations in exchange rates, this can affect how competitive car export businesses are.
  • Risk of Delayed/Incomplete/Non-Payment: There are risks of getting paid late, incompletely, or not being paid at all in the car exportation business. Due to the variation in payment methods across different countries, getting payment can be time-consuming and challenging. There can be situations of fake transactions, customers not having money by the time the goods arrive, or incomplete payment after delivery due to heavy charges.
  • Risk of Policy Change: This is another thing that can affect the car export business. Due to the differences in laws governing exportation and importation in different countries, a slight change can affect the business in huge ways. Little changes in tax regulations, insurance, etc. can prove a challenge and will add extra costs to the car export business.

Pros

  • Business Expansion: The car export business is an avenue for expansion of business to other parts of the globe (if you already sell cars locally). This leads to an increase in sales and profit because you have a wider market reach with several customers around the world.
  • Diversified Risks: Unlike selling cars locally, car export businesses enable you to spread risks across various marketplaces. This is important because changes made in exportation laws, policies, etc. in a particular country will not affect exportation to other countries, ensuring your source of income is not cut off.
  • No Local Competition: Car exporting businesses ensure that the problem of competition locally is reduced. How does this happen? There is less worry about competition locally for exporters; there is no thought of figuring out how to outsell local automobile sellers. The market is largely dependent on other consumers outside of your country.

How Much Does It Cost to Start a Car Export Business?

To start a car-export business, it is important to take note of what is needed. As mentioned earlier, a car export business comes with high costs, and as such, the direct and indirect costs should be taken into account. However, how you want your car export business to run will determine the amount needed to start it. You can decide to begin yours as follows:

  1. An independent car export business,
  2. Buying an already existing car export business and
  3. Collaborating with an already existing car export business.

Starting up can cost you about $20,000–30,000 to acquire a shop, build the brand, acquire licenses, and so many other initial expenses. However, for such a complex business as this, it might be advised to do numbers 2 and 3. This is because it enables you use their space, logo, brand, equipment, staff, get marketing advice, etc. Although it is more costly than starting it yourself, the profit won’t be totally yours if you are collaborating.

How to Start a Car Export Business

To start this complex line of business, it is important to follow the guidelines below:

1. Conduct Market Research

This is an important thing to factor in before starting your car export business. You will be required to identify what countries you want to export these cars to, look out for the types of cars that are in high demand for exporting, the prices at which cars are sold in different countries, identify your competitors, and so on.

2. Develop a Business Plan

After you have carried out market research, it is important to have a solid business plan. The business plan is important to help you outline the goals you have in mind, your target market, the strategies needed to export the cars, how much you expect in profit, and so on. It is important to note that making a business plan isn’t a simple task. Here is a guide to making a winning business plan.

3. Get the Necessary Licenses and Permits

The next thing to do is to register your car export business. Your business will not be legally recognised until this is done. It is important to note where and how you can carry out this registration in your country or region. After that, ensure you are given the proper licenses, permits, or documentation needed to run the business, and ensure that you do all of this with the help of a lawyer.

4. Source for Funding

If you don’t already have a means of funding the car export business, it is important for you to take this step. There are many ways to secure funding, such as angel investors, loans, friends and family, bootstrapping, etc. This article can also help you with ideas on how to get funding as an entrepreneur.

5. Get Suppliers

Finding car suppliers is the next step to take. Car auctions, car dealers, car manufacturers, or even individual car sellers are the different sources from which you can get cars for the car export business. It is important to ensure that these cars are in good condition and that the prices are very negotiable and competitive for your target market.

6. Establish Partnerships with Shipping Companies

Search for different shipping companies in your region and look for ways to establish partnerships with them. Negotiate prices with them and ensure that these shipping companies have efficient ways to move automobiles. Here is a list of shipping companies you can partner with.

7. Understand Export Documentation

Because the car export business deals with exportation to different countries, it is important to learn export documentation. The complexities involved in logistics, varying currencies, clearance from customs, and so on need to be understood and learnt to avoid delay and complications in your business in the long run.

8. Establish a Sales and Marketing Strategy

Finally, it is important to promote your car export business. Different marketing strategies can be used, like social media fliers, trade shows, billboard banners, and any other means by which you feel your target market can be reached. Also, you can set competitive prices that will draw customers into patronizing your car export services. Ensure that customer satisfaction is prioritized above all else and that the customer care service is top-notch.

Top Five Car Importing Countries

As of 2022, data was compiled on the countries that import cars the most. This can help you decide where to target your car export business. Below is a list of these countries:

1. United States of America

Despite the fact that the USA is one of the largest manufacturers and exporters of automobiles in the world, it also imports a large number of vehicles. This is because it depends on importation to meet the needs of consumers in the state. Some of the cars that are mostly imported include the Toyota Camry, Mercedes-Benz, BMW, etc.

2. Germany

Like the United States, Germany also has a large automobile manufacturing and exporting industry. However, importation helps them meet the needs of consumers with regards to their choice and taste in vehicles. Some of the cars mostly imported include Ford, Opel, Toyota, Honda, etc.

3. China

China is another country that imports a lot of cars. In 2022, it was reported that it would spend a total of $52.27 billion on the importation of vehicles alone. The cars commonly imported into China include BMW, Mercedes-Benz, Lexus, etc.

4. Japan

Fourth on the list is Japan. The cars commonly imported into Japan include BMW, Mercedes-Benz, Audi, etc.

5. France

Finally, France is the fifth country where cars are imported the most. Most of the cars imported are from its neighboring countries, Belgium and Germany. This means that most of the cars that are imported to France are locally manufactured German cars, like: Mercedes-Benz, Volkswagen, etc.

Examples of Car Export Business

Below is a list of popular car export businesses and their locations:

  1. Auto Zurich
  2. Japan Car Direct
  3. Samara Motors
  4. Copart etc.

Conclusion

Despite the complexity associated with the car export business, it is one that proves profitable in the long run. It is important to stay up-to-date with export regulations, embrace cultural differences, network with professionals, and just keep learning and adapting.

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