Essential Steps in Setting up a Salvage Car and Parts Business


With more and more people looking to ease their financial burden with salvage cars and parts, the auto salvage business has become more attractive in recent times. However, setting up an auto salvage business requires careful planning to make it a success. Some essential steps:

Get the Business Plan Ready

Like any other business, the chances of an auto salvage operation becoming successful increases with the time and effort you expend in planning out the business strategy and budget. You should talk to experts in the salvage business to understand what sorts of investments are required and what kind of margins are typically available. You should plan out the nature of the business entity, the size of the operations, the number of manpower, and projections regarding your cash flows and profitability. A thorough scan of the competitive environment is essential, as you don’t want to enter a market that is already too crowded and the margins are very low.

Comply with the Regulations

Once you have your funding ready, go ahead and locate a plot that is suitable for an auto salvage business. Make sure that is big enough to accommodate your expansion plan in the coming years. It is best that the plot is situated near a highway; not only does this make it easier for you to bring the totaled cars into your yard but also customers will find reaching you more convenient.

Contact the Environmental Protection Agency (EPA) or your local department of natural resources for verification that your business’s impact on the local ecosystem will be within the acceptable limits. Proceed to get all the necessary licenses that will allow you to operate your business; verify the zoning restrictions and obtain a business permit from your local government. Think about a website; visit for inspiration.

Set Up Your Operations

Build a facility with a modular design that you can keep on expanding as your business grows. Make sure that the covered areas have adequate lighting and ventilation as there are a number of hazardous materials that are present in cars. Organize anumber of large metal containers where you can dump the segregated materials for recycling. Enter into long-term contracts with purchasers of scrap metals; typically, apart from steel, you can expect to get saleable quantities of gold, copper, platinum, palladium as well as rhodium from the wiring harness, electronic circuits, and the catalytic converter.

Maintain a detailed inventory of all the spare parts that you can isolate; the trick is to know how to access a part that a customer is looking for without wasting time. Advertising regularly in the local papers and the yellow pages can help to attract both customers as well as people wanting to dispose of their vehicles.


The scale of operations and the profitability you can achieve depends on how professionally you run the business. Develop a network with other salvage yards so that you can assist each other for mutual benefit. Running a visibly clean and organized salvage yard can help to attract more customers.