Parting cars as a full time business

A friend of mine is wanting to do this, but let's look at it as a thought experiment.
The idea is to buy cars, have low wage employees strip them of the parts that sell, and sell via ebay.

The pitfalls I see are losing a significant percentage of your profits to ebay and paypal fees, although that just seems to be a cost of doing business. I'd be concerned of running afoul of local zoning regulations due to being something very close to a wrecking yard.

The fun part of this is the what car / cars question. There needs to be a large enough supply of parts cars to keep busy, and a large enough demand to make it worth while. Miatas jump out at me due to a large number of inexpensive parts cars out there and a strong enthusiast market. I don't know what the competition would be on such an obvious choice. Porsches would probably be lucrative, but the buy in would be expensive. I've been through a few RX7s as LeMons parts cars. When have a few, I seem to have the supply side covered, but the demand is too small / broke to make them worthwhile. Whatever it would be needs to have a DIY enthusiast following who have deep enough pockets to buy parts that aren't so deep that they compare repair bills at the country club. My friend is leaning towards Volvos.

What say you?

No advice but I would love that job.

"Close" to a wrecking yard? That's exactly what you're proposing.

When we had our salvage operation at FM, we got a lot of calls. Everyone wanted tech support along with their cheap parts, but that could be because it was the FM salvage operation and not just a random comapny. We eventually shut it down, and years later we're still getting requests. We had better use for the space, though.

From what I've heard talking to others in more metropolitan areas, the real money is in body parts. Doors, fenders, hoods, lights. But it's very difficult to ship those parts without taking damage. So we eventually stopped, and when we shut down the salvage op we recycled many, many doors. Also, if it's got paint, most people expected it to be concours condition.

I kept track of how much we made from each car. The better the car, the more we made - not just absolute profit, but margin. Nobody's looking for parts from a 200,000 mile 1.6 Miata with an open diff, but they'll fight over parts from a two-year-old low mileage car with interesting parts. Our first salvage car was a black 1500-mile Mazdaspeed and there was a feeding frenzy. Keep that in mind when choosing your market.

I used to know a guy who parted 67-72 GM trucks. I couldn't give him a 68 long bed stepside. His comment was something to the effect of "you get junk parts from junk trucks."

Don't assume shipping is easy.

Large body parts are lucrative, but very hard to ship.

Used automotive parts are frequently classified as HazMats for shipping purposes. You may get away with shipping an occasional air bag or part with oil residue or other automotive chemical, but you most definitely will not get away with it regularly as a business.

If you get caught once with a shipping violation, it could shut down your business.

I once worked for a company that packaged a liquid product incorrectly, and shut down a FedEx hub when the product spilled in transit. The fine was significantly more than most small companies could survive- nearly 7 figures. It was a pint sized container.

I would also be hesitant to go into competition with established wrecking businesses.

They play rough.

I too have given much thought to this kind of money maker and have parted out a few cars and made ok money.

I wouldn't limit yourself to just selling on eBay. Find what Brand or type of car/s you want to focus in and keep a thread going on a forum specific to that brand. Have a Craigslist ad going at all times.

Maybe find a few cars that just need a little work to be nice running cars and use existing part cars to repair these cars then sell.

i don't think there is enough money on a small scale to pay anyone to do the work for you.

ebay fees are the killer, paypal is not. paypal is the same cost of doing business as any other person accepting credit cards, ebay's flat 10% final value fee is hard but they simplified the system by eliminating listing fees. the worst part about ebay's fee is people love free shipping even if they're paying the same ($100 + 30 shipping or 130 with free shipping, people see FREE and think they're getting a deal because people are stupid psychologically). so you offer free shipping and get dinged 10% of $130 instead of 10% of 100. their shipping discount through fedex is nice though, better than i was getting with my own established account so i bought a scale and print my labels at home now.

i don't do it to make profit. i do it because buying a whole vehicle for the parts i need and selling the rest to make my stuff free or close to it is easier on my budget than being the guy buying the already removed parts.

You'd have to find out which cars have high-failure rates and be able to source good parts.

Interior plastic pieces off old British and Japanese sports cars always fetch good money. OEM radio surrounds, etc.

To reiterate, this isn't my idea, and at this point it's only theoretical. SVreX, I was hoping you'd chime in. That is good to know on the shipping front. Yeah, anybody can buy a car here and there and part it out. My question is can you do enough a month to make a decent living? I think you'd have to skirt some rules and regulations which would ultimately put you out of business, but I could be wrong. Let's focus on the what car aspect and see where that goes.

also take into account disposal of chemicals. coolant, old gas, etc...

example car - i picked up a rusty 80 z28 for $400. all the z28 specific stuff was there and good including the t tops. the interior was crap as was most of the body. i cleared $1000 profit parting it on ebay, and left a couple hundred on the table because it had a 3.42 posi rear that i left in when it was scrapped just because i couldn't sit on the car any longer as i got the nastygram from the township shiny happy people. to keep up with what i make not playing with cars on the side, i'd have to find that car 3 times a month. chances are you're not going to clear that much on every car. i've had some that have made me $50, some i've broken even on, and a few that have made $1000+. to employ other people, even minimum wage ones, would require you to find 2x that many.

i think the only two ways to really get into it would be buying wrecked cars with desirable drivetrains(anything LS powered comes to mind) or finding niche cars.

I would think German cars could work.

If you are going to part out a car and make a profit, you really need to know the ins and out of that car. Each classic has a market for specific parts and other are basically useless. I know my TR7s and 8s. A few years ago a BMW 2002 found me and since then I have parted out a couple more 02s and 320is for parts I wanted. The more I part out the BMWs the more I realize I have no idea what is worth what. Drop a Fiat or a Miata on my lap and I'd really have no clue.

I did this from '97-'03, exclusively with Volvo 240. It was a good business for the first 3 or 4 years. I could buy a rusty hulk for $100, part it out, and make $1000-1500 per car.

A few things killed it. First, the price of scrap went up, so the scavengers were paying $250-300 for any car rusting in someone's backyard or driveway. The second thing was the rise of eBay. Accessibility to lots of parts became easier, and drove retail prices on used parts down.

(As an example, in 1997 I could get $100 easily for a Volvo ECU. By the time I wound my business down, I would put those on eBay for $9.99 and they would go unsold, because others listed them at $5.99.)

All the money is in easy-to-ship, but expensive, parts. When the money was good, my competitors would just go to the pick-n-pull and buy those parts, make a $5-10 markup per, and have no overhead or storage costs.

It simply stopped being worth my time.

I watched an auto dismantler company start up. They started right inbetween a scrap yard and a large used autoparts chain.

They started in a small one car shop and a tow truck and keep adding on every year. This year they are clearing a few lots worth of trees. So I assume they are doing well, but location look like an important factor.

I talked to one guy that was in the business, and he said as long as the car is 5-7 years old he can sell the parts for more than kbb value.

If you could combine the wrecking yard with some parking/towing/impounding contracts ie towing college students' cars from private lots, you could have a free source of cars (if the odd car owner cant swing the impound fee) and a second source of income from the fines.

I just bought a giant pile of parts from a couple guys who do this. (Engine, trans, pedal assembly, gas tank and pump, driveshaft, ecu, all 4 intact wiring harnesses, fuse boxes, relay panels, assorted brackets, etc) all for a swap I'm getting into.

I spent just a little more than I bet they spent on the car, making the rest of the parts they could sell free. I bet they made $1000 on the car. I also bet they had a combined 100 or so hours in acquiring, dismantling, listing, communicating, meeting (nights and weekends), not to mention the gas and overhead of their phones, internet, trucks, trailers, tools, etc.

Point is, they make money but not much. I think it works for them because they are retired and bored. Oh, and they love free miata parts for their own cars.

Two highschool kids near me started parting Motorcycle parts about less than 10 years ago.
Their family owneds a grass runway airstrip where people pay to keep planes in hangers.
The boy's took over one hanger for bike parts.

Since then, both boy's, still in their 20's have each built a 200k house on the family property and just this year added a GIANT pole barn for the operation.
Here is a link to their ebay store where the currently have 19,000 pieces listed and a feedback of over 35,000 transactions.
http://stores.ebay.com/Mikes-Motorcycle-Parts

https://www.facebook.com/pages/Bores-Cycle-Salvage-Service/160862383943285

Even in their rural community they had some issues which included the need to keep everything indoors or then later the need to keep a privacy fence around it all. With the new building, they now do "counter sales" but in the past, everything went through ebay. I sensed that this was because they were somehow not proper for a real salvage operation with the state.

Back when I was big into Lincoln Mark VIIs I used to go the local Pull-A-Part and strip the good parts off them (and other parts that fit them) to resell on the Lincoln message boards. I didn't make enough money to live off of, but it paid for my own car parts and upgrades. The Pull-A-Part had no idea what half the stuff I bought was so they charged me pennies on the dollar. Complete airline set and compressor? Yeah, that's emissions hoses, $2 please. Then I'd resell the lines for $20 each.

It can be done, but like Keith said, know your audience.

As stated above, its best to specialize and really know the vehicle. I have a friend who parts out yj wranglers as a hobby. Axles from a 4 cylinder jeep are worth 2-3 times as much as a 6 cylinder jeep. An AX15 5 speed is worth several hundred, but the peugeot 5 speed is worth very little. A hard top and full doors are worth $1000, a soft top is worth almost nothing used.

I would think there would be money in parting out mercedes. Complete cars with problems sell for dirt cheap because parts are so expensive. That sounds like the recipe for profits, but that is just speculation on my part.