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

Car Hauling Business

You need a budget of over $300,000 to start a standard car-hauling business in the United States. With that in mind, it is safe to say the cost of starting a car hauling business may vary from one entrepreneur to another.

But there are basic factors that can contribute to how much it will cost you to start a car hauling business, and that is what we will discuss in this article.

10 Factors That Influence the Cost of Opening a Car Hauling Business

  1. Type of Carriers or Niche Idea

For car hauling business, there are two types of carriers; enclosed carriers and open carriers. The choice between open carriers and enclosed carriers will greatly affect your startup costs.

With open carriers, the vehicles being transported are exposed to the elements while enclosed carriers are used to transport valuable or luxury cars, as they shield the vehicles from road debris, weather, and potential damage.

A car hauling business may decide to operate both enclosed carriers and open carriers, and you know it will cost more to start such a business.

  1. Number of Trucks and Trailers

You may choose to start your car hauling business with just one truck and trailer or invest in a larger fleet for more extensive operations.

In essence, starting a standard car-hauling business that will operate with a fleet of trucks and trailers will be more expensive than starting a car-hauling business with just one truck or trailer.

  1. Your Vehicle Acquisition Option

When we talk of vehicle acquisition options, we are talking about your choice of either purchasing new or used trucks and trailers.

Note that when you buy new trucks and trailers, you will spend far more than someone who decides to start with used trucks and trailers. Despite the fact that new trucks and trailers are more costly upfront, they have fewer maintenance issues.

  1. Operating Licenses and Permits

In order to legally operate a car hauling business in the United States, you will need various licenses and permits, and some of them are:

Business License, Motor Carrier Authority (MC Number), USDOT Number (U.S. Department of Transportation), State Transportation Permits, Commercial Driver’s License (CDL),

Vehicle Registration and Licensing, International Registration Plan (IRP), International Fuel Tax Agreement (IFTA) License, and State and Local Permits (Varies by location).

Also, costs associated with complying with state and federal regulations, such as emissions standards, safety inspections, and compliance with weight limits, should be factored in.

These licenses and permits typically come with application fees and ongoing renewal costs which can form a significant part of your budget.

  1. The Cost of Insurance

The cost of insurance for a car hauling business is significant due to the risks involved in the business. For example, cars being transported can be involved in an accident, or can be stolen in transit or anything can happen. Hence, you need comprehensive insurance to protect you and your business. Of course, you know that insurance costs vary based on the size of your fleet and the level of coverage you choose.

But you must budget for commercial auto liability insurance, cargo insurance, physical damage insurance, general liability insurance, workers’ compensation insurance, umbrella/excess liability insurance,

Garage keepers insurance (if operating a repair or storage facility), business property insurance (for offices, equipment, etc.), and inland marine insurance.

  1. Maintenance and Repairs

Ongoing maintenance and repair costs for your trucks and trailers are significant factors that can influence the cost of starting the car hauling business.

Apart from the fact you are required by the U.S. Department of Transportation to keep all your trucks and trailers in good condition, regular maintenance of your trucks and trailers is to your advantage because it will help keep them in good working condition.

  1. Marketing and Advertising

Promoting your car hauling business through marketing and advertising efforts is essential to attract clients. Even though there are no specific costs attached to marketing and advertising a business.

The bottom line is that if you want to launch a business that will win a fair share of the available market in your location, then you must invest a significant amount to promote your car hauling business.

  1. Your Staffing Cost

Starting a car hauling business requires that you hire drivers and other support staff. When planning for your staffing cost, you should take into consideration the salaries, benefits, and training for your employees.

Trust me, these costs will form a significant portion of your budget and you must be prepared for it. The only reason why you may spend a very minimal amount on staffing costs is if you are operating only one car hauling truck, and perhaps you are the driver.

  1. Fuel and Operational Expenses

Fuel costs for a car hauling business are a significant ongoing expense. You are going to be spending a lot on operational expenses, so you must have a budget for it before starting the business.

Apart from fueling your trucks and trailers, you will also spend on other operational costs like tolls, parking fees, contract staff, vehicle tracking systems, and administrative expenses.

  1. Storage and Parking

Lastly, another factor that can influence the cost of starting a car hauling business is the amount it will cost you to rent, lease, or acquire a storage and parking facility big enough to accommodate not only your trailers and trucks but also some of the vehicles that you are meant to haul.

This is so because you cannot start a car hauling business without having a secure location to park and store your vehicles when they are not in use.