Skip to Content

How Do Junkyards Make Money? (Smart Ways They Profit)

A junkyard, also known as a salvage business, collects items consumers no longer deem usable. This “scrap” is then transformed to meet the requirements of specific buyers. Scraps and raw materials can be acquired from junked appliances, vehicles, furniture, and demolished houses.

Junkyard owners dealing in automobiles acquire decommissioned vehicles from individuals and companies. They function as both a short-term collection and storage facility for vehicles on their way to another destination or as the auto’s final resting place. For the latter, junkyard owners remove any valuable parts for resale and crush the rest.

A junkyard’s target market is anyone seeking an affordable option to fix or replace an item. Note that the specifics vary based on the needs of the community. That is why conducting thorough market research prior to developing a business plan is very imperative.

Once you have defined your niche, you can then point out what type of individuals and businesses might require your services. Grocery stores, factories, building contractors, construction companies, automobile outlets, homeowners, and electronic companies are all potential clients to consider.

Also have it in mind that the way your junkyard business operates depends largely on the system you choose to implement. For instance, if it is for vehicles, your junkyard may either be a temporary collection point for unserviceable vehicles to be shipped to another company or the place to cannibalize some vehicles for parts and crush the rest.

Your budget also influences your business preference. You need to invest in land, an office, and a warehouse, especially if you plan to salvage cars.

You will also have to determine how much to pay for the scrap your customers bring in; usually, the price varies depending on the condition of the items. Decaying items usually have no value, so you may choose to charge for the service of collecting them.

As the business grows, you may want to bring in some staff to help you with the business and impose some organizational strategies that result in more effective management. You also have to ensure that you have safety policies in place to guide your staff on how to work in potentially dangerous conditions.

If you have the skill set and a good shop, you may opt to service some of the scrap and resale the items for a profit, especially for vehicles, equipment, and appliances. Otherwise, you should simply strip them of reusable components and store these in your warehouse to be resold later to individuals or garages.

Have it in mind that once you have stripped them, you will have to proceed to flatten them with a crushing machine; the hydraulic system of the machine delivers enough force to compress them into flat cubes of steel for space saving and ease of transportation. These cubes can be sold to a recycler.

Smart Ways Junkyards Make Money

This business is all about buying and reselling for a profit. Parts and components are expected to be accurately priced to make sure the business gains back all investment, labor costs, and ongoing expenses. However, some teams with the proper skill set can also repair salvageable items, bringing in a larger return on their investment.

Prices in this business field are set based on demand, condition of the item, and region. Operating expenses should be a factor in your pricing formula.

Since the goods and services offered vary significantly from one to another, published junkyard profitability numbers cover a wide range. One owner reported earnings as low as $1,000 per month. Owners in larger, more populated areas report six-figure profits.

How to Start a Junkyard and Make Money

Selling junk over the years has proven to be a very lucrative and profitable business. Junkyards specialize in automobiles and old household goods. There are so many tips and steps you need to consider when setting up a junkyard so you can make a lot of money from it. These steps and tips include;

  1. Find A Yard And Stock up

Have it in that there is nothing as simple as getting scrap materials, you can acquire them from business premises or individual homes or contact people to drop their junk at your hard. Howbeit, finding people to buy your junk can prove to be quite challenging.

If you have not planned well and done proper market research, it may be difficult to find the right people and organizations willing to buy your junk car for cash. It is also imperative to conduct a research on the rules and regulations pertaining to running a junkyard.

  1. Business Type And Equipment

You also have to develop a system for your business to operate effectively. Note that the way the junkyard will work depends on the business type and the equipment you choose to implement. It is very critical to use equipment that favors your business type so as to make it lucrative. For instance, if you are dealing with old cars or salvaging reusable parts, you should have the right equipment.

  1. Have A Good Budget

Any successful business needs to have a substantial budget in order for it to be profitable.

  1. Choose Which Tools To Bring

You will also have to consider which tools to bring to the junkyard depending on what kind of scrap you are dealing with. For instance, if you are dealing with spare parts you will have to carry tools that deal with spare parts. If you are dealing with engine parts you should consider using tools that can handle engine parts.

  1. Employ The Right People

It is very necessary to seek the right people when employing workers. Note that this is because a good workforce enhances productivity which in turn leads to a profitable business thus making money from the junkyard. This is only applicable when the business grows and becomes large enough for a large workforce.

  1. Develop the Right Skill Set

Note that if you have the right skill set required to start and manage a junkyard business, you will be able to make a lot of money because you will know how to operate the business effectively and efficiently thereby making it profitable.

  1. Understand Customer Needs

You also have to know what your customers want. For instance, if you have a customer that is reassembling a vehicle you should look for junk vehicles that he can use to obtain parts.

  1. Divide Your Junkyard

It is advisable to have distinct areas in your junkyard and differentiate the products and junks you get. For instance, you can have a distinct area for automobiles and vehicle assembling, another one for household appliances, and another one for furniture and fixtures. This will make your junkyard attractive to customers.


Junkyards make money in a variety of ways. Most will sell parts to individual customers, who are usually responsible for installing the part themselves. Note that in some junkyards, the customers are expected to remove the part while in others, the yard removes the part for him.

Some Junkyards are known to sell larger parts such as engines to used auto part companies, which repair them and sell them to car builders and garages. Junkyards also sell unusable parts to scrap metal recycling companies. A large enough junkyard can sometimes perform some other tasks. For instance, a big junkyard might also reassemble and sell engines.