Do you want to start an aftermarket auto parts business? If YES, here is a detailed guide on how to start a car parts business with no money or experience.

An aftermarket auto parts manufacturing business is of course one of the many businesses an accredited investor can start in any part of the world and the owner of the business can still penetrate the global market by simply exporting his or her auto parts to other countries of the world.

An aftermarket auto parts manufacturing business is indeed a thriving business despite the fact that aftermarket auto parts manufacturers are looking towards China and Taiwan where they can get cheap labor and raw materials.

As a matter of fact, there are aftermarket auto parts manufacturing plants in 50 States in the united states of America and some of the leading aftermarket auto parts manufacturing plants roll out several millions of parts annually hence it is a business that can be started in the United States.

How to Start an Aftermarket Auto Parts Manufacturing Business – A Detailed Guide

Industry Overview

The automotive aftermarket is a subset of the automotive industry and players in this industry basically engage in the manufacturing, remanufacturing, distribution, retailing, and installation of all vehicle parts, chemicals, equipment, and accessories, after the sale of the automobile by the original equipment manufacturer (OEM) to the consumer. The parts, accessories, etc. for sale may not be manufactured by the OEM.

A recent report released by the International Trade Administration in the Department of Commerce, shows that “Aftermarket parts are divided into two categories: replacement parts and accessories. Replacement parts are automotive parts built or remanufactured to replace OE parts as they become worn or damaged.

Accessories are parts made for comfort, convenience, performance, safety, or customization, and are designed for add-on after the original sale of the motor vehicle. The aftermarket encompasses parts for replacement, collision, appearance, and performance. The aftermarket provides a wide variety of parts of varying qualities and prices for nearly all vehicle makes and models.

Over the five years to 2019, the revenue for the automotive industry is anticipated to experience volatility, which will ultimately contribute to an overall revenue decline. As the economy rebounded, consumer confidence has improved and financing options have become more widely available. This has released pent-up consumer demand for new vehicle purchases in the first half of the five-year period.

In addition, interest rates remained low, which reduced the cost to finance a vehicle purchase, and sales across the automotive sector recovered healthily. However, in the latter half of the past five years, production slowed in response to depressed vehicle sales. Despite declining revenue, the industry has continued increasing product innovation

Report shows that the United States automotive aftermarket is estimated to be worth $318.2 billion (2013), contributing more than 2.3 percent to GDP. The aftermarket employs 4.2 million people who work at manufacturers, distributors, retailers and repair shops.

For example, in the United States, online sales of aftermarket accessories have showed year over year increases over traditional brick and mortar stores. In fact, according to Hedges & Company, “Sales of auto parts & accessories continued to climb in 2015, and will continue the trend into 2016 to reach $7.4 billion dollars, posting around a 16 percent increase over 2015.”.

Aftermarket auto parts manufacturing business is not a Green business and despite the fact that the industry has major players who are already determining the direction of the market, there is still room big enough to accommodate new investors who are ready to come up with innovative ideas.

Some of the factors that encourage entrepreneurs to start their own aftermarket auto parts manufacturing business could be that the business is thriving and the products (auto parts and accessories) can be sold not just in your country but all across the globe.

Over and above, the automotive industry cum aftermarket auto parts manufacturing business, is a profitable industry and it is open for accredited investors to come in and establish their own aftermarket auto parts manufacturing plant in the United States of America.

Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition of those who purchase aftermarket auto parts is far reaching; households, individuals, taxi cab companies, haulage companies, auto workshop, auto parts dealers, and auto parts exporting companies and even suppliers, including Ford, Toyota, Renault/Nissan, Mazda, BMW, GM, Honda, PSA, JLR, VW, Daimler and others, hence the demographic composition for an aftermarket auto parts manufacturing plant is all encompassing.

So, if you are thinking of starting your own aftermarket auto parts manufacturing business, then you should look beyond producing and marketing your aftermarket auto parts to just businesses and people in your city, but also to people across the United States of America and other parts of the world.

List of Niche ideas Within the Industry

It is important to start that there are two clear cut niche areas when it comes to aftermarket auto parts manufacturing plant. These two niche areas are parts for replacement, collision, appearance, and performance. An aftermarket auto parts manufacturing company may decide to go in the production of all of the above.

Generally, an aftermarket auto parts manufacturing company may decide to specialize in;

  • Conventions auto parts manufacturing
  • Electric car parts 

The Level of Competition in the Industry

The competition that exists in the aftermarket auto parts manufacturing business goes beyond competitions in your city or country; it is both national and international. This is because, major aftermarket auto parts manufacturing brands in China, Germany, Japan, South Korea, Taiwan and in any part of the world can be found in auto spare parts stores all across the United States of America.

You are also going to be open to competition from original equipment manufacturer (OEM) – companies. So, it will be right to say the competition in the aftermarket auto parts manufacturing business is tough. The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or business properly, you will always make headway in the industry.

Just ensure you have what it takes to churn out reliable and well – designed aftermarket auto parts and you know how to reach out to your target market. There are several aftermarket auto parts manufacturing companies scattered all around the United States.

So, if you choose to start your own plant in the United States, you will definitely meet stiff competitions. Besides, there are larger aftermarket auto parts manufacturing companies/brand that determine the trends in the industry and you should be ready to compete with them for customers.

List of Well – Known Brands in the Industry

It is the norm that in every industry, there are always brands that perform better or are better regarded by the customers and general public than the others. Some of these brands have been in the industry for a long time, while others are best known for their innovations and the quality and reliability of their aftermarket auto parts.

These are some of the leading aftermarket auto parts manufacturing plants in the United States of America and in the globe;

  • S&S Cycle
  • Delkron, Inc.
  • BorgWarner Inc.
  • Lear Corporation
  • Dana Incorporated
  • Tenneco
  • Visteon Corporation
  • Standard Motor Products, Inc.
  • Accuride Corporation
  • Cooper Tire & Rubber Company
  • Goodyear Tire and Rubber Company
  • American Axle & Manufacturing
  • Bosch

Economic Analysis

If you are looking towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic analysis right and try as much as possible to adopt international best practices in the industry you choose to build a business in.

Aftermarket auto parts manufacturing plants business is not a green business, as a matter of fact, you will come across several aftermarket auto parts manufacturing plants if you travel across different cities in the United States of America.

So, if you are mapping out your economic analysis, you should carry out thorough market survey and costing of the required raw materials, branding and other production equipment needed in your manufacturing plant to successfully run the business.

Over and above, if you are considering opening an aftermarket auto parts manufacturing plant, then your concern should not be limited to the cost of setting up the plant, but also on branding and on how to build a robust distribution network. The truth is that if you are able to build a robust distribution network, you are sure going to maximize profits from the business.

Buying a Franchise vs Starting an Aftermarket Auto Parts Business from Scratch

If you are considering opening an aftermarket auto parts manufacturing plant, then you are left with the option of either starting from the scratch or buying the franchise of an established brand. No doubt, it is pretty tough and highly capital intensive to start your own aftermarket auto parts manufacturing company from the scratch.

Good enough, there are quite a number of aftermarket auto parts manufacturing brands that don’t have their manufacturing plants in the United States of America, you can talk to them and work out modalities of operating their franchise in the United States of America.

Please note that we are not ruling out the possibilities of starting your own aftermarket auto parts manufacturing plant from the scratch, but you must be ready to spend enough time and money to see it materialize.

Possible Threats and Challenges You Will Face

If you decide to start your own aftermarket auto parts manufacturing business today, one of the major challenges you are likely going to face is the presence of well – established aftermarket auto parts manufacturing companies and cars and automobile manufacturing companies who are also into the production of auto parts.

The only way to avoid this challenge is to create your own market perhaps concentrate on parts for electric cars. Just like any other business, one of the major threats that you are likely going to face is economic downturn and unfavorable government policies. It is a fact that economic downturn affects purchasing power.

Lastly, high automobile turnover and the preference for new parts means that the market for remanufactured and reconditioned auto parts is very small. Plus, automobile manufacturers have attempted to hinder or suppress automotive aftermarket sales by means of copyright or patent infringement litigation.

The Best Legal Entity to Use for an Aftermarket Auto Parts Business

As an accredited investor, when you are considering starting an aftermarket auto parts manufacturing plant, the legal entity you choose will go a long way to determine how big the business can grow; most companies design their business for the national market and to a large extent international market.

Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your aftermarket auto parts manufacturing business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.

If you take your time to critically study the various legal entity to use for your aftermarket auto parts manufacturing business, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.

Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your aftermarket auto parts manufacturing business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.

Catchy Business Name ideas Suitable for an Auto Parts Business

You will agree that when it comes to Choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.

If you are considering starting your own aftermarket auto parts manufacturing company from the scratch, here are some catchy names that you can choose from;

  • Dothan Elvis® Aftermarket Auto Parts Manufacturing, Inc.
  • Blue Nation® Aftermarket Auto Parts Plant, Inc.
  • Pascal Martins® Aftermarket Auto Parts Plant, Inc.
  • Ted Capstone™ Aftermarket Auto Parts Plant, Inc.
  • Green Line® Aftermarket Auto Parts Plant, Inc.
  • Sleek GAP® Aftermarket Auto Parts Plant, Inc.
  • Auto Mike® Aftermarket Auto Parts Production Company
  • Macron Mendes® Aftermarket Auto Parts Manufacturing Co, LLC
  • High Tech® Aftermarket Auto Parts Plant, Inc.
  • Road Master® Aftermarket Auto Parts Plant, Inc.

Insurance Policies

In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your aftermarket auto parts manufacturing business.

Here are some of the basic insurance covers that you should consider purchasing if you want to start your own aftermarket auto parts manufacturing business in the United States of America;

  • General insurance
  • Auto insurance
  • Health insurance
  • Liability insurance
  • Workers Compensation
  • Overhead expense disability insurance
  • Business owner’s policy group insurance
  • Payment protection insurance
  • Facility /Building insurance

Intellectual Property Protection/Trademark

If at all there is any business that requires intellectual property protection (copyright ©), then an aftermarket auto parts manufacturing business is it, especially as it relates to your design and models. The truth is that your brand, design and your style need to be protected or else anybody can successfully fake or create similar products.

So, if you want to protect your unique design, your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.

Is Professional Certification Needed to Run This Business?

If you want to make an impact in the automotive manufacturing industry, then you should work towards acquiring all the needed certifications in your area of specialization. You are strongly encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business.

Certification validates your competency and shows that you are highly skilled, committed to your career and up-to-date in this competitive market. These are some of the certifications you can work towards achieving if you want to run your aftermarket auto parts manufacturing plant;

  • Certificate in Automotive Technology
  • Automotive Service Technology Certificate
  • Vehicle Acoustics – NVH
  • Certificate of Advanced Studies (CAS) Computational Fluid Dynamics
  • Certificate IV in Automotive Mechanical Diagnosis
  • Professional Program Certificate in Electric Cars (TU Delft)

Please note that you cannot successfully run an aftermarket auto parts manufacturing company in the United States without acquiring professional certifications and business license even if you have adequate experience cum background in the aftermarket auto parts manufacturing industry.

List of Legal Documents You Need to Run an Auto Parts Plant

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations.

If you do, it won’t be too long before the long hand of the law catches up with you. These are some of the basic legal documents that you are expected to have in place if you want to legally run your own aftermarket auto parts manufacturing plant in the United States of America;

  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Non – disclosure Agreement
  • Employee Handbook
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Privacy Policy Document (basically for online payment portal)
  • Company Bylaws
  • Memorandum of Understanding (MoU)
  • Franchise or Trademark License (compulsory)

Financing Your Aftermarket Auto Parts Manufacturing Plant Business

Opening an aftermarket auto parts manufacturing plant business is indeed capital intensive. Securing a standard and well – equipped production facility is part of what will consume a large chunk of your startup capital. In essence you would need to source for funds to finance the business because it is expensive to start an aftermarket auto parts manufacturing plant.

When it comes to financing a business, one of the first things and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.

Here are some of the options you can explore when sourcing for startup capital for your aftermarket auto parts manufacturing business;

Choosing a Location for an Aftermarket Auto Parts Manufacturing Company

The fact that you are not expected to showcase aftermarket auto parts manufactured in your manufacturing plant for sale directly to end users does not mean that location has little or no significant impact in your business.

The truth is that your choice of location when it comes to establishing an aftermarket auto parts manufacturing plant must meet certain requirements or else you will not get the approval of the regulating authorities in your state or country.

So, what you are expected to do before choosing a location for your aftermarket auto parts manufacturing plant is to ensure that you visit the regulating authority to give you the requirements and guide for such business before going ahead to settle for a location.

Besides, you are expected to choose a location that is easily accessible, a location that is close to your source of raw materials, a location that is secured and with a good number of skilled and affordable workforce.

Technical and Manpower Details

If you are considering setting up an aftermarket auto parts manufacturing plant, it means that you should be prepared to purchase equipment and machines such as industrial (power) screwing machines, hydraulics machines, lathe machines, fabrication machines, forklifts and conveyor system amongst others.

If you don’t have enough cash, you can start with fairly used equipment / machines but if you are financially buoyant, then you should go for brand new ones since they usually have a long-life span. As regard leasing or outright purchase of a plant facility or warehouse facility, the choice is dependent on your financial standings.

But the truth is that to be on the safe side, it is advisable to start off with a short – term rent / lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location / facility for such business.

When it comes to hiring employees for a standard aftermarket auto parts manufacturing plant, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Sales and Marketing Manager, Plant Manager, Automobile Engineers in various areas of specializations, Electric Electronics Engineers, Quality Control Officer, Machine Operators and Fabricators, Welders, Accountant, and Client Services Executive.

On the average, you will need a minimum of 80 to 200 key staff members to run a standard aftermarket auto parts manufacturing plant business.

The Production Process Involved in Operating an Aftermarket Auto Parts Manufacturing Plant

Operating an aftermarket auto parts manufacturing plant seems a complex process but it is a process that is run on autopilot. Usually, an aftermarket auto parts manufacturing plant is only expected to manufacture different components of automobiles from the chassis to the doors to the windscreen to the electronics and lighting fittings et al.

Each of the component parts that are manufactured are supposed to match with the existing parts as manufactured by the original equipment manufacturer (OEM) and of course meet international best practice. After the auto parts are manufactured, the parts will be subjected to various tests via the quality and safety control unit in order to ensure that the auto parts coming out of the plant meet the expected international standard.

Marketing ideas and Strategies

In practical, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch an aftermarket auto parts manufacturing plant, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for the aftermarket auto parts manufacturing industry.

Customers will purchase auto parts if they know that they are going to get the best in terms of comfort, durability, quality and value for their money.

As a matter of fact, your marketing strategy will center on quality and pricing, and above all excellent customer service. The truth is that, if you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers.

Businesses these days are aware of the power of the internet and which is why they will do all they can to maximize the internet (videos / YouTube) to market their services or products. In other words, a larger percentage of your marketing effort will be directed to internet users.

These are some of the marketing ideas and strategies that you can adopt for your aftermarket auto parts manufacturing business;

  • Introduce your aftermarket auto parts by sending introductory letters alongside your brochure to corporate organizations, businesses in the auto parts exporting, distribution and retailer industries, transport companies, households and key stake holders throughout the United States
  • Advertise on the internet on auto related blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
  • Creating a basic website for your business so as to give your business an online presence
  • Directly market your aftermarket auto parts via your various auto parts showrooms across the nations
  • Advertise our business in community – based newspapers, local TV and radio stations
  • List your business on yellow pages ads (local directories)
  • Encourage the use of Word of mouth marketing (referrals)

Factors That Will Help You get the Right Product Pricing

One key factor that will help you sell your aftermarket auto parts at a competitive price is to ensure that you source your raw materials from recycled materials, cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your cars.

You can also try as much as possible to work with independent contractors and marketers; it will help you save cost for paying sales and marketing executives.

Possible Competitive Strategies for Winning Your Competitors in the Aftermarket Auto Parts Manufacturing Industry

The quality and uniqueness of your aftermarket auto parts – brand, your business process and of course your pricing model et al are part of what you need to stay competitive in the industry. If wholesale distributors are making profits from selling your products (aftermarket auto parts), they will be more than willing to go the extra mile to help you push your parts to every nooks and crannies of the cities they distribute to.

Another possible competitive strategy for winning your competitors in this particular industry is to build a robust distribution cum business network. Over and above, ensure that your organization is well positioned, key members of your team are highly qualified and your aftermarket auto parts – brand favorably compete with the some of the best in the industry.

Possible Ways to Increase Customer Retention for Aftermarket Auto Parts Manufacturing Business

When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps to attract new customers is to produce results and satisfy your customers always. If your customers are satisfied with your services delivery, they can hardly source for alternative service provider or products.

Statistics has it that one of the major reasons why clients source for alternative service provider or product is when there is a drop in quality. Another reason is poor customer service. If you can continue to improve on the quality of your aftermarket auto parts, then you won’t struggle to maintain loyal customers.

Part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands. When it comes to managing your customers, and building loyal clientele base, you should purchase a customized CRM software.

With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).

Strategies to Boost Your Brand Awareness and Create Your Corporate Identity

If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.

If your intention of starting an aftermarket auto parts manufacturing plant is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.

Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your aftermarket auto parts manufacturing plant;

  • Place adverts on both print (newspapers and automobile magazines) and electronic media platforms
  • Sponsor relevant community – based events/programs
  • Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your business
  • Install your Bill Boards on strategic locations all around your city or state
  • Distribute your fliers and handbills in target areas
  • List your aftermarket auto parts manufacturing plant in local directories / yellow pages
  • Advertise your aftermarket auto parts – brand in your official website and employ strategies that will help you pull traffic to the site.
  • Ensure that all your staff members wear your branded shirts and all your vehicles and distribution trucks/vans are well branded with your company logo et al.
Joy Nwokoro