- Profitability: The auto parts business can be profitable due to its low investment cost, high profit margin, and good growth potential. The average dealer has a 15-20% profit margin on automobile parts.
- Availability: Spare part dealers ensure that a wide variety of components are readily available. This saves time and effort, allowing for quick repairs and replacements.
- Online store: Creating an online store can be a good option for starting and growing your business. Customers search for auto-spare parts on the internet, and suppliers present on the internet fulfill this requirement.
- Research and planning: A thorough research can make your auto business idea very clear.
- Focus on your niche: Focus on your niche.
- Permits and licenses: Obtain the necessary permits and licenses.
- Financial management: Manage your finances.
- Inventory management: Manage your inventory.
- Marketing and branding: Develop your marketing and branding strategy.
How to Start an Automobile Parts Business?
Starting an automobile parts business is complicated. Thus, you need to consider several aspects to achieve success. Here is a stepwise guide to establishing a smooth start-up:
Research and Planning
Understanding your niche is the most crucial part of starting an auto parts business. Parts like air filters, exhaust systems, clutch kits, brake coils, etc., are some auto parts that remain in high demand. You must also research your target audience and competitors to start well. Research and plan properly to establish a business that attracts customers and makes sales.
Permits and Licenses
The next step is to obtain the required permits and licenses from the local municipality of your state. Moreover, you must register your business under the Indian Shop and Establishment Act. You will also need licenses to open a store and sell spare parts. GST registration is also compulsory to set up a commercial business in the country.
Choose a Location
The auto parts store’s geographic location largely affects its chances of success. A strategic location near target customers will be a huge plus. Consider locating your automobile parts business at a site that receives lots of cars every day. On the contrary, launching an auto parts store in a rural area will be a bad idea.
Financial Management
Since an auto parts manufacturing or sale business requires different types of labour and machinery, you will need ample capital to fulfil the requirement. Moreover, keep your book of accounts up-to-date. Consider the cost of your day-to-day operations and arrange the required funds to cover the expenses.
Contact with Suppliers
To make sales and profits and cater to your customer’s needs, you will need a reliable supplier who can provide high-quality products at decent rates. It will help you keep good profit margins without over-pricing your potential clients. Whether you need OEM or aftermarket auto parts, you must choose a reliable supplier and contact them to raise a quote.
Inventory Management
You will never want a customer walking into your store and not getting a part they want. After establishing your auto parts business, you must meet your customers’ expectations to grow and expand. Inventory management ensures your store remains well-stocked with all in-demand auto parts. Once the stock is sold, prepare another order and fill it on your empty shelves.
Marketing and Branding
No business can do without efficient marketing. It helps get your name among the target audience and create demand. Open social media pages to spread information about your automobile parts business and display all the accessories in your stock. Holding car shows is also a good strategy to market the enterprise. Use brochures and flyers to announce updates about your business and provide information about the auto parts you deal with.
Conclusion
Setting up an automobile parts business provides ample opportunities to expand, considering the number of cars increasing in India yearly. This guide must have taught you how to establish the store properly with the required licenses and financing. To expand your operations, you can get the required funding easily and quickly with a Business Loan from Hero FinCorp. Whether you need finance to manage your store, restock inventory, pay suppliers, or build working capital, borrowing a Business Loan has various advantages, such as simple funding access, flexible repayment, reasonable interest rates, and quick loan approval.
Frequently Asked Questions
1. Is the auto parts business profitable?
The auto parts business is highly profitable due to low investment cost, high profit margin, and good growth potential.
2. What is the profit margin of automobile parts?
An average dealer has a 15-20% profit margin on automobile parts.
3. What are the most profitable auto parts?
Air filters, exhaust systems, clutch kits, brake coils, etc., are the most in-demand and profitable auto parts.
4. Why might an automobile parts business need a business loan?
An automobile parts business might need a Business Loan to expand its workplace, buy inventory, invest in marketing, build working capital, or for other purposes.
5. How much funding can I apply for with a Business Loan for automobile parts?
At Hero FinCorp, you can apply for a Business Loan of up to Rs 40 Lakh for automobile parts.