If you’re revved up by cars and want to start an import/export business dealing in vehicles, we can help.
Automobiles don’t just drive the roads — they also drive a significant amount of commerce. In 2016, the US imported more than $1.25 billion in used passenger vehicles and exported nearly $5 billion.
You can be part of this bustling commerce in vehicles, building a thriving import/export business that facilitates trade around the world.
What’s in this guide?
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Types of import/export businesses
There are three basic types of import/export businesses. Starting out, it’s a good idea to pursue the one that most interests you.
Export management company
An export management company (EMC) helps US companies export their goods. The EMC manages all the details of exporting including hiring distributors, creating marketing materials and handling shipping logistics.
Export trading company
An export trading company (ETC) researches the needs of foreign buyers and then finds US companies to fulfill those needs.
Import/export merchant (or free agent)
Import/export merchants buy merchandise from a manufacturer — foreign or domestic — then resells that merchandise around the world. Although there’s heavier risk in being a free agent, you can potentially earn higher profits since you cut out the middlemen.
Startup costs for an automobile import/export business
You can start your own import/export business with little upfront cost. At minimum, you’ll need a phone and a reliable Internet connection. You’ll also want to invest in business cards, a website and a fax machine. And it doesn’t hurt to hire somebody for your branding, including creating a unique business logo.
Narrowing your market focus and target customer
Once you decide which type of import/export business you want to run and figure out the startup costs, it’s time to narrow your market focus. By niching down, you can concentrate on a market you can serve best.
Take time to dig deep with this research. The extra time you spend finding profitable niches will pay off in the long run. Think about:
- Customers you want to serve.
- Countries and cities you’ll target.
- Types of vehicles you’ll offer.
Your target customer will be someone who wants to trade globally. They’ll either want to sell goods overseas or buy goods from international sources.
Types of vehicles
Meeting the needs of your target customer is easier if you choose products you already know. Do you know about heavy-duty vehicles such as buses? How about motorcycles? Perhaps you have a particular passenger vehicle you’re passionate about, such as classic cars.
Relying on existing experience means you’ll understand the product and jargon of your niche. And you may even already have contacts, which further widens your advantage.
The wider vehicles market
- Light-duty motor vehicles. Passenger cars and trucks.
- Motorcycles and scooters. Including lithium ion batteries, lead acid batteries and fuel cells.
- Recreational vehicles. Dirt bikes, ATVs and snowmobiles.
- Heavy-duty motor vehicles. Commercial trucks and buses.
Narrowing down target countries
To narrow down the countries you’ll do business with, think about your competitive advantages:
- Do you speak a foreign language?
- Do you have connections abroad?
- Have you lived overseas before?
- Have you traveled extensively to a particular country?
- Do you love the culture of a certain country and know a lot about it?
Once you’ve narrowed your list of target countries, investigate each country’s requirements for conducting business: tariffs, registration and other documents.
Educate yourself before making a final decision can affect your competitive edge. Ask questions of your target country’s foreign embassy or consulate, and visit the US Department of Commerce to learn more. You can also search our import/export guides by country.
Top vehicle importers and exporters in 2015
- United States
- Germany
- United Kingdom
- China
- Canada
- France
- Belgium
- Spain
- Mexico
- Italy
- Germany
- Japan
- United States
- Mexico
- Republic of Korea
- China
- Canada
- United Kingdom
- Spain
- France
Information courtesy of International Trade Center.
How do I register my import/export business?
To register your import/export business, you need to fill out the US Department of State’s SNAP-R company registration.
After you submit your information, the Department of State will email instructions about obtaining a company identification number (CIN). A CIN is used for tax purposes and for registering with the US Department of Commerce.
Import and export licenses
Typically, the US Customs and Border Protection (CBP) doesn’t require a license to import or export goods to and from the United States. However, other government agencies or departments or local governments may require them. If you’re exporting goods, you can find out which licenses may be required by asking your local port of entry.
Incorporating and forming an LLC
You don’t have to incorporate in order to start an import/export business. However, incorporating or creating an LLC can provide key benefits that include:
| Benefit | Explanation |
|---|---|
| Separation of personal and business assets. | Creating a corporation or a limited liability company (LLC) can help you protect your personal assets. For example, you’ll have less personal liability for business debts. |
| Expense deduction. | Through a corporation or LLC, you can deduct business expenses before income is forwarded to you. |
| Enhanced credibility. | Clients often prefer working with incorporated businesses, seeing them as more legitimate. |
Is specific paperwork or compliance required for the automobile import/export market?
Imported vehicles must comply with environmental and safety standards in the US. Exceptions, compliance and required forms and procedures vary by vehicle types and according to agency that include the EPA and the National Highway Traffic Safety Administration.
When exporting vehicles, you must also file information in the Automated Export System of the US Census Bureau. You may also be required to submit forms in the country you’re importing from or exporting to.
For more information on the laws and regulations governing the automotive industry, visit the US Small Business Administration’s Business Guide.
Because regulations and requirements change, also consider seeking the help of an import/export specialist to determine the exact certificates, licenses and other clearance documents needed.
Charging for your services
Import/export business typically charge based on commission or retainer.
Commission structure
With a commission structure, you’re paid a percentage of any trade deal you close — usually around 10%. For example, if you sell a truck for $3,000, you’ll make a $300 commission. On top of your commission, you’ll also want to charge for expenses like packaging and shipping.
Retainer model
On a retainer model, your clients pay you a monthly fee to be on call when they need your services. To find the right amount for your retainer, consider your costs. These may include labor, supplies and overhead.
An alternative model
Beyond a commission or retainer structure, you can simply buy goods and sell them. In this case, your revenue will come from the profit you make from selling merchandise.
Which business model should you choose?
A rule of thumb is to pick a commission model if you think a product will be easy to sell. If you think a product will be difficult to sell, however, price your business based on a retainer.
The thinking is, if you’ll sell a lot of product, you want to be paid based on performance. On the other hand, if you believe sales will be slow, using a retainer model could ensure that you’ll be paid even in the downtime.
Finally, if you’re confident in your ability to sell products, you don’t have to negotiate a payment structure with manufacturers. All you’ll have to negotiate is how much you’ll buy product for and then find a way to profit from the merchandise.
International billing and payments
Your new business will require you to make and receive international payments, which means you’ll make transactions between currencies and across borders.
You can safely and affordably manage your business payments — with lower fees and stronger exchange rates — by comparing the services of a money transfer specialist.
Send Money to the U.S. Efficiently
Compare international money transfer options for importing and exporting automobiles
Shipping the goods
You’ll be sending and receiving goods from other countries so you’ll need to arrange shipping details.
First, contact a freight forwarder. A freight forwarder is a company that helps you transport goods safely and efficiently. Your freight forwarder will help you handle the logistics of completing shipping documents, finding cargo space and securing cargo insurance.
Find a freight forwarder by looking in state-specific business directories. After you’ve hired one, read our shipping guides to learn how to ship merchandise.
Laws and legal documents when transferring large sums of money into the US
Risks and how to avoid them
Unpredictable shipping logistics
Needless to say, your success hinges on whether you can ship goods safely and efficiently. If you’re exporting goods, for example, you’re responsible for ensuring they leave your local port and arrive at the correct destination on time.
You’ll also need to account for anything else that could go wrong, such as damage to the cargo. Staying organized and partnering with a reputable freight forwarder will help you ship goods without a hitch.
Not knowing enough about your market
It’s a good idea to thoroughly research the automobile market before entering this business.
Consider hiring experts who understand the tastes and cultures of your specific markets. You’ll need to sell products that resonate in countries you’re unfamiliar with.
Running into problems at the border
Customs rules aren’t uniform throughout the world. Instead, you’ll encounter a mass of different regulations while transporting goods. To avoid drowning in a swamp of border regulations, hire experts in customs law and trade compliance.
Bottom line
The import/export business is for people who love building relationships in other countries. But success also requires an organized mind that can handle logistics. When dealing with automobiles, a willingness to thoroughly comply with relevant regulations is a must.
If you have these qualities, take the plunge into creating a thriving automotive import/export business.
