Last updated: September 26, 2022

How to Export Cars for Profit?

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How to Export Cars for Profit?

To learn how to export cars for profit, you have come to the right page. Many people in the USA specialize in exporting and importing vehicles from and to the US. These are traded from different global destinations.

The export of cars is a sound business requiring a competent team and a few computers to manage the data and communications involved and develop a global network of dealers and brokers. This is no different to what any other trade business will require.

Exporting cars can be very challenging, and as the recession looms, it can grow rapidly in the next few years. Cars are a commercial commodity like any other, and they play a role in the global trade between countries.

According to statistics for 2020 the USA exported cars worth $47 billion. This places it in 3rd in the global ranking of car exporters behind Germany and Japan.

Out of these, a sizable number is for used cars. These values make it an impressive industry and one that you can also become a part of by starting your own export car business.

How to Export Cars for Profit- Export Cars

Different Categories of Export Businesses

There are three different sorts of export businesses:

  • Export Management Company: also known as an EMC, these companies manage the trading processes for a local business. It acts as an agent for firms to export their product internationally. The Event Management Company handles all operations required in the export of cars. Key activities are marketing, distribution of vehicles, and shipping and customs documentation.
  • Export Trading Company: This company, also called an ETC, gets orders from international buyers and then sources them locally from dealers and businesses and arranges to get them exported through an EMC.  
  • Import/Export Merchant: this is a fancy term for a simple trader. Export merchants work as a middle man, buying from the manufacturer or dealer and selling the car to international buyers.  

Starting Costs For Export Car Business

Some capital outlay is required in order to buy or rent office space, computers and and other equipment.  

Some funds are required to pay the legal fees needed to get the necessary licenses and permits. Some capital will be required for operating expenses like employee payroll, office utilities, and supplies.

Learning to Trade in Cars

Exporting a car to another country is not a simple process and requires many technical elements that we need to learn about. Exports or international trade involve inland logistics, global logistics, local (US) customs, and foreign customs. The financial transaction involves money transfer, exchange, and transmission charges. A standard deal usually has about 11 to 12 different transactions.

How to Export Cars for Profit-Trade In car

Know The Market and Target Customer

Like any business, when starting to export cars, you need to decide on a market niche and the type of customers you want to cater to.

Simultaneously you need to research and do your groundwork short list your target market areas and customers.

This can be done by shortlisting the customers, cities, and countries you want to target. Once you have these shortlisted, you can finalize the types of cars in demand in that region.

Types Of Vehicles to Export

There are different categories of vehicles that can be exported. These are:

1. Light-duty motor vehicles: These include small passenger cars and trucks

2. Motorcycles and scooters: These include bikes that are powered by lithium-ion batteries (hybrid), lead-acid batteries, and fuel cells (electric)

3. Recreational vehicles: These include dirt bikes, All Terrain Vehicles, and specialized vehicles like snowmobiles and even jet skis.

4. Heavy-duty motor vehicles: These include medium to heavy range commercial trucks and buses

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Picking Your The Target Country

To select the countries you want to focus on, you should consider the following points:

  • Do you speak the language spoken there?
  • Do you know someone that lives there?
  • Have you lived there?
  • Have you visited and or know the country well?
  • Are you familiar with the culture of the country?

Once you have a selection of countries based on the questions above,  you can start promoting your business.

Registering the Business

Once your export car company is formed, it needs to be registered on the US Department of State’s SNAP-R business registration portal.

You will need to fill in a form, and the Department of State will email you the process for getting a company identification number (CIN). The CIN is essential as it is used for taxation and registration with the US Department of Commerce.

Incorporating And Forming An LLC

Forming a Limited Liability Company is not necessary, but it can prove to be a helpful thing. An LLC offers some significant benefits like

  • The separation of individual and business assets: making a limited liability company (LLC) creates a layer between your business and personal assets. 
  • Expense reduction: Owners can charge business expenses from their earnings before paying taxes by making a limited liability company.
  • Better credibilitymany people find themselves more comfortable dealing with an organized, registered company, as they are more legitimate and formal.
How to Export Cars for Profit-Car Insurance

Company Insurance

The car business is very dependent on insurance, and it is a crucial part of running a safe and legal business. Insurance protects a company and its customer’s interests in case of any adverse event that can cause financial or even physical stress.

The standard insurance to opt for is General Liability Insurance. The GLI is a standard coverage for any export car business. Many businesses will also have to get Workers’ compensation insurance.

The Business Model

There is a choice between working on commission basis or on a fixed payment basis. Commission-based is more effective if a high or steady volume of exports is expected. The fixed payment basis ensures that you get paid even during low trading periods. 

You might be also interested in Why is My Truck Registered as a Commercial Vehicle in California?


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