How To Start Auto Spare Parts Business In South Africa
What is Auto Spare Parts?
Auto spare parts (auto spare parts) are a variety of units that make up the whole car and a product that serves the car. There are many types of auto parts. Nowadays, there are more and more brands of cars and more and more types of cars. Automobiles can be divided into passenger cars and commercial vehicles.
How To Start Auto Spare Parts Business In South Africa
1. Choose a Profitable Automobile Spare Parts Business Idea
There are mainly four ways you can start an automobile spare parts business. Below are the following:
- Automobile Spare Parts Retail Store
- Automobile Spare Parts Store with Workshop
- Automobile Spare Parts Online Shop
- Automobile Spare Parts Franchise
2. Create a Business Project Plan
Crafting a specific business plan is a must for starting this business. Apart from creating a blueprint, the business plan helps to identify the goal and the ways of achieving that goal. Additionally, it helps to secure startup capital from investors or banks.
3. Conduct the Market Research
First of all, you must conduct a market feasibility study to get first-hand information about the market condition and opportunities. It will also help you to understand potential competition from the other operators. Basically, it enables you to know how to develop winning strategies that will help you getting breakeven within a few months of starting the business.
4. Understand the Industry
It is another most important aspect you must consider before commencing this business. Though the business doesn’t demand any sort of educational degree, you must have clear knowledge about the inside industry.
5. Calculate the Cost of Starting an Automobile Spare Parts Shop
After getting the knowledge and finalizing the business model, you must calculate the requirement of startup capital. Generally, you have to consider the rent of the retail space, store setup costs, and purchasing the spare parts from the wholesaler or manufacturing companies.
6. Ensure a Retail Location
After getting the plan properly, you will need to secure a retail location according to your business model. You must select the storage space in a good location. However, if your marketing and advertising strategies are good enough, you don’t need to invest much more in the location.
You will need a location that is big enough to house and properly catalog a variety of spare parts for all the makes and models of cars you cater to.
7. Licensing & Registration Issue
Check the registration and licensing issues of your state. Get the licenses for opening the store, selling spare parts, and have the right insurance. In India, apply for MSME Udyog Aadhaar Registration online. In addition to that, you must apply for the license under the Shops & Establishments Act.
It is always advisable to talk with a local small business consultant for the upcoming tax and compliance liabilities.
Presently, GST Registration is a must to start a commercial business in India.
8. Procure the Spare Parts
After finalizing the store, you will need to procure the spare parts that you want to sell from your store. Actually, identifying the parts you need and where to find them depends largely on your business plan.
According to your plan, talk to the companies and deal with the best quote with MOQ (minimum order quantity).
9. Setup the Store
You must set up the store properly. An outdoor sign is a must. Additionally, check the electrification, counter space, and shelves properly. You can consult with an interior designer to have the right floor plan. However, you must use every inch of space properly to get the optimum benefits of it.
10. Hire Employees
Hire the right manpower. In any startup business, initial employees play important role in getting the initial success. Check, whether you need a licensed mechanic or not. Additionally, if you want to open the store with a workshop then consider keeping an automobile engineer too.
Frequently Asked Questions (FAQs)
What is the profit margin in the auto spare parts?
Average dealer margin of a automobile dealer in India is 4-5% on vehicles cost & 15-20% on spare parts cost. Internationally, the margins are nearly 7-8% on vehicle cost & 30-40% on spare parts cost.
Is an auto parts store profitable in South Africa?
The auto parts retail industry enjoys resilience even during times of economic downturn. Therefore, learning how to start an auto parts store can be a profitable venture.
How do you make a parts department profitable?
Reduce or eliminate errors in ordering. Ordering the wrong part and arranging returns and replacements increases costs and reduces margins. Train staff to improve accuracy, and offer incentives to improve performance. Manage inventory to minimize stock on hand.
Is auto parts a good business?
It can be considered a recession proof industry, because as opposed to car sales which may not be front of mind for consumers during a difficult economic environment, car parts are more easily accessible for an auto related emergency. This makes them a great investment for anyone looking for that next opportunity.