Rebuilding cars

If you were going to get into the business of rebuilding cars to resell, what specifically would you look for before you decide to buy vs not buy?

Rebuilding body-wise or mechanically?

In general, you should be mechanically astute, don’t believe much of what anyone tells you about the vehicle, and always expect something else (Murphy’s Law) to enter the equation somewhere.

Since this is a business the equation is pretty simple.

A What is the cost of the vehicle in its current state.
B What are the cost of repairs.
C What is the value of the vehicle with the repairs completed.

Therefore C-(A+B) = Profit or Loss and should be the driver for your buy / no buy decision.

Yes, estimating A, B, and C is the key, and is VERY difficult. If this is to be a business, B needs to include the cost of the parts, plus the cost of your time, rent, etc, etc.

traveltsar, do you have a LOT of experience in this? There is a series on HDT where two pros buy cars, fix them up, and sell them. They frequently make ZERO on the cars. And their “B” is only the cost of parts, ignoring the hours of work they put in fixing up the cars. Be VERY cautious about doing this.

My previous mechanic, now retired, follows this method as he rebuilds older cars for a hobby and profit.

He says the car has to be basically sound, and that includes the body. He looks for cars which do not need serious engine work and need mostly cosmetics and paint, easy to install itmes like suspension and brakes, and perhaps some items the previous owner found hard to get.

Like buying a house fixer upper, you don’t want bad foundations, new roof needed and other expensive items.

In our town, there was a business like that a few years back. They only bought-fixed-sold VWs. I would assume others have done (are doing) this. Might consider the pros and cons of sticking with one make of car. Familiarity could give you a more rapid turn-over rate and efficiencies related parts. Just like any retailer, you need to buy at a discount and sell at a premium relative to book value. The answer to your question will come out in a business plan. You really need that. Start at the local C of C and ask where you can get help (usually free) on doing a business plan. Good luck.

PS I mean you REALLY NEED a business plan.

To everyone who has responded, thank you very much. Your responses are greatly appreciated. I guess I should have elaborated. My goals are to purchase a salvaged car and repair and finally export it. I have connections overseas where I can send the vehicle to be repaired in the respective countries where I have family and friends.

Ultimately, should a car with engine damage be avoided? Would that type of damage typically cost more to repair than a vehicle that has just structural damage for example?

I don’t think I want to deal with flood damaged cars unless someone can suggest ideas on what to look for. I guess everyone realizes how much of a novice I am to this topic. I do have a business plan put together already.

Thanks in advance…

That changes everything. If your overseas connections are who are going to be fixing the cars, ask them what kind of cars are in demand there and what kind of work they’re set up to do. The different labor costs hugely affects the economics of things like major engine overhauls and so fixing up an older car with a blown engine makes little financial sense in this country, but it might in some others.

I would avoid work that requires expensive tools you don’t own and won’t use very often. I would also only deal in cars that are popular where you sell them. Quick turnover is essential to good cash flow, and you need cash flow to earn enough to live one and make your business grow. I would avoid any internal engine problems at first. Something on the outside, like ignition or AC, might be OK, but be sure you can meet whatever pollution laws exist in your area before you start depressurizing an AC system. I wouldn’t mess with ECU problems either, unless you are confident in you skills with the ECU.

No. I’m gonna harp. If you have a business plan, then the answers you want are already in THE BUSINESS PLAN. Everything everyone is telling you here should have already been covered in developing THE BUSINESS PLAN. Since that is obviously not the case, you need to first understand exactly what a business plan is. It is very specific and very detailed. Your business plan should have already covered what type, condition, etc. vehicles you buy. How much value added, turn-around time, etc. will work. Go see one of the volunteers who are old retired business people and get this all straight before you spend money.

I won’t be fixing any of the cars since I have absolutely no idea how to. I was going to go to the mechanic I’ve been using for many years to fix them.

Another idea I had to sell cars domestically was to focus on one style of cars, get them fixed and resale them. For example, someone I know focuses solely on Corvettes and resales them. I plan to do the same. However, I can only imagine that fixing a BMW for example would probably require some deep pockets.

Another way to ‘rebuild’ vehicles, a method used by many generic used car lots, is to assemble one good one from several bad ones, often procured for pennies. ( ex; engine from a roll over, front clip from another , onto a third. )
Then there remains the question of which v.i.n. is considered the selling vehicle and which gets killed off the records.

Great idea Ken Green. I don’t think I would have thought of that. Then I also have a local junk yard I’ve frequented not to far from where I stay!

This market is already well-served. You may find exporting wrecked car much more difficult than you imagined…This is a closed club…Parts to repair wrecked cars are not available in foreign countries, making that part of your plan suspect…

In the States, the housing bubble has already collapsed, and the car bubble is next. New car sales have plummeted, and soon the surplus of decent used cars on the market will be gone. Technology is changing day by day, five years from now, today’s cars will be hopelessly obsolete… With a single stroke of some regulators pen, on either end of the transaction, your business could vaporize overnight…

Few questions Caddyman…

  1. What makes you think it’s a closed club? I have a mechanic friend back in C America that constantly asks if I can get my hand on a specific type of vehicle. He can’t keep enough of them.

  2. Who said I’d purchase the parts overseas? Even if I did decide to purchase them overseas, I know exactly where to get them from overseas.

  3. Car bubble? Have you even ever been overseas?

Don’t take this wrong but by your own admission you know nothing about the mechanical workings of cars and what you’re attempting in my opinion is the equivalent of sitting on a mountaintop and watching a train with an uninformed engineer racing towards a washed out bridge.

This is a mine field for someone who does know cars, much less for someone who doesn’t.

You mention engine repairs as being a costly detriment to whatever project you have planned and engine repairs are likely to be one of the least of your worries.
As to structural damage there are often things that are not visible to the naked eye and you will discover this AFTER you lay out the cash for something that would have been better off crushed.

As to salvage yard parts, a fair number of those “I swear they’re guaranteed to be good on my Mother’s grave” parts are parts that should have stayed in the salvage yard.

Some exceptions (possible exceptions) to this may be in very or moderately desireable cars but not on your regular old ho-hum daily drivers.
A 1968 Z-28, yes. A 1984 Camaro, 96 Crown Vic, or 98 Camry, no.

Have you ever been to this country? I’m not sure about Caddyman’s prophesies, but at the moment (and for at least the last 25 years or so) the trouble with rebuilding older cars is that there is a huge supply of perfectly servicable cheap used cars. So if you have a car that’s more than a few years old, you are never going to recover the cost of doing major work. The few people who do rebuild cars do so because they are very good at it and for some perverse reason actually enjoy it-- there’s no way you can make money yourself paying someone else to do it.

Even if you’re planning to ship them overseas where the cars might sell for more, you’d be better off trying to find presently-running cars. Like I said earlier, maybe the dynamics of the price of used cars and labor overseas might make this a reasonable proposition if, say, you found cars with blown engines, found used replacement engines, and then shipped the cars and engines overseas to be installed by some third-world mechanic making $15 an hour. But paying a normal mechanic to do the work here and then shipping them overseas makes no sense.

First, you don’t want to buy cars from salvage yards. You want to buy them where the salvage yards buy them. See , and for some ideas of what I’m getting at. All three of those export cars all over the world from their on line auctions.

Second, you need to buy cars that don’t need heavy structural work. Stick to those that can be fixed without any “frame” work being done. Those that need a fender or a pair of doors to be good cars are what you’re after. Six year old or more cars get “totalled” for very minimal damage, the sort I just mentioned. The insurance adjusters are required to make their bids based on new parts. You can use used parts, sometimes with a color match so paint, which is expensive, is not a factor. I bought a '98 Mercury Grand Marquis the other day for $200. It needs a blue rear door.

Third, understand the rules of the country you are exporting to about whether or not they will accept an unfixed “totalled” or rebuilt salvage car. Some won’t. Some will actually not care at all, and will issue a title for the car that is not branded as a rebuilt car once it is on their shores.

Fourth, a “foreign” car is just as foreign in say the UAE as it is in the USA. The parts will cost about the same, maybe even less. Aftermarket new parts (mostly made in Taiwan) are available all over the world. In a few cases they don’t fit quite as well, but for the most part they are fine.

Fifth, good luck.

Third world mechanics are lucky to make $15/day…And we haven’t even talked about the containers full of STOLEN late model cars and SUV’s that flood Third World countries. This is a rough business to try and make an honest living in…

Definitely. I’ve been to this country plenty of times. I have family there. The one mechanic I’m referring to down there, who is also a good friend, has a shop he’s expanding. He’s the one that planted this idea in my head when I last visited the country back in Aug.
Ultimately, my friend the mechanic, another friend and I are going to work together. We’re all putting up money. He’s not some guy I arbitrarily decided to use.
I do prefer to find a car that’s currently running though. I’m specifically focusing on both the Ford F150 King Rancher as well as Expeditions (late models). If you know of any place off hand where to find these vehicles, would you mind sharing? I have a tentative source, but am open to suggestions.