How to Part Out a Car for Profit! A quick and easy guide to making quick cash...Wednesday, October 26, 2016 –
I’ve been buying and selling cars and parts for years. I’m not a flipper by any means, just an auto enthusiast who gets bored quickly. In order to keep this potentially expensive hobby affordable, I’ve come up with some awesome ways to ensure I never lose money on a car project. I’ll start with one of my favorites, having a part out project on the side…
A few disclosures….
- First off, this is not for the mechanically challenged. I suppose I should assume that if you’ve come across this article, you are aware of throtl Marketplace, and consider yourself an auto enthusiast, you can probably handle a wrench and basic hand tools. If not, not quite sure it's worth reading on…
- Well, it's pretty darn important to have tools to do a part out! You’ll need at minimum a floor jack, a cherry picker, and hand tools.
- More than likely, you are going to have to pull an engine and transmission, so having adequate garage space is a must. I do not recommend doing this on the side of the road, or even in a driveway for that matter. Covered space is a must have.
- Patience is key! I never said this was the easiest way to make a buck...but it is profitable, and it can save you a ton of money for your current project.
Let’s Get Started!
Part 1: Choosing a Candidate.
This is hands down, The Most Important step in the entire process. Picking the wrong candidate will result in lots of hard work, limited profits, and will probably result in you never wanting to even look at a car again! Trust me, I’ve been through this and I can tell you, it took me a long time to even start on the next project because it was such a headache.
That said, it's quite easy to avoid picking the wrong car for your part out, and as long as you follow these simple steps, you’ll be in the green while saving tons on your current project.
Pick a car you are comfortable with working on. Ok, so there's a great deal on a Ferrari 360 that was wrecked, but you’ve never worked on a Ferrari, never driven one, never bought parts for one, etc. Even if it's the best deal in the world, it can become a total money pit very quickly. I always buy cars that I’ve worked on, or had experience with in the past.
Buy the same car as your project/fun car. This sounds crazy. You just bought this project car, and I’m telling you to buy ANOTHER of the exact same car! Yes, as crazy as it sounds, this is a key aspect to a successful part out for profit. See, you’ll want to be able to utilize parts from the part out on your project car to minimize your project build costs. Essentially, you are the “buyer” of your own parts (off the part out), which speeds up the process. On top of that, all the parts you swapped off of your project car can be added to the part out to further increase your profits.
You may end up with a few duplicate parts off of the two cars if you need to replace with an aftermarket modification, but, I’ll let you in on a little secret. You only have to LIST THE PART ONCE, and SELL IT TWICE! For example, say you replace your exhaust with aftermarket, and you end up with two OEM exhausts. Listing an OEM exhaust may lead to 4 potential buyers, and since you have one off of the project car, and one off the part out car, you can sell to 2 of those buyers. No need to list the exhaust more than once!
Buy Modified. Your part out car should definitely be heavily modified cars. The more mods, the better. One of my favorite buys was a race car. I utilized TONS of the parts from the car on my own project, parted out the high dollar race parts, and then sold a stripped down chassis to the next owner for racing, or conversion back to a street car.
There are some crazy economics at play here. See, when someone sells a car complete, they typically get around ten cents for every dollar spent on modifications...and that's with the right buyer! Some people say a modified car actually is worth LESS than a stock car, which is absolutely insane! Take race cars for example, the cars are almost always cheaper than a stock version of the same car. These funky economics work in your favor on a part out considering aftermarket performance parts usually sell for about thrity to fifty cents on the dollar used. Basic economics 101...buy something for ten cents on the dollar, sell it for fifty cents, you are making money…
Sum of High Dollar Parts must Exceed Purchase Price. You don’t want to be messing around with selling every single little interior panel just to break even on the car. My rule of thumb is this…
2 parts on the part out must cover the costs of the entire purchase. Say you’ve picked up a car that has been hit in the rear. The engine and transmission MUST cover the cost of the entire purchase price. That way, right off the bat, you are in the green.
This seems crazy...why would anyone sell an entire car for the price of the engine and transmission, and the reality is that this is another economic trick at play. Perceived value of a car is determined by what the market will pay for it in its given state. Very few people think about the car as a summation of all its parts. Plus, very few people know what the parts are worth on their own. A little bit of research will help you determine if/when you have some high dollar parts that will exceed the purchase price.
Part 2: Parting out
Keep track of everything! I build a google spreadsheet of every single transaction that occurs and with who. You’ll want this in the future, trust me!
Focus on the big stuff. Do not mess around with the low dollar parts. It's a great way to drive yourself absolutely insane. As I mentioned earlier, you should have 2 parts on the car that will cover ALL of your costs. List those first! Go down the list, selling all the high dollar parts. Eventually, you will get to a point where your high dollar parts have exceeded your costs, and now you are in the green. Do not be afraid to use a featured listing for the big stuff. Then, I start digging into the small stuff. Doing a “parting out” thread is useless, and you are best listing parts individually. In order for SEO to pick up the parts, you need to list them all with an individual title. Fortunately for you, throtl offers an insanely easy listing process. Snap a pic, write a brief description, and get it listed.
Only part out what is sold. Do not rip parts off the car until you know you’ve sold them. It’s a waste of time, and at the end of the day, time is money. You can get good enough pictures of the part installed with your smartphone to attract a buyer. Once you have a buyer, then its time to start removing the part.
Offer a money back guarantee. Guarantee any part you sell. If the person isn’t happy with the part for whatever reason, then take it back. Hopefully, you’ve sold your big ticket items, and have already broken even. It's not worth the damage to your reputation to put up a fuss over a $50 part. Plus, this will likely help your user rating increase on throtl, which will in turn lead to more buyers for your stuff.
List on throtl, use the forum sharing tool. The host of seller tools, including the forum sharing tool make your life so much easier! Now, you don’t have to manage writing separate listings for each different forum you use. Simply copy/paste into forums associated to the car brand hit post, and you are done. You can let people know that you only manage the inquiries through throtl, which helps keep all the messages in one place. I’ve found this to be useful when selling 50+ parts.
Sell the carcass! List the carcass on throtl and your favorite forums as a race shell, project candidate, and pass it along to the next owner. I like to leave them as rollers, as typically its easier to find a buyer in that condition. Be upfront with the new buyer, and let them know you bought the car for the parts, and already have another of the same car. Give them confidence that you are being transparent, and you aren’t out to get them. Hopefully this will also result in some positive ratings on throtl.
Part 3: The follow up.
Ratings. Make sure you rate all of the people you interacted with positively. I can’t tell you how important your reputation is. Rating people encourages them to rate you. I promise, this will not be your only part out, so get as many connections, and happy customers as you can!
Wait about 15 days, then follow up. Reach out to all your customers, and ask them how they are doing with the parts you provided. This is key. You’ve built your first wave of happy customers, and you want to ensure they stay happy! If any complain or have issues, offer to refund them with the return of the part. This seems crazy, but you are differentiating yourself from other sellers, and guess who they are going to think of next time they are looking for a part.
Rinse, and repeat. This is the step where you look back and see what worked, and what didn’t. There is always room for improvement. If you feel confident that all your customers were happy, you were happy in the parts you scored for your project on the cheap, and you ended up in the green, give yourself a pat on the back. You are now ready for the next one!
Part 4: Final tips and tricks
Use your user store! Put the link to your user store in your signature on all of the forums you frequent. You wouldn’t believe how many sales are facilitated through curious clicks. I encourage you to add the link to your user store on all your for sale posts as well.
Don’t be afraid to start with higher prices! You can always come down, but its very hard to come up. Price items closer to salvage yard retail. Do your research, and even call some salvage yards and see what they would charge for similar parts. You can always lower your price if you don’t get any bites.
Have fun! Look, at the end of the day, this part out was a tremendous learning experience. Don’t ever lose sight of this! You probably learned a thing or two about your project car in the process, and scored a little extra cash. Now you have a new skill under your belt, and no one can take that away from you.