Saturday 11 September 2021

Startup Idea: How To Set Up An Auto Parts Manufacturing Business

You might not know this, but car manufacturers seldom produce the parts they use in their models! They source components from a variety of different suppliers. For example, ABS systems might get sourced from Bosch. Starter motors might come from Valeo. Tires are also supplied from third parties like Goodyear, Michelin and Dunlop.

Even the body panels and chassis of each vehicle get manufactured by other companies! And, yes, you guessed it, the car maker’s badges are also made by some other firm! Of course, that’s true of most industries.

Everything we use each day has parts that get manufactured from different suppliers. It’s rare to find a product where all the components they use are all made by themselves. Why? They do so for cost reasons. It’s cheaper to outsource the work because they don’t have to pay for tooling costs. Nor do they need to invest in production facilities.

As you can imagine, the auto parts manufacturing industry is a lucrative one. If you’d like to have a slice of the pie, today’s blog post will share with you tips on how you can start a car parts manufacturing business.

Startup Idea: How To Set Up An Auto Parts Manufacturing Business


To begin with, you need to decide on a name and logo design for your new company and brand. I recommend paying a graphic designer to come up with a suitable logo for your brand. As for the company name, that’s something you need to think about I’m afraid!

Business Structure

The next step is to register your new business. But what legal entity or structure should you choose? For tax purposes, it makes sense to go down the incorporated route. It also limits your liability should things go wrong and you need to close your business.

Speak to your friendly local accountant for advice on the best way to proceed. They of all people will tell you the most tax-efficient way of setting up your new car parts manufacturing firm.

Premises and Machinery

Before you can make any auto parts, you need a building to do it in and the machinery and tools to get the job done. Some parts might need painting before you can ship them to your customers. In those cases, you will also need to invest in robotic painting facilities.

It’s worth thinking about what auto parts you want to manufacture. Rather than setting up a company that makes “anything” you should specialize in one or more niche sectors. That way, your firm will be the go-to supplier for many of your customers.

Be sure to do plenty of market research before you spend money! The last thing you want to do is set up an auto parts manufacturing plant if there is little demand for the parts you want to produce!

As part of your business plan, you need to factor in the cost of hiring people to work on your assembly lines. You should only hire people as soon as you get your first manufacturing contract.


Once you’re ready to get started, you need to market your brand. It’s worth taking part in industry events to showcase your brand and the services it offers. That’s because representatives from automakers attend such events.

Finally, make sure you have a solid marketing strategy. Good luck!