How to Start a Car Hauling Business: A Step-by-Step Guide

What's in this article?

Starting a car hauling business from scratch can be daunting, but it is also an enriching journey.

From the legalities of transporting cars across state lines to the equipment you will need to get the job done, there are a lot of details to address.

In this article, we will walk you through each step of starting a successful car hauling business. You'll get actionable advice on the many aspects of setting up your car transport business.

How Much Does an Auto Hauler Make In a Year?

Typically, an auto transport business with a contract to haul new vehicles for a car producer will likely make $75,000 to $110,000 per year.

Additionally, as long as people drive cars, there will continue to be high demand. Your services will be needed by car dealers, individuals transporting their vehicles across state lines, etc.

That way, you're assured of continuous and repeat business.

Benefits of Owning a Car Hauling Business

There are many benefits that come with starting your own car hauling business.

For one, you'll be your own boss and have the freedom to set your schedule. As an owner-operator, you'll have the opportunity to grow your business as large as you want it to be.

Another benefit is that you can start with very little money. You don't need to have a lot of capital - all you need is a truck, the necessary equipment, and relevant licenses and documentation.

Finally, starting your own business is very rewarding. It's a great feeling to be your own boss and build something from scratch.

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How Much Does it Cost to Start a Car Hauling Business?

The cost of starting a car hauling business can vary depending on a few factors, such as the size of your operation and the equipment you already have.

You can get by with just a truck and some essential equipment if you're starting a small operation.

If you're starting a more extensive operation, you may need to purchase additional trucks and trailers. This can cost anywhere from $30,000 to $100,000.

Additionally, you will need to obtain the necessary licenses and permits to operate your business. The cost will vary depending on your location.

Finally, you'll need to purchase insurance for your business. This is a mandatory expense and can cost anywhere from $500 to $5,000 per year, depending on the size of your operation.

That brings the total startup costs to $15,000 - $100,000+

Setting Up Your Car Hauling Business

Here are some key steps to starting a successful car hauling business:

Choose your car hauling business model

There are two main types of auto hauling businesses: contract-based and customer-based.

A contract-based business regularly hauls cars for a specific company or dealership. This type of business is usually more stable and predictable, but it can be harder to get started.

In contrast, a customer-based business works with individual customers who need their cars transported. This type of business is often more flexible, but it can be less predictable.

Define your budget

Like every other business, you need money to start your trucking business.

So, calculate the amount you have on hand. If it's not enough, consider taking out a loan from a bank or from family and friends.

Another option is to get into a partnership or look for an investor. In either case, you must have a business plan first.

Research the industry

Once you have decided on the type of business you will operate, it's time to research the market, other trucking companies, and your ideal clients.

To avoid legal issues down the road, find out what business license, or permit, is required in your state or province.

You will also need to research the regulations for auto transport. This information can be found at your local Department of Motor Vehicles (DMV) or Transportation Department.

In general, you'll need:

A commercial driver's license (CDL)
Permits to transport cars across state lines
Dealer Transport License (if you're transporting cars for dealerships)
International Registration Plan (IRP) apportioned plates (especially if you're hauling cars across different jurisdictions)

You'll also want to research your competitors to answer three major questions:

What are they doing correctly?

There are already many successful companies within the trucking industry. Find out what they're doing well so your business can do likewise. There's no need to reinvent the wheel.

What are they doing wrong?

One way to make your startup stand out is to discover what the other car transport businesses are doing wrong and make sure your business does better.

You can find this information through customer complaints on review platforms or face-to-face interviews with potential customers.

How can I stand out?

Once you see how your business can do better than other companies, use this information for your key value propositions.

For instance, if your competitors are known for late deliveries, then early delivery is a fundamental value proposition for you to leverage.

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Get your operating authority (MC + DOT numbers)

The next step is to get your Motor Carrier (MC) number and Department of Transportation (DOT) number. You will need these numbers to operate legally as an interstate carrier.

The Department of Transportation (DOT) number is a unique identification number assigned to trucking companies. It is used to track a company's compliance with safety regulations.

To get a DOT number, you'll need to fill out an application and submit it to the Federal Motor Carrier Safety Administration (FMCSA). You'll provide some basic information about your business, such as your company name and address. There is no fee.

To get your MC number, fill out an application with the Federal Motor Carrier Safety Administration (FMCSA) on their website. There is no fee to apply for an MC number.

An important note: You must purchase your trucks and insure them within 30 days of getting your DOT number. Otherwise, your new company will be shut down before you even start.

Create a business plan for your car hauling company

The next step is to create a car hauling business plan. It's an important document you'll need to source for funding from investors, track your business's progress, and make improvements as the case may be.

This document will outline your business goals, strategies, and how you plan on achieving them. Your business plan should include:

An executive summary
Your business goals and objectives
A market analysis
Your marketing strategy
Your financial projections

Creating a business plan may seem daunting, but many resources are available to help you. The Small Business Administration has a great guide that walks you through each step of creating a business plan.

Register your transportation business

Your business must be registered to operate legally.

You may want to seek the help of a certified business consultant or tax professional to set up your new company.

You'll need to get your Employer Identification Number (EIN) from the Internal Revenue Service.

Get the right equipment

An important step is to purchase equipment for your business.

If you're starting a customer-based business, you will need a large truck or trailer to transport at least one car.

You will also need some basic tools to secure the car during transport, such as straps and tie-downs.

But for a contract-based business, you will need a fleet of trucks or trailers. You will also need to invest in some storage space, such as a garage or warehouse, to store the cars you are transporting.

Before you buy new equipment, assess the equipment you already have. To cut costs, you may choose to lease your vehicles rather than purchase new ones. Then, as your business develops, you can purchase your own vehicles as needed.

Here's a checklist of the equipment you'll need:

Electronic logging device
Vehicles: pickup trucks or semis, car haulers
Storage space (a warehouse)
Straps and tie-downs
Toll transponders
Business cards

Insure your vehicles, trailers, and client cargo

Another key step is to get the proper insurance for your business.

You will need two types of insurance: liability insurance and cargo insurance.

Liability insurance covers any damage you may cause to other people or property while transporting a car.

Cargo insurance covers any damage that may occur to the car during transport. It is commensurate with the value of the vehicle you're transporting.

You may also want to consider getting uninsured or underinsured motorist coverage, which will protect you if you're in an accident with a driver who doesn't have insurance.

The amount of coverage you need will vary depending on the size and scope of your business. But in general, it's a good idea to get as much coverage as you can afford. That way, if something does happen, you'll be covered.

You can get insurance quotes from a commercial insurance company specializing in trucking companies. But to get the best deal, shop around and compare rates before you purchase an insurance policy.

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Set up your business office

Your company will need a business office to track expenses, invoices, and other vital documents.

Your office will need a computer with internet access, a printer, and a filing system.

You can use accounting software to keep track of your finances and generate invoices. Many great accounting software programs are available, such as QuickBooks, FreshBooks, and Xero.

Finally, you'll need a way to accept payments from your clients, which could be through a merchant account with a bank or credit card processor. Also consider using an online payment system, such as PayPal or Stripe.

Hire employees

If you're planning on growing your business, you will need to hire employees. And to make your business successful, you must hire the right people.

Aside from drivers, you will need to invest in some dispatch systems and office staff to handle customer service and scheduling.

To find suitable employees, start by posting ads on online job boards, such as Indeed or Monster. When reviewing applications, be sure to check references and conduct background checks.

After you've hired your employees, be sure to do regular check-ups on their progress; this helps ensure that they adhere to safety standards and driving regulations. It also builds trust and loyalty between employer and employee.

Vital qualifications to check before you hire a driver

Before you hire a driver, it's crucial to check their:

Class A Commercial Driver's License (CDL). Anyone driving a vehicle with a gross vehicle weight of 26,000 lbs. and above must have a CDL in the US.
Previous driving record or experience. It's vital to do a background check to gauge their adherence to safe driving, their reliability, etc.
Knowledge of loading and unloading techniques, including tie-down techniques and how to properly distribute weight.

How to Market Your Car Hauling Business

Once you've got everything set up, it's time to market your car hauling business.

The best way to do this is through word-of-mouth marketing. Tell family and friends about your business and ask them to spread the word.

It's also essential to invest in a quality website. A good website will be the easiest way for customers to find your business. There are many companies that can help you design a website that will attract customers.

Start Hauling Cars

Now that you're done with each step, it's time to start hauling cars.

You can join a load board to get clients consistently. Examples of such load boards include:

Carload board
Central Dispatch
Car Hauler's dispatch
DAT Load Boards
Truckstop
ready logistics
Uship

Another way to get clients is to contact car dealerships and auto transport companies in your area. They are always in need of a car hauler to transport vehicles from one location to another.

Be sure to give them your rates and let them know what services you provide. But before you give them your rates, investigate what other owner-operators charge.

Another way to find customers is to contact auto auctions and ask if they need a car hauler to transport vehicles to and from the auction site.

How to Make Your Car Hauling Business More Profitable

In most cases, maintaining a business is more challenging than starting one. And that's because most owners are unable to generate profits continuously.

To ensure that your new car hauling company lasts for a long time, do these three things:

First, invest in GPS tracking for your vehicles. This will allow you to track their location in real-time and ensure that they are on schedule. It may cost a lot of money, but it's a small price to pay to satisfy your customers.

Second, create a standard operating procedure (SOP) for your business. This will help to streamline your operations and make them more efficient.

Third, invest in some quality marketing materials, such as business cards, flyers, and websites. This will help you attract more customers and grow your business.

Where to Find the Best Car Haulers for Your Business

If you're looking for a reliable and professional car hauler for hire, then you've come to the right place.

At A-1 Auto Transport, we’re reputable and reliable car transporters with years of experience in hauling, transporting, and shipping cars. We are happy to help you with any kind of vehicle shipment or to answer any questions you might have. Contact us today for more information.

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