Starting up a vehicle salvage yard

[SC Vehicle Solutions]

I am currently setting up a vehicle salvage yard and provide a service of towing and storing write-off vehicles for insurance companies.
The aim with this process will allow me to buy back the write-off vehicles of the insurance companies disposal allowing the company to:

• Sell salvage vehicles
• Restore salvage vehicles
• Breakers

If or when securing this, I would like to start apprenticeships with local colleges in motor mechanics.

When it comes to towing write-off vehicles for the insurance, I would sub-contract the jobs to independent towing companies wherever the accident has happened.

So far I’ve been in contact with so many insurance companies and I’m not getting anywhere. I’ve even been in contact big recovery firms but were unable to help.

This is a service that is needed to the insurance companies, but I don’t know who to contact.

How do I go about this?

 

[Mr D]

The insurance companies already use such services? Then you have to make it attractive to them to switch to you - and the existing contract holders may fight back.


If they don't already use such services then you have to sell them on the benefit to them in using the services. What makes their jobs easier? What improves their profit?

You may want to look beyond the insurance companies - my car was towed away by the police after an accident. The nearby garage had no room for storing destroyed vehicles so it took up one of the few parking spaces for customer cars for 2 weeks.

 

[SC Vehicle Solutions]

Sounds like a good idea. I was already going to go in that direction but thought I would try and secure a contract with a insurance company first so I’ve got a foot in the door. Even securing local council contracts for abandon vehicles.

The reason why I was going with the route of insurance companies is clearly for the buy back of vehicles. The aim is to buy back vehicles so I was going on the impression that that’s a good way to secure a contract/s with insurance whereas companies like copart sell vehicles on their behalf.

I don’t have a recovery service just contacts with independent towing companies across England that I would sub-contract the jobs to.

I’ve contacted recovery services like call assist that recover vehicles for insurance companies but they only use storage facilities for 1-3 days so the vehicle can get repaired, so their isn’t really any money in it. Plus they won’t allow me to sub-contract the towing jobs so that was a dead end.

I was going to contact the British Vehicle Salvage Federation but they are looking companies that have been running for over a year.

 

[fisicx]

Sounds like a good idea. I was already going to go in that direction but thought I would try and secure a contract with a insurance company first so I’ve got a foot in the door. Even securing local council contracts for abandon vehicles.

You have to tender for these sort of contracts. I know the owner of a local recovery company and it cost him about 100K to get a contact for just part of Hampshire. It's very competitive and everyone fights hard to win.

 

[SC Vehicle Solutions]

Wow!!! And that’s in Hampshire???
I’m London based and have no plans basing myself in London cos of the pricing everywhere. But thought if I’d set up a salvage yard somewhere along the M1 close to the M25 I can cover the motorways.
But your saying it costs an owner 100k just for a part of Hampshire?
What makes his costs so high?

 

[fisicx]

You have to buy the contract from insurance company. You want their business you need to pay for it. He makes his money by getting paid for each recovery and storage. Got a whole fleet of vehicles. And the salvage guys pay for the scrap vehicles.

 

[SC Vehicle Solutions]

Makes sense for the insurance companies.
When I spoke to a few of these companies the most expensive cost was business insurance.
So is that part of his 100k or is that just for the contract?

 

[fisicx]

That was just for the contract.

And that's just for recovery for one insurance company in a defined geographical area. The cost is higher because he also does motorways. That's the bit that makes most money for him.

Salvage and storage is a difference contract.

 

[SC Vehicle Solutions]

That is a very high start up cost and that’s just for the contract. Let alone business insurance and lease for a yard.
I guess you’ve got to spend money to make money.
Maybe this is something I need really look at and see how I could go about this.
I was under the impression that the insurance companies charge members fee or something like that.

 

[Mr D]

Makes sense for the insurance companies.
When I spoke to a few of these companies the most expensive cost was business insurance.
So is that part of his 100k or is that just for the contract?

Not forgetting the cost of applying for the contract - can be multiple companies applying and only one winning. The losers having spent money to bid they cannot get back from the company.

 

[fisicx]

Not forgetting the cost of applying for the contract - can be multiple companies applying and only one winning. The losers having spent money to bid they cannot get back from the company.

And contracts are only awarded for a fixed term. The chap I know has a contract for 3 years. After that the whole process begins again.

 

[billmccallum1957]

To be brutal, you don't have vehicles for towing, you don't have the funds to bid for a contract.

You have nothing to offer!!!!

Why not look at starting smaller?

 

[The Byre]

I'm afraid Mr.Bill has nailed it in one. Start small, possibly dealing with private customers and small garages only.

Maybe this is something I need really look at and see how I could go about this.
I was under the impression that the insurance companies charge members fee or something like that.

That gives me the impression that you are not from the vehicle salvage business and therefore you do not know the ins and outs of the game!

 

[Mr D]

And contracts are only awarded for a fixed term. The chap I know has a contract for 3 years. After that the whole process begins again.

And winning one does not guarantee winning another. Though can help a little.

 

[Mark T Jones]

Based on the above, your best starting point might be to approach the main contractions to sub Work.

 

[SC Vehicle Solutions]

Yeah Bill nailed it on the head for real. Thanks for the eye opener.

You are right The Byre, I don’t don’t the ins and outs of this game.
I use to buy salvaged vehicles, restore them and resell them. I did it so much I thought I might aswell cut my costs by trying to secure a contract with an insurance company or companies instead of buying from a vehicle salvage yard. I some research and saw the real potential of this business and grown an interest in.

So far from the comments I’ve recieved have given me more of an insight to what goes on in what I’m trying to get myself into.
I’m very thankful for everyone giving me your time.

Now I know that insurance companies isn’t the way to go for a startup business.

Is vehicle storage for police contacted like the way insurance companies are?

Is local garages in need of storage going to be profitable?

If getting subcontracted jobs by a company that is contracted with an insurance company, are they going to charge me to provide my services due to their high contract prices?

 

[The Byre]

Find Mr.Bill!

Unless service contracts make me do otherwise, I take our cars to a guy called Bill. Bill is large. When he sits in a C1 hatchback, it looks as if he put it on like an overcoat that is two sizes too small for him! Everyone just calls him either Big Bill or Mr.Bill (after an animated character on Saturday Night Live on NBC) and he is that rare animal, a totally honest auto mechanic, who at the same time is just brilliant at what he does (what John Cadogen calls 'Stig with a spanner').

Mr.Bill used to be the foreman at the local Vauxhall dealership, but got fed-up with the cheating and BS he had to put up with. Putting cheap oil in expensive engines and charging full-whack, inventing expensive faults on MOT reports - that sort of thing. When he refused to go along with those practices, he found himself at liberty to start his own repair shop.

Up and down the land, there are loads of Mr.Bills. Small dealers and garages, that just do a great job with very limited means. These people need others that work with them. Mr.Bill does not do electrics, body-work or heater and AC systems, but he knows others that can fill those roles. He also does not deal with scrapping. He is however the 'go-to' guy for all these things, as he will know a guy who . . . . well, you get the idea!

He will also tell you who to avoid!

 

[SC Vehicle Solutions]

Would anyone suggest working with accident claims companies?

 

[fisicx]

You will still need to pay a wodge for the contract and have experience in vehicle recovery, storage and salvage.

 

[SC Vehicle Solutions]

I’ve been contacting insurance companies just making inquiries about securing some sort of contact with recovering and storing vehicles with the possibility of buying back the vehicles, but with every department of every insurance company doesn’t have a clue with what I’m talking about. How/who is/are the right people to contact and how do I go about contacting them?