How to Start a Car Hauling Business: Ultimate Guide
If you love being on the roadway and enjoy cars, then a car hauling business may be right up your alley. While it may sound complex to begin with, starting a car hauling business doesn't have to be overly difficult with the right strategy.
We're going to give you our best tips and go over the ins and outs of starting this type of business so that you can get started on your new entrepreneurial journey.
What Exactly Is a Car Hauling Business?
At its simplest definition, car hauling is essentially moving a car from one place to another. This is a type of service where you can charge a monetary fee for your transportation.
As a car hauling business, you'll perform vehicle transportation for individuals as well as businesses including dealerships, towing companies, and moving companies.
Car haulers are responsible for numerous tasks associated with the transportation of a vehicle. Drivers will load each vehicle onto their specialized hauling trailer.
Most of these specialized trailers will haul between seven and nine cars at a time. Car hauling businesses will take multiple hauling contracts at once to optimize their payoff for each trip.
After loading and securing the vehicles, haulers will typically need to complete inspection paperwork for each one. This reports the vehicle's condition at the time of transport.
Once arriving at your destination, you'll typically need to complete more inspection paperwork and safely unload the vehicle.
If you’re not already geared up to start your car hauling business, find out how much you could make in this short video by ReloGeek:
When using trailers to haul cargo, this is what you'll need to know to protect your truck and business while on the road.
Types of Car Haulers: Explained
There are two main types of car hauling companies out there. These include car carriers and auto transport brokers. It's vital to understand the difference between the two so that you know what type of hauling you want to structure your new business to do.
Car carriers make up the majority of car hauling businesses. They are the ones that actually hit the road and move the vehicle from one location to the next.
Car carrier companies can have just one carrier truck or hundreds of them.
Auto Transport Brokers
Auto transport brokers are simply the go-betweens in the car hauling process. If you don't want to physically deal with the actual hauling, you can be a broker.
Brokers work with various companies in need of vehicle transport and different car carriers. Your job will entail getting clients great pricing and delivery timeframes.
Car Hauling Business: How much can I make per week?
The Benefits and Drawbacks of Car Hauling
As with any sort of business, it's a good idea to sit down and go over the benefits and drawbacks of opening a business in the car hauling industry. Here is a short recap of the major benefits and drawbacks that come along with establishing your very own car-hauling business.
|Pros of car hauling||Cons of car hauling|
|In-Demand Industry||Difficulty Establishing Reputation|
|Establish Your Brand||Frequent Unexpected Expenses|
|Be Your Own Boss||High Maintenance Costs|
|High Profit Margins||Rigorous Licensing Requirements|
Watch the Benefits and Disadvantages of Car Hauling in this short video:
The Pros and Cons of Car Hauling
5 Steps to Start Your Car Hauling Business
If the car hauling industry is where you would like to launch your own business, there is a series of steps that you'll need to follow.
Step 1: Obtain Your CDL License
In order to drive a truck and specialized hauling trailer, you'll need to obtain your CDL-A license. Known as a commercial driver's license, this shows your skills and competency in hauling large loads on the roadway. You'll want to ensure that you get the right CDL weight class license to haul your intended load.
Step 2: Get a Hauling Truck and Trailer
Once you get your CDL license, it's time to obtain the necessary equipment for transporting vehicles. Most car haulers will utilize one of two options: (1) an enclosed car hauler or (2) an open car hauler.
1. Enclosed Car Haulers: An enclosed car hauler will protect your transport vehicles from inclement weather and damage from rocks and other roadway debris. Most enclosed trailers for car transport will have a ramp to easily load the vehicles and will carry one to six cars.
Enclosed car haulers are much more expensive than open car haulers. However, you can charge a premium for transport due to the enclosure.
2. Open Car Haulers: An open car hauler is more common due to its lower purchase price. Open Car Haulers typically have two different levels, each of which can handle three or four cars. This means that you can transport six to eight cars at a time. Most vehicles are transported on open car haulers because they are cheaper than enclosed ones.
Pro Tip: Invest in a Dually Truck
After you have your car hauling trailer picked out, you'll need to invest in a dually truck to transport it.
For those who are unfamiliar, a dually truck is one that has four rear wheels as opposed to the two rear wheels on standard trucks. These added rear wheels give the truck more traction while driving.
Some common examples of dually trucks include:
- GMC Sierra
- Ford F-350 Super Duty and F-450 Super Duty
- Ram 3500
- Chevy Silverado 3500HD
You'll also notice that dually trucks come with more powerful engines as well as heavy-duty brakes, shocks, and springs. Most dually trucks are rated to tow very heavy loads in excess of 20,000 pounds.
While their wider stance is perfect for creating more stability on the roadway, dually trucks do have their own disadvantages that you should be aware of.
First and foremost, they tend to be less comfortable to drive when you don't have a load. Dually trucks get less fuel economy than standard pickups, and they cost a lot more. You'll also have to get used to parking a wider vehicle.
Step 3: Get Car Hauling Insurance
Before you can legally establish your business, you'll need insurance. This works to protect both you and your clients from any unintentional harm that may occur during the hauling process. You'll want to be mindful of the amount of insurance coverage that you obtain.
As a car hauler, you'll have a high-value load. You need insurance that will cover this high amount in case all the vehicles you're transporting become damaged.
Insurance is necessary not only for your peace of mind, but also to gain customers who require that you have abundant insurance coverage before they will hire you.
Some common recommendations include:
- Carriers - $1 million in liability insurance and $250,000 in cargo insurance.
- Auto Haulers - $2 million in liability insurance and $500,000 in cargo insurance
One type of insurance that you may not be aware of is called bobtail insurance. This type of insurance works to cover your equipment whenever you don't have a load.
Many new car haulers are surprised to discover that their risk of being involved in an accident starkly increases when they don't have a load on board.
This is because car hauling equipment is specifically designed to work at its most optimal when fully loaded. Whenever your vehicle is unloaded, you need to follow specific safety tips to protect yourself on the roadway.
Step 4: Get Your Legal Authority
Once you've got your license, hauling equipment, and insurance, it's time to get the legal authority to establish your transport business. There are many individual tasks that you'll need to complete to get your legal ducks in a row.
The first legal requirement you'll need to meet is to have an established business. To incorporate a new business, you'll need to provide your:
- Business Name
- Business Location
- Entity Type (LLC, Corporation, Sole Proprietorship, Partnership)
- IRS Tax ID Number
- Business Bank Account
You'll need to start by visiting your state's government website and registering your business name.
Once registered, you'll be redirected to the IRS website to obtain a tax identification number — EIN for short. Once you're registered and have an assigned EIN, you can establish your business bank account.
2. DOT Number
The Federal Motor Carrier Safety Administration (FMCSA), along with the United States Department of Transportation, will issue your company a DOT number. This is a unique identifier for your commercial vehicle. To obtain a DOT number, you'll need to visit the FMCSA.gov website and click on the registration tab.
3. MC Number
The FMCSA issues MC numbers to those in the transportation industry. This unique number identifies your trucking authority. You can obtain this number at FMCSA.gov for a $300 fee. It's important to note that you'll need your DOT number to obtain your MC number.
Most states require that you obtain an IFTA license. IFTA stands for International Fuel Tax Association, and they issue you a license for fuel tax.
Each carrier must submit a quarterly fuel tax return to their base jurisdiction and pay all associated taxes.
While each state has its own submission method, you can discover how to obtain an IFTA license and submit future returns at the IFTA.org website.
5. UCR Registration
Unified Carrier Registration (UCR) requires all companies participating in interstate travel to pay an annual registration fee. This fee is based on the number of vehicles that you have in your fleet.
You can easily register and pay your fees at the UCR.gov website. The fees are as follows:
|Number of vehicles||Fee|
|0 - 2||$41|
|3 - 5||$121|
|6 - 20||$242|
|21 - 100||$844|
|101 - 1,000||$4,024|
6. BOC-3 Process Agents
Federal law requires that you establish a BOC-3 processing agent in each state in which you intend to do business. Each person may only be named an agent in one state.
This process agent is given legal authority to accept any legal documents for your company in the particular state that they've been authorized via your BOC-3 form. You can submit your BOC-3 processing agent forms at the FMCSA.dot.gov website.
IRP stands for International Registration Plan and is required for commercial vehicles that participate in interstate operations.
Under IRP, you're responsible for paying designated fees to each state in which your truck operates. The amount of each fee highly depends on the percentage of miles that you drive in each state.
You can establish your IRP at your local government's DMV website.
8. Other State / Local Requirements
It's vital to note that there may be more requirements for establishing your car hauling business, depending on the specific state and locality where you register.
Speaking with representatives of your local and state governments is a great way to learn more about any additional requirements you must meet to start your car hauling business.
9. Legal Documents
An essential part of any car hauling process is completing the necessary legal paperwork associated with each transport. Every vehicle transport that you do will have two main legal documents that you'll need to obtain.
These include the Bill of Lading and Insurance Terms and Conditions. You need to speak with a lawyer to get these formal documents established so that you can simply fill them out for each transport job you do.
Step 5: Get Your Website Up, and Start Establishing Contacts
Once you get all of your business registration and legal requirements settled, it's time to start growing your business. A great place to start is with a website.
Most companies and consumers won't work with a business that doesn't have an established website.
Before people ever call you, they'll want to visit your website to get more information about your business. There are a few key aspects that every potential customer is likely to look for on your website.
For this reason, you need to you address them all and make sure the information is readily available for online visitors.
While you may not have any experience owning your own car hauling business, you should showcase what skills you have. For example, if you've been in the car hauling industry working for someone else, note that experience. Consumers want to see that you know what you're doing.
2. Insurance Coverage
Another key aspect that people are going to be looking for is your insurance coverage. Make it a must to include how much your insurance policy covers so that customers can have peace of mind.
3. Showcase Your Equipment
This part should include some photos to help consumers better understand what you're operating with. Give them key information such as the maximum vehicle capacity and the various safety precautions that you take for every transport.
4. Make Getting a Quote Easy
Once consumers have scanned your website to understand more about your business, their likely next step is to obtain a quote from you.
While it may be impossible to give upfront pricing for any transport job because of the many factors involved, you still need to give these customers a way to get a quote.
This could be by providing a "Contact Us" button or simply displaying your phone number in an easy-to-read area.
How You'll Create a Shipping Quote
As your customers start calling in, they're going to want specific quotes for shipping their particular vehicle(s). You'll need a structure in place that takes into account the various costs associated with hauling a vehicle. These key costs include:
1. Transport Type
Enclosed car hauling will cost, on average, $500 more than open car shipping.
2. Type of Vehicle
The size of the vehicle that needs to be shipped is going to determine the equipment that you use to do so.
While crossovers, sedans, and SUVs all tend to fit on regular car haulers, some bigger pickups and heavier vehicles do not.
Additionally, vehicles that are inoperable require winching services, which will increase their transportation cost.
This is going to be one of the most versatile factors in determining shipping costs. Typically, shorter shipments can cost around $1 a mile, while longer shipments may cost as little as 50 cents a mile.
4. Pickup and Delivery Locations
Where you get the vehicle and drop it off can greatly influence your shipping costs. Delivering vehicles to remote rural areas tends to cost more than shipping to a location along a major route.
Additionally, pickup and delivery locations with a large amount of space offer easier loading and unloading than tighter spaces.
5. Market Demand
As with the main rules of supply and demand, the more car haulers that are available to transport vehicles in a particular area, the lower the prices will be.
The time of year affects the travel conditions for many. Most car haulers will charge more to move vehicles during the snowy winter season than during the breezy spring season. It takes longer to travel in adverse weather conditions.
7. Rush Demand
Car haulers will typically offer a lower rate for shipping a vehicle that has no rush demand on it. This is because they can wait until they have a truck driver conveniently near its location.
Rush demand requires more strict deadlines and is therefore more expensive.
8. Average car hauling costs
To help ensure that you're staying within an average shipping rate, here are some average shipping costs, according to Forbes Advisor.
All these costs are quoted for hauling a vehicle from Los Angeles to New York City.
|Cost Level||Average cost to ship a car|
|No Rush Cost||$1,200|
Source: Forbes Advisor
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FAQS: How to Start a Car Hauling Business
As with starting any business, there are some common questions people ask about how to become a car hauler. We address the most commonly asked questions below to help you better understand how to start your own car hauling business.
Where Do I Learn More About Loading and Unloading?
If you don't have a lot of hands-on experience with loading and unloading vehicles, then that's something that you'll want to address prior to getting customers. One of the best ways to learn is to watch videos on the subject. Be sure to start by checking out this video.
What Responsibilities Does a Car Hauler Have?
While you're familiar with the fact that a large part of your job is loading, unloading, and transporting vehicles from one location to another, this job includes other responsibilities, too. You'll also need to understand how to perform inspections, safely secure vehicles, and drive in inclement weather.
How Much Does a Typical Car Hauler Make?
The average salary for any car hauler will depend highly on the type of transport that they specialize in. However, various sources online provide salary estimates.
Indeed.com estimates base salaries of $81,854 to $125,119 a year, with an average of $101,201.
Overdriveonline.com notes that transporting new vehicles can earn an owner-operator car hauler $75,000 to $110,000 a year.
Start a Car Hauling Business: Wrapping Up
The car hauling business can be a very lucrative way to earn a living and do what you love. By following our helpful outline above, you'll be well prepared to undergo the process of starting your very own car-hauling business today!
To get a specialized insurance quote for your new business coverage, contact an experienced CoverWallet agent at CoverWallet.com, or call (646) 844-9933.