USED AUTO PARTS CONTAINERS FROM JAPAN

TIPS FOR HIGHER PROFITS

How you can explode your auto parts importing profits with simple time proven techniques

TS EXPORT

JOHN HAWES

Used Auto Parts Containers From Japan

Tips For Higher Profits

TS EXPORT have shipped tens of thousands of containerised parts around the world, and together with our clients have an accumulated knowledge base spanning several centuries.

We'd like to share this experience with you and here are some simple tips to make your parts importing more profitable. This information is particularly focussed on car and truck parts, though the information is relevant to all automotive parts containers from Japan.

Does this mean we know everything? NO....we're always learning and improving what we do. In Japanese its called kaizen which means we're always looking to improve services and value to clients which means lower costs and higher profits for you.

Find me at TS EXPORT. To report errors, please send a note to the CONTACT form provided on the website.

Copyright © 2011 by John Hawes. All rights reserved, including the right of reproduction in whole or in part in any form. No parts of this book may be reproduced in any form without written permission of the copyright owner.

The author and publisher have used their best efforts in preparing this report and the instructions contained herein. However, the author and the publisher make no warranties of any kind, express or implied, with the regard of the information contained in this report, and specially disclaim, without limitation, any implied warranties of merchantability and fitness for any particular purpose.

NOTICE OF LIABILITYIn no event shall the author or the publisher be responsible or liable for any loss of profits or other commercial or personal damages, including but not limited to special incidental, consequential, or any other damages, in connection with or arising out of furnishing, performance or use of this report.

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Throughout this report trademarks are used. Rather than put a trademark symbol in every occurrence of a trademarked name, we state that we are using the names in an editorial fashion only and to the benefit of the trademark owner with no intention of infringement of the trademarks.

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PUBLISHING INFORMATIONFirst published in Japan in 2009.

Second edition published in Japan in 2011.

for our clients and future clients and for all those who pursue excellence in

their own and unique ways

Table of Contents 1 Why Japan? 2 Salvage Vehicles 3 Target Profit Not Cost

Calculate The Total Number Of Salvageable Parts And Their ValuePart The Cars Out FullyFixed CostsParts From A Rarer Higher Value Car Can Command A Premium In Your Marketplace

4 Protect Your StockFully Part Out Your StockProtect Your StockFill Your ContainerHave Careful Experienced People Pack Your Container

5 BuyingDon't Be Limited To One SupplierDon't Rush Your Buying

6 Find Market NichesHigh Demand In Your Home Market – Low Demand In JapanNiches That Have A Barrier To Entry

7 Container Load FactorHave Lots Of Small Parts In Your Container

8 Container Loading Plan

9 Pay As You Go 10 Import Regularly 11 Hold Stock Between Containers 12 Monitor Exchange Rates 13 Action Summary

Use Salvage Vehicles As The Basis For Your Parts ContainersTarget Profit Not Cost. Buy The Most Profitable Salvage Vehicles... Not The Cheapest.Fully Part Out Your Stock For The Best Load Factor And Best Stock Protection. Protect Your Stock. Use Premium Protection For Delicate, High Value Stock. Fill Your Container For The Lowest Landed Cost Per Item And For Stock Protection.Have Careful, Experienced People Pack Your Container. Don't Rush.Don't Rush Your Buying If You Want The Best Buys.Don't Be Limited To One Supplier. Select From Multiple Suppliers For The Best Deals.Have Lots Of Small Parts In Your Container. There Is No Profit In Importing Air. Have Your Exporter Prepare A Container Loading Plan For Your Container.Pay As You Go To Smooth The Lumps In Your Cashflow. Import Regularly And Get Known As An Importer From

| 5

Japan.Make Sure You Can Store Stock Between Containers.Make Sure Your Supplier Has Their Own Storage And Export Facility

With Total Control Over Who Can Enter The Facility And Video Security Protection.Monitor Exchange Rates To Take Advantage Of Favourable Exchange Rate Movements.

14 Resources

FIRST 8 TIPS Use salvage vehicles as the basis for your parts containers.. 1Target profit not cost. Buy the most profitable salvage

vehicles... not the cheapest.2

Fully dismantle your stock for the best load factor and best

stock protection. 3

Protect your stock. Use Premium Protection for

delicate, high value stock.4

Fill your container for the lowest landed cost per item and for

stock protection.5

Have careful, experienced people pack your container.

Don't rush. 6

Don't be limited to one supplier. Select from multiple

suppliers for the best deals.7

Don't rush your buying if you want the best buys. 8

why japan? | 6

1 Why Japan?ehicles in Japan have a high depreciation rate, which means perfectly good used cars can be purchased much cheaper in Japan than in other countries. And

its not just Japanese cars. European and American cars also depreciate quickly. These cheap cars provide the basis of an abundant supply of genuine recycled parts.

VLabour rates are also expensive in Japan, so cars with repairable damage are often scrapped as salvage cars rather than repaired.

Often salvage vehicles can be bought for around the price of just the engine value on the Japanese domestic parts market. “

salvage vehic les | 7

2 Salvage Vehicles good base for your parts containers are salvage vehicles. These can be sourced from either auction or local dismantlers and parted out to your requirements. A

Salvage Vehicles can be either:

• Crash Damaged Vehicles High repair costs in Japan can mean late-model damaged vehicles can be sourced for a fraction of their new price, providing suitable stock for repair or parting out.

• Mechanical Failure Vehicles Light suspension damage from running into a ditch or a faulty transmission can sometimes be enough to write-off a car. These vehicles may be suitable for repair or as a source of valuable front panels.

• Water Damaged Vehicles Heavy rains and localised flooding in Japan mean regular supplies of water damaged vehicles. These vehicles can provide a good source of late model front panels, transmissions etc.

• End Of Life Vehicles Vehicles can reach end of life because of the age of the vehicle or just being out of favour in the Japanese market. Its a shock, but some perfectly drivable non-damaged vehicles become end of life with under 40,000 kilometres. Nothing wrong with the car... just out of fashion in the fickle Japanese marketplace.

target prof i t not cost | 8

3 Target Profit Not Costhen selecting which salvage cars to buy go for the most profitable – not the cheapest. The cheapest cars might be tempting, but remember: W

Calculate The Total Number Of Salvageable Parts And Their ValueCheaper cars may not have as much value. Dearer, higher value cars may also have value in much more of the car, including doors, switches, seats, exhaust systems that might otherwise be scrapped in a lower value car.

Dismantle The Cars FullyDon't import a front cut if you only want the engine/transmission and the front body parts. Otherwise you will be only importing scrap which is taking up valuable space in your container.

Fixed CostsFixed costs such as vehicle trucking, government recycle levies, service fees, labour, drayage, ocean freight etc. are much the same whether you invest in cheaper, lower value cars or dearer higher profit cars. With higher value cars these fixed costs are a lower proportion of your landed cost per part.

target prof i t not cost | 9

Parts From A Rarer Higher Value Car Can Command A Premium In Your MarketplaceIf fewer competitors have the same parts you can command a premium price in your marketplace, particularly if the price of the new part is expensive.

When selecting which salvage cars to buy go for the most profitable – not the cheapest. The cheapest salvage cars will often not be the most profitable. With

higher value cars fixed costs are a lower proportion of your landed cost per part. “

protect your s tock | 10

4 Protect Your Stockt's pointless sourcing salvage cars, having them parted out and then shipping them to another part of the world only to find that they are damaged and you can't obtain a

premium price. Or worst still the stock is damaged to the point the parts are unsaleable! How can you avoid this?

IFully Dismantle Your StockThis means removing all body parts from front half cuts so the parts can be placed in safe parts of your container, such as the foot-wells of the front cuts. In addition to optimum stock placement, parting out your stock fully has the added benefit of giving you more space in your container for additional stock. This gives a higher load factor which means the lowest landed cost per part and maximum profit.

Protect Your StockA variety of materials can be used to protect your stock. Cardboard, styrofoam, scrap car roof linings, scrap bonnets, scrap carpets and floor mats, scrap trunk board, scrap back seats etc. can all be used in protection. Tyres can be used to fill holes and wedge stock firmly together. To get the parts in premium condition means you can command a premium price in your marketplace. Premium Protection - where parts are individually protected and wrapped - is recommended for high value, easily damaged items.

protect your s tock | 11

Having premium protection also means you can save time and money once your parts arrive since they are already packaged and protected ready for

sale to your customers. “ Fill Your ContainerNot only do you get a lower landed cost per part but also a properly packed full container means no stock movement inside the container.

Movement in the container together with poor stock placement and inadequate protection is what damages stock in the container. A tightly packed

container avoids movement. “ Have Careful Experienced People Pack Your ContainerPacking a parts container is a skilled job. Only have careful, experienced people do this work. Careful packing can't be rushed. A bit more time and care can save you hundreds and thousands of dollars in preventing stock damage.

buying | 12

5 Buyingou've probably heard the advice “You make your profit when you buy”. Well here are some common-sense tips for best buying:Y

Don't Be Limited To One SupplierOtherwise you may buy stock just for the sake of filling your container. Sourcing from multiple suppliers gives you more choice and the best prices.

Don't Rush Your BuyingIf you're value and profit conscious you won't find the best value in your first week of searching the market. Be patient and search multiple suppliers. Always be “in the market” for the best buys.

Remember, the bargains don't last long, someone will soon snatch them up. So check the online auctions every day to make sure you don't miss

out. . “

f ind market n iches | 13

6 Find Market Nichesome will see parts importing itself as a market niche. But a key to increasing your profit is to see the parts sector itself as made up of niches – and even niches

within niches. Lets look at some examples.SHigh Demand In Your Home Market – Low Demand In JapanLets look at one market niche – alloy wheels. Within that niche there are sub-niches... original factory alloys, after-market alloys, performance car alloys, 4WD alloys, etc. And then there is niche segmentation by manufacturer, style and brand, and so on.

What you want are niches where there Is an opportunity to source cheaply in Japan in a niche where there is strong demand and a willingness to pay in your home market.

There is no point identifying a hot market niche in your home market only to find the same hot demand for the same product in the Japanese domestic market which boosts buying demand, inflates prices and squeezes your profits.

So lets look at potential niches where there is good product with relatively low demand in the Japanese domestic market.

f ind market n iches | 14

If you research the Japanese market you will find that there is a pattern where owners of late model Mercedes-Benz will take their cars to after-market wheel suppliers for bigger, lower profile alloy wheels. There is no significant Japanese domestic demand for the trade-in genuine Mercedes alloy wheels and tyres. And so the after-market supplier will sell them cheaply on the Yahoo! Japan Auction. Now research your market. If there is a demand for this product, say for older model Mercedes Benz owners looking to trade up to late model alloy wheels – and willing to pay – you have a potentially profitable market niche.

Niches That Have A Barrier To Entry Now if there's a good opportunity it won't take your importing competition long to find the same niche.

So to protect your profits from price competition from your competitors look for niches that have a barrier to entry.

Lets take another example. Brand name after-market damper sets like Tein, Tanabe, Cusco and Bilstein have new retail prices of $2000 and more per set. They are a popular replacement for standard systems for car owners wanting better cornering and handling from their cars.

Because of the high price of new units there is a strong market for these as second-hand items. However the demand is also strong in Japan, which inflates their prices.

f ind market n iches | 15

But if you do the market research for these you'll find that for second-hand sets that have one faulty damper in the set the prices are significantly lower . Most buyers are private buyers in the Japanese domestic market and for them a set of dampers with one damper in the set being faulty makes the set useless.

This means is that you can buy these sets with one faulty damper, and make up good sets for resale by mixing and matching between sets and/ repairing the faulty dampers.

But to do this you need to specialise in particular makes and models of dampers to collect the volume for mix and match.

This presents a barrier to entry to potential competitors since they may not be willing or able to purchase multiple sets and mix, match and repair like you can.

f ind market n iches | 16

What you want are niches where there is an opportunity to source

cheaply in Japan in a niche where there is strong demand and a willingness to pay in your home market. Use the online auctions like eBay in your home market to research demand in the niche. Use the Yahoo! Japan Auction to research supply.

“NEXT 8 TIPS

Find niches with high demand in your home market and low demand

in Japan.1

Have lots of small parts in your container. There is no profit in importing

air. 2

Have your exporter prepare a Container Loading Plan for your

container. TO VIEW ALL TIPS3

Pay as you go to smooth the lumps in your cashflow. 4Import regularly and get known as an importer from Japan.5Make sure you can store stock between containers. 6Make sure your supplier has their own export facility.7Monitor exchange rates to take advantage of rate movements.I8

conta iner load factor | 17

7 Container Load Factorhe load factor of your container is simply the amount of stock in your container. Containers with the highest load factor will give the minimum landed cost per part

which means maximum profit. THave Lots Of Small Parts In Your ContainerBuy stock on a parts basis to supplement the parts from your parted out salvage cars. This includes:

• Bulk Recycled Parts such as lights, body panels etc.

• Genuine and After-market parts from the Yahoo! Japan Auction

• Parts from the Japanese Domestic Parts Networks

• Genuine New Parts

There is no profit in importing air. There are lots of small spaces in a parts container that can be filled with small parts. The more stock in the container, the lower the landed cost

per item. “

conta iner loading p lan | 18

8 Container Loading Planave your exporter prepare a Container Loading Plan for your container once you have decided to go ahead. This: H

• will guide you in how much stock you need to fill your container

• means you can get a full container with optimum placement of stock inside the container.

• helps you select which stock you ship now and which stock you hold over for your next container

• lets you prepare for the unloading of the container. Know exactly what labour and equipment you will need.

A container loading plan means you can get a full container with optimum stock placement inside the container. There is no profit in importing air. There are lots of small

spaces in a parts container that can be filled with small parts. By filling up these small unused spaces you effectively getting free shipping on this stock. And the more stock in the container, the lower the landed cost per item. “

pay as you go | 19

9 Pay As You Goarts containers can put a lump in your cashflow because there is so much stock contained in one shipment. P

Finding a supplier who will allow you to “pay as you go” will help you smooth the lumps in your cashflow. Use your current sales to invest in stock for your next container for

ongoing profit.“

impor t regular ly | 20

10 Import Regularlyf you import regularly you will start to get orders from others in your industry when they get to know that you can source from Japan. If you're importing in full

containers you can import stock for them cheaper than they can do it themselves, and pocket the profit!

IBy importing regularly you also:

• make the most of your pool of capital,

• turn your money over quicker,

• and smooth out the lumps in your cashflow as the income from sales is used to reinvest in your next container for ongoing profit.

If you import regularly you will start to get orders from others in your industry when they get to know that you can source from Japan. “

hold s tock between conta iners | 21

11 Hold Stock Between Containers

ind an exporter who has storage facilities to collect and store your stock between containers. This means that you can grab bargains as they come up and hold

any leftover stock from one container to the next. FSome countries also require that parts from whole cars must be shipped in separate containers, such as body shells in one container and engines in another container, which means storing the stock until there is enough stock for your next full container. Make sure your supplier can do this.

Make sure your supplier has their own storage and export facility with proper security. Make sure that they have total control over who can enter the

facility and there is video security protection. If they share a facility with others then your small high value parts can be stolen. “

moni tor exchange rates | 22

12 Monitor Exchange Rates

ave the exchange rate of your currency against the Japanese Yen on your desktop to take advantage of favourable exchange rate movements. If the rate

moves in your favour, then take the opportunity to top up your Trading Account.

HThere you have it. If you apply these simple tips there is no reason that you can't increase your profits!“

act ion summary | 23

13 Action SummaryUse Salvage Vehicles As The Basis For Your Parts Containers

Target Profit Not Cost. Buy The Most Profitable Salvage Vehicles... Not The Cheapest.

Fully Dismantle Your Stock For The Best Load Factor And Best Stock Protection.

Protect Your Stock. Use Premium Protection For Delicate, High Value Stock.

Fill Your Container For The Lowest Landed Cost Per Item And For Stock Protection.

Have Careful, Experienced People Pack Your Container. Don't Rush.

Don't Rush Your Buying If You Want The Best Buys.

Don't Be Limited To One Supplier. Select From Multiple Suppliers For The Best Deals.

act ion summary | 24

Have Lots Of Small Parts In Your Container. There Is No Profit In Importing Air.

Have Your Exporter Prepare A Container Loading Plan For Your Container.

Pay As You Go To Smooth The Lumps In Your Cashflow.

Import Regularly And Get Known As An Importer From Japan.

Make Sure You Can Store Stock Between Containers.

Make Sure Your Supplier Has Their Own Storage And Export Facility With Total Control Over Who Can Enter The Facility And Video Security Protection.

Monitor Exchange Rates To Take Advantage Of Favourable Exchange Rate Movements.

resources | 25

14 ResourcesClick on the links for direct access:

Information on Auto Parts Containers and Links to Stock

Parts on the Yahoo! Japan Auction

Answers To Your Questions And Resources For Importing From Japan

Answers To Your Questions And Tips For The Yahoo! Japan Auction

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