Business question

[Ragtop68rs]

Every since they started reproducing the 69 camaro shells I've been thinking about starting a business. The business would be building brand new camaros (and others as they become available). Every part on the car would be new. I would probably use a Chris Alston front sub and suspension, Wilwood brakes, ect.-all high quality parts. Base motor would be a LS2 crate with 4L65 or 6 speed although someone could order anything they wanted. I figure it would cost 40-50k to build the cars doing everything myself. I have done three camaros from the ground up and I know I am more than capable of this. Is there a market out there for something like this? What would someone be willing to pay for one of these asuming the work would be top quality? Is this even feasable? I know there are at least a couple of obstacles. One is the VIN/title on these crate cars. I have not checked into that yet to see what would be involved. Second, would I have problems from GM for trying to sell brand new camaros? I would appreciate any and all opinions. Thanks, John

[DarkBuddha]

I think you'll have lots of competition, not just from Chevy, but from others thinking of doing the exact same thing you're talking about. There seems to already be a few places doing this kind of work (Unique, Baldwin-Motion, etc.), so you've already got some stiff competition there. Now, if you think you could do 'em for less and with similar quality, then maybe...

[ProdigyCustoms]

Well, we looked hard at it. Since we are already distributors for the majority of the products we would need, including the body shell, we gave it a lot of thought. Even had 3 bodies ordered (another long story). $60K would be a parts only number and could be a light estimate. Then labor would be minumum 600 to 700 hours. So even if you only want to make a wage, say $40 per hour, you have another $25K to $30K in labor. Which would mean you need to sell for $90K or so for just a base car.

CARS is trying to do the "Hot Rod" cars, copies of the green and white convertible that got 37 pages. Last I heard, they had sold none of the 69 they want to build.

So for us, we decided to pass on the $100,000 recreation Camaro's, and let the guys at Unique have that business. They seem to be the only ones that have ever had any succsess with their Mustangs and Shelbys.

[customcarpainter]

I think you have to have some serious buyers lined up before you ever build the first car.Unique "seems" to have the market,but if you seriously look at the cars they are building,then you would have to wonder how long they can satisfy their market share.You need to be realistic in pricing a car when you are in the build process and in the selling process.It's one thing to build cars as a hobby,quite another to do it for a living.Look at ALL the expenses of being a business owner very hard before taking that leap.I've been there,it ain't always what it seems.

[Beegs]

The first area I would look at is liability insurance. If you don't have two nickels to rub together, they can't take away what you don't have. A little real estate, cash, stocks etc... can end up in someone elses hands in a hurry whether it is your fault or not.

Beegs

[southernfriedcj]

CARS was selling thier new Camarors starting in the mid 40k's. I was going to put up a link to their page, but they're redoing thei site and it's under construction.

The big problem will be titling IMHO. The kit car guys are getting hasseled with by some DA on a jihad in California over titling.

Jim

[vintageracer]

The title issue in California has to do with proper sales tax being paid on cars at time of registration. What got Boyd and others in tax trouble was the fact that the cars were registered as a model year car represented by the brand new car they built. Example, if the car was a 46 Mercury, the car was registered as a 46 Mercury and cheap sales tax was paid on its value as an unrestored car, not the completed value since the car was completely new/restored. As I understand the cars involved were completely new cars with new/repo bodies, frames etc.

You would be in the same circumstance as you would be selling a "new" body that will require proper sales tax to be paid upon purchase. The same sales tax would be paid on parts and labor depending on your state of residence. At this point you have 2 choices, swap a VIN from a real 69 Camaro convertible or go to your state and get a state issue VIN number. This would be the way I would go as you could document that proper sales tax has been paid as the car was built on parts and labor. In Tennessee, this will add 9.25%-9.75% to the price of the car depending on the county in which the car is registered. With a new body it will be hard to get around the sales tax issue. If you use an original 69 Camaro VIN you have all sorts of issues that can return to haunt you in the future since you now are involved in VIN swapping which is a felony in most states and it is VERY easy to tell these repo bodies from original 69 Camaro bodies. The ability to tell the difference was built in to the bodies by Dynacorn since there are unique stampings all over the body with different logo stamps.

The best way to overcome this problem is to go to your state and see what's required for a new/kit type of car to acquire a VIN on a completed vehicle. That's the only time a state will issue a VIN is on a completed vehicle. My big concern would be that all sales tax paid along the way during the build of the car "counts" toward the sales tax necessary to register the vehicle at completion time and you are not double charged sales tax for all the parts/labor and then again charged sales tax on the completed value of the vehicle at time of registration.

A little investigation will go a long way to solve this issue and "I" do not think this is a big problem at all. Just do your homework on the frontend instead of pleading stupidity on completed end!

Concerning liability, this is always a business consideration however that's why proper business insurance is a necessity. Liability is important however if that was a show stopper there are lot's of business's serving this hobby that would have never been created.

The BIG PROBLEM "I" see is the $40K-$60K you will need to build your first car since most/all buyers of your car will not step up to the plate to purchase your car until they see what quality and build time frame you can achieve. Baldwin/Motion and Unique built cars to show before they sold their first cars. You MUST do the same thing in my opinion. Our hobby DOES NOT have a great reputation for builders doing what they say they will do in the time frame and for the dollar amount to which all agreed originally.

Look at Frank and his son at Prodigy Customs. He has been around this business for years yet they built their signature Camaro on their dime and not the customers. If you are willing to do the work on the front end you can make a success of this venture. Just remember it will take twice as much money and twice as much time as you think to sell your first car. Your desire and passion will help but ultimately it will be your craftsmanship and ethics that will determine final outcome!

[camcojb]

I don't think I could build the car you speak of for $50K. I mean you literally start with just a shell, so you'll need every little part which adds up very quickly.

Then there's titling issues, and with California and some other states there will be smog issues. I will not be titled as a 69, it will be titled as a new 2006. They inspect it, assign a vin. Also they use the engine to determine smog on "kit" cars, so an LS2 would need everything including cats, sealed fuel system, etc. to be legal.

Then you have to make a profit. You're going to have many hours just getting everything to fit nice, the repro bodies struggle in this area. And how long will it take you to completely do all this? If it takes 6 months which would be fast for one guy, then how much a year do you have to make to survive?

I think Frank is correct, you'd need every bit of $90K+ per car to survive.

Jody

[Ragtop68rs]

Thanks for the input guys. I think you guys are right, it probably would take 60k to build a car. Originally I was thinking 40-50k and selling for 70-75k. I just don't think there are many people willing to pay 90k for a camaro. I'm sure there are a few, but they would probably only be looking at the big shops to have it done.

I also did not think about the emission issues. I figured it would be considered a 69 and be exempt. This is something I would love to do but I don't think I will be jumping right in anytime soon. Thanks for your thoughts.

[Bob Johnson]

Thanks for the input guys. I think you guys are right, it probably would take 60k to build a car. Originally I was thinking 40-50k and selling for 70-75k. I just don't think there are many people willing to pay 90k for a camaro. I'm sure there are a few, but they would probably only be looking at the big shops to have it done.

I also did not think about the emission issues. I figured it would be considered a 69 and be exempt. This is something I would love to do but I don't think I will be jumping right in anytime soon. Thanks for your thoughts.

Year One is selling the bodies and offering turn key 69 Camaros..not going to be less than $100K I'll bet

[Nine Ball]

Year One project cars typically run in the $150K range for customers. That red fastback Mustang with the carbon fiber hood was actually the first customer car they ever built, it was in the $150K range.

[68fusion]

YOU could bait the buyers with a low base price...lose the LS motor and 6 speed/auto for something more ordinary....crate 350/th350?
The cars wouldnt be that expensive to do in that regard...but as I have found most repo stuff is of "lesser" quality and fit -so if you are going to ask good money for the cars it better look right - thats where the labor cost comes in.

But most buyers of cars like this, over say 75-80k dont build they buy... most dont pinch pennies- have had a hard time finding people to do work in past and do it right- so they look for quality and dont concentrate so much on price....just my experience

I think this is the way things are headed...but until the bodies and parts are more refined , the labor to put out a nice car would eat your profit up.

[Jim Nilsen]

The lesson to learn from is the Cobra replicars. It has been apparent to me for many years that the people who do the highest quality workmanship on those cars have no problem selling them for somewhat of a profit. It make the biggest difference in the world on how quickly you can do 100 point show quality work. People expect the to have the best when they pay big money, but people will pay good money for the best.
Yearone and others may be able to do them at less cost because they are distributors for parts so your profit will be less for the same quality car. On the other side of it all if you put out he highest quality car anyone has ever seen and can do it quickly you should be able to get the same money or better for one.
With the quality of the parts you have available to make a complete car being very subjective these days and the ability to make an original car look great with aftermarket parts you will be at best only able to make a real nice car quickly no matter how good you are to start with.
Waiting and seeing what the others will put out for quality and the problems they encounter would be the smart thing to do. If you can find someone to fund the car to start with because of faith and you can charge by the hr. and you can both be happy in the end no matter what time frame and cost to get the quality they can afford then you might have something going that the rest won't matter.

Jim Nilsen

[speedster]

Ragtop68rs -
You might want to take it slow and see how the Unique/Year One, and other shops sell. They can get the parts and labor much cheaper than you (remember, your time IS valuable) and they have the infrastructure to support assembly line style buildups which is considerably more efficient than a one-off. The tradeoff is usually quality. I would bet that Frank @ Prodigy would drop dead before he put out a car that did not meet his personal high standards. This may or may not be true for the niche "mass" builders. Time will tell. You can have the best car in the world, but as proven by the BJ auction, you need a willing buyer. It costs money to make money. So, know your competition. Do your best DD up front, before you commit.
My .02 cents.

[speedster]

...and one other thing -
Remember that your competition is not just other builders, but Detroit 's new cars:

Corvettes
Vipers
Mustangs of all forms (Rousch, Steeda,..)
Chargers
GTOs

And some much awaited '08/'09 beauties:
Challengers/Cudas
Camaros/Firebirds
These will be competing against you for your buyer's money.

Just a few other things to consider.

[Neil B]

The lesson to learn from is the Cobra replicars. It has been apparent to me for many years that the people who do the highest quality workmanship on those cars have no problem selling them for somewhat of a profit. It make the biggest difference in the world on how quickly you can do 100 point show quality work. People expect the to have the best when they pay big money, but people will pay good money for the best.

The last time I checked, a turn-key Superformance car from a licensed distributor with a crate motor and a Tremec runs $75-100K. For people that have to have a 'Cobra' and want a nice one, they are still spending only a fraction of the cost of a real one. The problem I see with the Camaro is that you can still buy a nicely-restored original car for less than a finished repro. The repop body makes a ton of sense for do-it-yourselfers and race cars though.

[Ragtop68rs]

I do agree that I would have to build at least 1 car to start with to show off my work. And yes you could cut the price of the build down by going with a 350 crate motor but I think that takes too much away from it. I think the people that are willing to pay good money for a car like this want the classic car with the modern drive train and suspension. I know that is what I would want.

[wantahertzdonut]

Do you have a facility already? Perhaps you could always do this as a side business to get started. I have a couple friends who did that, just did restorations for people in their garage after their regular job and on weekends.

[Mean 69]

Starting any type of small business is not a decision that should be taken lightly. There are far more details to making everything work than just the product or service you plan selling, the entire infrastructure to run things smoothly is a really big undertaking to put things mildly. Don't get me wrong, I would encourage anyone that has an entrepreneurial sense to seriously consider self employment, but planning things out as much as possible up front will save you loads of work while you are trying to get products to market (and just how would I know that?).

One way to put ideas into some form of a plan is to write a business plan. In fact, it is one thing that should precede everything else you do. It will force you to make decisions on how to fund, an estimate on how much money you will need to put necessary capital equipment in place, can generate a cash flow scenario, and it will remind you that things like insurance, rent, other insurance, utilities, more insurance, materials, labor, and then there's insurance too.

Don't forget about the psychological aspect of things too. Depending upon how you feel about money, the act of writing checks to pay everyone, for long periods of time, without you yourself making one stinking penny, can get under your skin and really force a gut check. Think about not only what this will do to you, but also to your family, etc, it is not a trivial issue.

Perhaps the biggest challenge to sorting all of this stuff out is "forecasting." A wonderful marketing exercise, determining how big the market is, and then extrapolating down to all of the demand that you "might" be faced with. I would highly, highly recommend working this the other way, from the bottom - up. Rather than think about the demand for the product, plan things based upon what you can realistically accomplish, you may dream of the potential of selling 200 cars per year, but making this a reality is an enormous undertaking. Rather, think about how long it will take you to ramp up to a reasonable output level based upon the resources you have, and factor in the learning curve. Then, apply a fudge factor, most people like to double the expected time, but my experience shows that using "pi" (3.14, sorry, I'm a scientist geek) is a better estimate. Nothing, nothing, nothing happens as fast as you expect it to.

Sounds negative, but it isn't intended to be at all. I decided to leave corporate America a year ago and start my own venture. Most of the cautions I stated above came true, and it has been both an incredible learning experience, at times frustrating to the point where I wanted to pull the plug (and nearly did several times), while at other times being so gratifying that I felt like I was on top of the world. I wouldn't trade it for anything, and I can't ever see myself going back to a corporate job as an employee.

Beyond everything, the only way to run a sustained business operation successfully is to do so with the highest sense of ethics. If you, and everyone on your team doesn't completely embrace this as critical, at some point, you will likely have to pay the Piper. You might have a great product or service idea, but if you are not true to your customers, your suppliers, your investors, and your employees, well... Some companies "survive," others "thrive."

Good luck, go in with your eyes wide open, and be willing to adapt as necessary.
Mark

[Ragtop68rs]

Thanks Mark, that is great advice. If I deciede to do this it would have to be part time to get started. I can't afford to quit my job without knowing if I could make a go at it. Like you said, there are a lot of things to think about.