| Written by Mark Buzinkay
What exactly is the business of a car importer?
A car importer is an intermediary between international car manufacturers and the local market. Their business model centres on importing, marketing, and distributing vehicles, spare parts, and services to consumers or regional dealerships. Some importers act exclusively for a brand in a region or country, and some do not.
This said, the car importer bridges the gap between global manufacturers and local customers by negotiating rights to import a brand or specific models, handling logistics and customs processes to bring cars into the country, and establishing and managing distribution networks to reach end consumers. The car importer is key to the sale of a foreign car brand.
The importer generates profit not only from selling imported vehicles to dealerships or directly to end customers; furthermore, the importer distributes spare parts and accessories and offers diverse services such as warranty management, maintenance programs, and even training for dealerships.
In this way, a car importer delivers value by offering diverse choices of global car brands to local consumers, ensuring reliable after-sales support and availability of spare parts, and enhancing customer experience through localised marketing and service.
At the same time, the car importer faces economic risks (such as currency fluctuations affecting import costs and market downturns that reduce vehicle demand), regulatory risks like changes in import tariffs or emissions standards, and competitive risks.
As discussed, car importers play an essential role in the automotive ecosystem. However, their business success depends on their ability to efficiently manage logistics, meet local consumer preferences, and foster strong relationships with both manufacturers and local dealers. Let's examine their core business processes to discover the inner success factors.
What are the critical processes of a car importer business?
In this section, we delve into the business process landscape of a car importer. Besides management, support and evaluation processes, the most interesting part are core processes. A core process is a process that generates value for the customer and, hence, the supplier.
The most influential business processes of a car importer span procurement and logistics, marketing and branding, dealer network management, sales and distribution, after-sales service, regulatory compliance, financial management, customer relationship, and risk management.
We pick two areas to go more into details: (1) Managing the sourcing, transportation, and customs clearance of vehicles and spare parts, and (2) ensuring adherence to local laws and regulations governing vehicle imports and operations. Why? Because the business of a car importer stands and falls within these processes: they directly impact their ability to operate effectively, maintain profitability, ensure customer satisfaction, and comply with regulatory requirements. These processes are interconnected and must be executed with precision to sustain and grow the business. Non-compliance can lead to legal penalties, sales bans, or damage to the importer's reputation.
Procurement and logistics
The procurement and logistics processes are critical for a car importer. They ensure the seamless flow of vehicles and spare parts from global manufacturers to the local market at optimal cost, quality, and compliance with local market needs.
The key steps include demand planning and forecasting, supplier selection, order placement, contract negotiations, regulatory compliance, procurement scheduling, and logistics process. The logistics part may be the essential one as the objective is to manage the transportation, storage, and distribution of vehicles and parts efficiently, minimising costs and ensuring timely delivery.
The logistics process includes factors such as shipping modes (sea/train/trailer freight is the most common for vehicles due to cost efficiency and flexibility; air freight is only used for high-value vehicles or urgent spare parts), routing and insurance. Booking space onboard car carriers, organising pick-up of delivered cars and performing quality/damage checks are the most obvious tasks within this process. For customs clearance, required documentation (e.g. certificates of origin) must be prepared and submitted.
The most visible part of this process is warehousing: Sometimes thousands of cars are parked in secured yards. Warehousing also includes managing spare parts inventory (see also: Vehicle processing centers).
Regulatory compliance
The regulatory compliance process ensures that all vehicles, spare parts, and operations align with local laws, standards, and policies. This is crucial for avoiding penalties, ensuring smooth business operations, and maintaining consumer trust.
However, before a vehicle can be sold in a new market, it must meet local technical and safety standards. Therefore, the process includes pre-import compliance and vehicle homologation & certification.
Pre-import compliance depends very much on national regulations such as vehicle emissions and safety standards. Vehicles are tested for CO2 and other emissions, fuel economy, noise levels. Tests also ensure that cars meet crash-test, airbag, braking, and other safety requirements. The process ends with obtaining certifications such as Euro standards, EPA (USA), or BS (India). Technical modifications to cars are made to meet local standards such as headlights for specific driving sides, different fuel types etc.
The same goes for spare parts and components - they must be verified to meet quality and safety certifications (think of lithium batteries for electric vehicles).
Importing a car is not only a logistical challenge but a bureaucratic process of handling a long list of documents in preparation for customs and border clearance:
- Commercial Invoice: Details the vehicle/part, price, and transaction terms.
- Bill of Lading (BoL): Proof of shipment.
- Certificate of Origin: Confirms where the goods were manufactured.
- Harmonized Tariff Codes (HS Codes): Correct classification for import duties.
Once the duties and taxes are paid, the physical inspections can take place (if required). More importantly, vehicle registration and type approval must be obtained for every single vehicle. The Vehicle Identification Number (VIN) is essential here - it's the car's ID. The car importer must ensure compliance with motor vehicle and road safety acts. Additionally, mandated labels must be attached for fuel economy, emissions, and safety features in the car. And don't forget the user manual in the proper local language.
How to overcome the myriad of vehicle data and logistics moves?
As we have seen, the procurement and logistics process ensures the timely and cost-effective sourcing of vehicles and spare parts, aligning with market demand. The process is crucial to a car importer because delays in delivery can disrupt sales and dealership operations, and non-compliance can lead to legal penalties, sales bans, or damage to the importer's reputation. Therefore, exact planning and preparation of logistics, car handling, and documentation is of utmost importance. So how does a car importer solve this challenge?
Car importers combine strategic planning, robust tools, and operational best practices to effectively manage procurement and logistics challenges. When it comes to tools, a car importer uses a mix of Enterprise Resource Planning systems for centralised management, Supply Chain Management software for end-to-end logistics, Freight Management systems, Customs and Trade Compliance tools, and Customer Relationship Management systems. Telematics and IoT solutions help track every car in the yard and during the preparation and registration process.
Illustration: semi-automated identification and location of cars in a yard
Telematics doesn't seem to be the crucial part of this solution rack, but it is a "game changer" when it comes to vehicle handling efficiency. A car importer moves a car several times within the yard to execute various tasks (as described further above). Every car movement needs a driver and includes searching, locating, identifying, accessing and driving the specific car to a pre-defined destination, such as a tyre changing station, fueling station, or damage control station. It also includes driving the car to a pre-defined parking slot or zone after completing the task, presumably changing the original parking slot. This change must be recorded in a database to know where to look for the car on another day. As a consequence, a car importer uses tools that provide the current true position of a car in their yard (outdoor and indoor), make identification easy to handle (such as a scanner or even a fully-automated system) and automatically document everything that has been done with or provided to the car. This way, telematic solutions update the Car Operations Management system (another name for a specific ERP) constantly and in real time. Consequently, a car importer knows every car's current position and status at fingerprint. Additionally, the full documentation of performed tasks is attached to the car's documentation (see also: Vehicle logistics software).
FAQ
What are the main car handling tasks within a car importer's operations?
Car handling tasks include unloading vehicles at ports, performing quality checks, transporting vehicles to storage yards, and preparing them for distribution. In the yard, vehicles are moved to designated areas for tasks like damage inspections, technical modifications, fueling, or cleaning. Each movement is tracked, and vehicles are relocated to new parking slots once tasks are completed, requiring meticulous documentation and tracking systems.
What challenges do car importers face in managing vehicle movements within their yards?
Car importers face challenges such as locating specific vehicles in large storage areas, minimising labour and time for repetitive movements, and ensuring accurate documentation of every action. Inefficient processes can lead to delays in delivering vehicles to dealerships, errors in inventory records, and increased operational costs.
How do car importers overcome inefficiencies in vehicle handling?
Car importers use advanced telematics systems and digital tools to streamline vehicle handling. Telematics provides real-time location tracking for every vehicle, automates task documentation, and integrates with operational systems for seamless updates. These solutions reduce time spent searching for cars, optimise task execution, and ensure precise record-keeping, enhancing overall efficiency and accuracy in yard management.
Takeaway
Car importers face significant logistical challenges, from coordinating international transportation and managing storage yards to ensuring timely deliveries and maintaining accurate records. Delays, inefficiencies, or missteps in these processes can disrupt operations, increase costs, and impact customer satisfaction. Advanced tools like telematics systems offer solutions by providing real-time tracking, optimising vehicle movements, and automating task documentation, enabling smoother and more efficient logistics. Overcoming these challenges is essential for maintaining profitability and meeting market demands. If you want to know more about telematic solutions and their benefits, learn more about Asset Agent for Vehicle Logistics.
Delve deeper into one of our core topics: Car logistics
Sources:
(1) Kersten, Wolfgang Ringle, Christian M. Blecker, Thorsten (2021) Adapting to the Future: How Digitalization Shapes Sustainable Logistics and Resilient Supply Chain Management. Proceedings of the Hamburg International Conference of Logistics (HICL), Vol. 31 ISBN: 978-3-7549-2770-0; epubli GmbH, Berlin, pages 565-583
