How to Start an Automotive Scrap Yard Business

Updated March 23, 2017

An automotive scrap yard disassembles cars, trucks and aircraft in order to reuse or sell usable parts or fluid. Additionally, many scrap yards run by trained mechanics include repair shops and recycling centres. An entrepreneur interested in starting a scrap yard should have auto parts knowledge and experience disassembling cars. Additionally, to run a repair shop, you’ll need to obtain certification or hire ASE-certified mechanics.

Contact your state’s licensing department to learn of the regulations for starting a salvage yard, such as insurance and bonding requirements and zoning issues.

Find a location that can accommodate enough tonnage to ensure viability for your business within good distance of a commercial business park or equally booming market. At a minimum, expect to need at least three acres to house cars, trucks, scrap, equipment, an office, storage facility and parking space. Contact your zoning department to confirm zoning approval.

Contact your state’s Environmental Protection Agency to learn local environmental regulations including air and water quality requirements.

Hire a licensed contractor to help you procure building approval and to outfit your land with a fence, security system, amenities and utilities and a storage facility to house those parts that can’t be exposed to inclement weather.

Purchase vehicle lifts, a three-car hauler, tow truck, forklifts, a wheel crusher, car crusher, recycling equipment, storage drums for hazardous liquids, tools, a computer and office equipment and auto body equipment if you intend to run a repair shop. Implement a fluid disposal system.

Obtain a commercial driver’s license or hire drivers who hold CDLs to operate your equipment.

Purchase a bond and liability insurance in the amounts required by your state. Create safety policies for employees and waivers for customers, if you will allow them to peruse your storage facility and pick up their own parts.

Obtain an auto wrecking and salvage yard license from your licensing department and pay all applicable fees. If necessary, apply for a second-hand dealer’s license and motor carrier permit with your state’s Department of Motor Vehicles.

Advertise your scrap metal business both online and off.


Label everything. Reuse everything. Use gas drained from scrap cars to fuel your commercial vehicles and oil to heat your facilities in the winter. Remain up-to-date and compliant on environmental regulations, which change frequently.

Things You'll Need

  • Location
  • Fence
  • Security system
  • Office
  • Storage facilities
  • Bond
  • Liability insurance
  • Car hauler
  • Tow truck
  • Lift
  • Recycling equipment
  • Wheel crusher
  • Permits
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About the Author

Shanika Chapman has been writing business-related articles since 2009. She holds a Bachelor of Science in social science from the University of Maryland University College. Chapman also served for four years in the Air Force and has run a successful business since 2008.