Can you profit on kits?

[Cephyr13]

You guys have probably heard this question many times, but can a person purchase everything from Factory Five to build a Cobra, build the car, then sell the car for a profit?

I'm trying to figure out if it's profitable build these cars and sell them just as a fun side-business.

If possible, I wouldn't want to use donor parts. I'd like to have a car with all new parts. So, before I go do a bunch of research, I figured I'd ask the guys who have experience with this stuff.

Thanks so much.

- Brian

[Bob Cowan]

It's always possible, but not common. The economy is tough, so any new business can be difficult. A friend of mine builds Back Drafts to sell. He is a high end builder, working out of his garage. His personal Cobra is one of the nicest I'v ever seen.

BUT.... he's been sitting on the same car for well over a year now. He built it on spec, but can't get a buyer.

Like anything else, you need to be really savvy to turn a profit. It would be tough to do with all new, mnon-donor parts.

4/26/14: Sorry. I meant to say that my friend builds Lone Star cars, not Backdraft.

[Cephyr13]

Bob,

Thanks. That's what I was figuring. When the economy is down, purchasing luxury items is at a low. I figured if I started building these, I might end up sitting on them for a while or be completely unable to sell them.

Isn't a Backdraft a Cobra strictly for racing? (I'm not very good with Cobra terminology). If so, that'd be harder to sell than a non-race Cobra, I imagine.

Well...I might have to find another side-business instead.

- Brian

[hrosenthal]

Buy a lot of liability insurance.

[Cephyr13]

LOL It'd be nice if you could buy liability insurance in case you couldn't sell a car.

[Garry Bopp]

Backdraft is a "Factory Built" replica. They are built in Durban, South Africa and shipped to the USA ... then you choose your drivetrain to have installed by one of the stateside dealers. You can make a competition car out of these, just like any other replica but they are not "race only."

Garry

[68GT500MAN]

There are pro builders who do make a profit building these cars and then there are a lot of builders who try it as a hobby and fail to cover their labor. I would never build one on speculation, too many buyer preferences to cover. The liability insurance would come into play if something happened and a lawyer came after you.
Doug

[OCCPete]

It'd be very difficult to make a profit on a FFR roadster build, as there's just too many people selling them for less than it costs to build one. I thought about doing this myself and after much research and analysis, decided it was a bad idea. There are a few people in the community who have had some success buying unfinished or poorly built cars cheap, finishing/fixing them, and flipping.

[Cephyr13]

Thanks for the information. You guys are just confirming all of the obstacles I had thought of. I figured that my best bet for building these cars would be to get an order for one, and full payment, then building to the customer's preference. However, one must have notoriety/reputation to do such a thing, and I have none, so I'd have no way to get customers.

The idea of buying unfinished project cars is an interesting idea, but seems too risky for someone like me.

Thanks for the clarification on the Backdraft, too. I remember reading about a factory in Africa many years ago. I guess that was Backdraft.

Thanks so much for the information. Saves me a lot of research time. I greatly appreciate it.

- Brian

[edwardb]

Just to add to what has already been stated -- My Mk3 started life at a well known fabrication shop in Toledo, Ohio. The owner had a business in a small commercial building fabricating FFR's for customers who didn't want to build their own. They had a great reputation and did beautiful work with some really nice mods. In fact, Dave Smith's personal 427 was built in this shop. (I don't know if he still has it. It was advertised for sale a while back.) When I bought the Mk3 roller, they were closing down the business. There's more to the story, but the bottom line was they said they never did make any money. They were building two GTM's when I picked up my Mk3 and said that would be their last. There's a side of this that's a little frustrating, because some of the well known factory builds (Superperformance, Backdraft, just to name two) are quite a bit more money than an FFR, and people are buying them. But a similar FFR build doesn't command the same money. It's just the reality. There are already several builders still out there that will complete these for a fee. But I don't know if they get a lot of business. Probably couldn't sustain on that alone. Bottom line IMO, build them for fun, shop right, and maybe you could get your investment back. But little/none of your labor. A profitable business model based on completion alone is probably not likely.

[Blue MK3]

As OCCPete said, there are too many people selling cars for far less than they cost to build. I considered building a FFR car, but backed away when I found a completed car that I liked and was within my budget. I bought it and then calculated what it would have cost to build an equivalent car. I figure I saved $12-15k on parts alone. The car I bought was very well constructed and has been free of problems for two years. The money I saved didn't include the cost of my labor, special tools, and all the other unforeseen services required. If you love building a FFR, fine; but I suspect you'll lose money in the process. Depends on how much you want to spend on a hobby. Gordon Levy in Phoenix will build a kit for a fee, but I have no idea how much money he makes/charges. However, he provides a lot more services than building kits for customers.

[JL1958]

I was considering building one, when I found a well built finished car for less then I could do one. I've spent a little money going thru it and fixing a few things, but I'm very happy.

[michael everson]

I have been not making money building these for years. Very tought business. No matter what you build, it will be the wrong color, wraong engine etc. I rarely build a car to sell anymore. Most of my builds are bought and paid for before I ever see them. The its just my labor, so nothing to lose for me.
Mike

[Cephyr13]

Thanks so much for the information.

My friend has a very large shop I'd planned on building them in. And while I have some of the tools needed, I figured I'd have to purchase some, too. I only wanted to make a few grand on labor for each car. Maybe $5000. I don't need to make a ton of money, and I don't need a lot of builds. Just a build every once in a while. I'm not trying to make a full-blown business out of this, so I wouldn't have to rent or maintain a building or mechanics. However, it does sound like I'd need liability insurance (thanks again for that bit of information--I hadn't even thought of that).

From what you guys have said, I see two problems:

1. Getting business in this economy (I'd build one only if a customer sent the parts to me for the build).
2. Reputation (I have none when it comes to building these).

So, I figure it's not possible for me to do this right now. If I were really serious about this, I'd go ahead and put out an ad and see if I got any bites. But at this point, I don't think it's feasible.

Thanks again for the information. It's all very helpful and has saved me a lot of research time.

- Brian

[Pylons]

yeah, I don't think there's much doubt that you can make money on a build. If someone wanted a particular flavor of car, didn't want to build it themselves, and trusted you to build it, they likely would pay you a premium over the cost of parts.

The problem is that there just aren't a lot of those people out there, so building a business out of it is an awfully tough row to hoe.

Doing it as a part-time-on-the-side thing...as you alluded to...kind of a catch-22: who's gonna pay you when you have no history/reputation? how are you going to build a history/reputation if you only want to build if a customer buys/sends the parts?

[SStrong]

I've spent about $42k on my build including paint (finished now). Most sales seem to be about $28k. I always wanted one of the originals, but could never afford one, so this was my only path. I also knew I'd enjoy the challenges and time in my garage (what we won't do to get away from the wives).

I don't intend to sell this. Add all the labor (I know I've got over 800 hours in) and you know you will be upside down. Michael and some of the guys on the forum really do beautiful work. You need to be a craftsman to make one worth buying. I enjoy working on my cars (have 4 now, plus my two boats) and this was probably the best time I've ever spent.

Agree with Pylons. Might be fun if you're wealthy and don't worry about losing money.

[Jeff Kleiner]

If you do one on speculation you can pretty much count on paying yourself pennies per hour for your labor.

Jeff

[Cephyr13]

Yep, I'd have to agree with all of you guys.

[riptide motorsport]

Short answer is no.

[cobraguy13]

I teach an auto technology class at the high school and the senior class has been building one a year for the past four years. The money the kit costs and all the extras usually runs about $30.000 total after paint. We put out a very nice product that is brand new. But the labor is free and students are performing all tasks to the build. After paying the auction house 10% to sale the vehicle we usually put a thousand or so more than we have invested back into the fund that supports this curriculum. It works great as a teaching aid for our program but I don't believe any real money could be made if you were to figure in the labor hours..

[CraigS]

Pay attention to Mike Everson and Jeff Kleiner. They have been doing this for a while.