How to Get a California Dealer License

Published: Oct 11, 2018

 

To sell new or used vehicles, or to act as an auto broker or wholesaler in California, you will need to get a California auto dealer license. Dealer licenses are issued by the state Department of Motor Vehicles.

The California dealer license classes include the following:

  • New dealer – licensees can sell new vehicles to the public or other licensed dealers (can also hold a new/used license)
  • Used dealer – licensees can sell used vehicles to the public or other licensed dealers
  • Wholesale dealer – licensees can sell vehicles only to other licensed dealers
  • Autobroker – licensees can only arrange or assist in the purchase of a vehicle that does not belong to them by a person

Want to get a dealer license in California? Follow the steps below!

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1. The California Auto Dealer License Requirements

Licensing of California auto dealers is regulated by the California Vehicle Code, Division 5, Article 1. As required by the Code, to get licensed, applicants must meet the following requirements.

Business and Tax Registration

Before applying for your license, you must register a business entity with the California Secretary of State. Sole proprietors are excluded from this requirement. You will also need to file a Statement of Information (SI 550) or Statement of Information LLC (LLC 12) with the Secretary of State.

In order to collect sales tax, you will need to get a California Department of Tax and Fee Administration (CDTFA) Resale Permit. You will need to attach a copy of your permit to your application.

If you plan on having employees or if your business is a partnership or corporation, you must also obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

Finally, if your dealership will have employees, you must also main Workers’ Compensation Insurance coverage. You can learn more about this requirement from the Department of Industrial Relations.

Established Place of Business

Your dealership location must meet the following requirements in order to pass an Occupational Licensing (OL) inspection.

  • All dealer types in California must have a location for their business, and obtain property use verification from your local zoning or planning office
  • All dealers are required to have an office at the premises of their business location
  • All dealers, except wholesale dealers, must have a business sign at their business location
    • The sign must be readable and permanently affixed on the exterior of the office or the display area and be able to withstand reasonable climatic effects
  • New and used dealers specifically must have a lot, or display area, for the cars they will be selling
    • The display area must be large enough to accommodate the type of vehicles that a dealer is licensed to sell
    • It must be for the exclusive use of the dealer and for display purposes only
    • A dealer may have additional display areas within a radius of 1,000 feet from the principal place of business or a licensed branch location, without it requiring separate licensing
  • Brokers and wholesale dealers do not require a display lot

As part of your license application, you will need to provide photographs of your dealership

Fingerprinting

Any person listed as an owner must get a Live Scan fingerprint and submit a Request for Live Scan Clearance (receipt) (DMV 8016) as part of the application process.

A $32 DOJ criminal record check fee is collected when getting your fingerprints taken.

Education and Testing

Used and wholesale-only dealers must pass a dealer education program, approved by the DMV. Upon completing the program, they will receive a certificate of completion which they need to attach to their application.

After passing the program, used and wholesale dealers must also pass a test, administered by the DMV. 

2. Complete the California Auto Dealer License Application

Along with meeting the above requirements, you must also complete your California dealer license application and pay several fees.

California License Application Forms

Depending on your license type, complete one of the following application packets:

 

 

To act as an autobroker you do not need to submit a separate application but simply to mark on your application whether you want an autobroker endorsement

Licensing fees

Along with your license application and additional paperwork, you will need to pay several fees. These include:

  • $175 non-refundable application fee
  • $1 family support program fee
  • $70 fee per branch location (if applicable)
  • $88 fee per dealer plate (plus county fees, if applicable), $90 fee per motorcycle plate (plus county fees, if applicable)
  • $300 new motor vehicle board fee, per location (new automobile, commercial, motorcycle, ATV, motorhome, and recreational trailer dealers only)
  • $100 autobroker endorsement fee (if applicable)
  • $16 examination fee

3. Provide a Surety Bond

All types of dealers in the state must get a California auto dealer bond as part of the licensing process. 

New and used dealers are required to post a $50,000 bond, whereas wholesale-only dealers must post a $10,000 bond.

The bond guarantees dealers’ compliance with the provisions of the California Vehicle Code.

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4. Submit and Receive Your California Auto Dealer License

You can submit all of the above paperwork at the time of your examination. After submitting your application packet, you must schedule an appointment with an OL inspector. Once your dealership has been inspected and if you have met all requirements, your license will be issued.

After licensing, new dealers must participate in the Business Partner Automation Program. Both new and used dealers must get a National Motor Vehicle Title Information System (NMVTIS) for used vehicles that are offered or displayed for sale. 

5. License Expiration and Renewal

Dealer licenses in California are valid for one year from midnight of the last day of the month of issuance

Renewal applications and additional documents must be submitted no later than 90 days prior to the expiration date of the license. 

For any further questions about the licensing or renewal process, contact the California DMV Occupational Licensing branch.

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.