How to Get a California Dealer License
The state of California requires all auto dealers, auto brokers and wholesalers working in the state to get a California dealer license.
So, if you plan to sell new or used vehicles, or to act as an auto broker or wholesaler, anywhere in the state, you’ll need to apply to the Department of Motor Vehicles for an auto dealer license.
There are four main classes of California auto dealer license. These are:
- New dealer – Allows licensees to sell new vehicles to the public or other licensed dealers. Dealers with this class of license are also able to sell used cars.
- Used dealer – Allows licensees to sell used vehicles to the public or other licensed dealers
- Wholesale dealer – Licensees are only allowed to sell vehicles to other licensed dealers
- Autobroker endorsement – Allows licensees to arrange or assist in the purchase of a vehicle that does not belong to them in exchange for a fee.
Want to get a dealer license in California? Follow the steps below.
Find Out Which Type of California Dealer License You Need
Before you can apply for a California dealer license, you’ll first need to determine the type of license you need. This is essential as having the incorrect license could limit your business or make your dealership non-compliant with state regulations.
If you plan to sell pre-owned vehicles, you’ll need either a used car dealer license or a wholesale dealer license. If you want to sell cars to the public as well as to other dealers, you’ll need a used car dealer license. This will class you as a retail dealer. Retail dealers are required to have an approved commercial office.
If you only plan to sell to other dealers and won’t be working directly with the public, you’ll need a wholesale vehicle dealer license. Wholesale dealers aren’t required to have an approved premises and can work from a home office as long as it meets certain criteria.
Wholesale-only dealers often operate in collaboration with partners with a retail dealer license. This allows them to sell to the public as well as to other professionals.
To sell new cars to the public, you’ll need a new vehicle dealer license. New dealer licensees are also permitted to sell used cars to the public, to other dealers and at auctions.
An auto broker license, also known as an autobroker’s endorsement, is an addition to a new, used or wholesale license. It allows the holder to arrange, negotiate and otherwise assist in the purchase of a new or used vehicle in exchange for a fee.
The California Auto Dealer License Requirements
The licensing of California auto dealers is regulated by the California Vehicle Code, Division 5, Article 1. The California vehicle code asks applicants to meet certain requirements before they can get licensed. Below you’ll find a breakdown of the main licensing 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’ll need to get a California Department of Tax and Fee Administration (CDTFA) Resale Permit. You’ll need to attach a copy of this permit to your application.
If you plan on hiring 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’ll need to get Workers’ Compensation Insurance coverage. You can find out 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 dealers in California must have a location for their business and obtain property use verification from their local zoning or planning office.
- Those with a wholesale dealer license are allowed to work from a home office. This office must be on the ground floor and directly accessible from the outside.
- All dealers are required to have an office at their business premises.
- All dealers, except wholesale dealers, must display a sign at their business location. This sign must be readable and permanently affixed on the exterior of the office or the display area. It must be able to withstand reasonable climatic effects.
- New and used dealers 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 and it must be for the exclusive use of the dealer.
- New and used dealers may have additional display areas within a radius of 1,000 feet from the principal place of business or licensed branch location without requiring separate licensing.
- Brokers and wholesale dealers do not require a display lot
As part of your license application, you’ll need to provide photographs of your dealership.
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.
The Department of Justice will use your Live Scan fingerprint card to carry out a criminal background check. If this check uncovers criminal activities that occurred within the last 10 years, it could prevent you from obtaining a license.
A $32 DOJ criminal record check fee is collected when your fingerprints are taken.
Education & Testing
Used and wholesale-only dealers must pass a DMV-approved dealer education program. The dealer training program lasts six hours and can be completed online. At the end of the program, participants will receive a certificate of completion. This certificate should be attached to the application.
After passing the dealer education program, used and wholesale dealers are required to sit an in-person test administered by the DMV. This test is made up of a series of multiple-choice questions and a score of 70% is required to pass.
Complete the California Auto Dealer License Application
As well as meeting the above requirements, you must also complete your California dealer license application and pay a number of obligatory fees in order to secure your license.
California License Application Forms
When applying for your license, you’ll need to complete one of the following application packs. The pack you require depends on the license you’re applying for.
As an autobroker’s endorsement is an extension of either a used or new dealer license, you don’t need to submit a separate application. Instead, simply mark on your application if you want an autobroker endorsement included in your license.
There are a number of fees that you’ll need to pay in order to secure your car dealership license. 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
Obtain a Surety Bond
The California Department of Motor Vehicles requires all types of dealers in the state to get a California auto dealer bond as part of the licensing process. The bond amount you’ll need will depend on the type of automotive dealership you plan to run.
- New and used dealers are required to post a $50,000 auto dealer bond
- Wholesale-only dealers are required to post a $10,000 dealer bond
The surety bond guarantees dealers’ compliance with the provisions of the California Vehicle Code and is an essential part of the occupational licensing process. If dealers fail to pay their DMV fees or remit sales taxes they collect, the auto dealer bond protects consumers and the State of California from financial losses.
As Lance Surety Bonds are experts in dealer surety bonds and California DMV requirements, we’re able to arrange your motor vehicle dealer bond quickly and at an excellent rate, even if you have a poor credit score.
Find out more, and get a free bond quote, by contacting a member of our team today.
Submit & Receive Your California Auto Dealer License
You can submit all of the paperwork required for your business license
at the time of your examination. Once your application forms are in, you can schedule an appointment with an OL inspector to come to your business location.
If the OL inspector is happy with your dealership, and if you have met all the other requirements set by the DMV, your license will be issued.
Once an auto dealer license has been issued, both new and used licensed dealers
will need to get a National Motor Vehicle Title Information System (NMVTIS) for any used vehicles that are offered or displayed for sale.
If you’re a new dealer, you’ll also need to participate in the Business Partner Automation Program once you’ve got your license.
License Expiration & Renewal
Auto dealer licenses in California are valid for one year. This one-year period runs from midnight on the last day of the month of issuance.
Renewal applications and additional documents must be submitted no later than 90 days before the expiration date of the license.
If you have any further questions about the licensing or renewal process, contact the California DMV Occupational Licensing branch.
How Many Cars Can You Register as a Dealer in California?
If you’re not a licensed auto dealer, the State of California only allows you to register a maximum of 4 cars per year. However, if you have submitted your application forms, paid your fees and completed the licensing process, you’re allowed to register a much higher number of vehicles without any issues.
Find out more about registering new and resale cars, and learn about auto dealer license requirements, on the DMV website.