How to Become a California Motor Vehicle Dealer

There are four possible license types that applicants can apply for with the California Department of Motor Vehicles (DMV):

• New/Used Auto-Commercial license
• Commercial Used Auto license
• Wholesale Dealer Only license
• Auto Broker license

This post will focus mainly on the New/Used Commercial License and the Commercial Used Auto License. The motor vehicle dealer license only applies to the dealer, not the salespeople employed by the dealer. The application requirements for a Vehicle Salesperson License can be found here. Getting your California Motor Vehicle Dealer License can seem daunting, but if you follow these 5 steps, it can be much easier.

Step 1: Determine What Kind of License is Needed

Are you planning on opening a dealership for Ford? Audi? Subaru? Or would you rather have your own car lot?  The answer to these questions are very important because it will help determine what kind of license you will need to apply for with the DMV. Commercial New/Used Dealers are affiliated with a larger franchise company whose policy they follow when engaged in business. These licensees can sell new and used cars and trucks to both the public and other licensed car dealers. Commercial Used Auto licensees can sell only used cars and trucks to the public and to other licensed dealers and they are independent of any larger car and truck manufacturer.

Step 2: Background Check

The State of California requires background checks to be done on all applicants that apply for a motor vehicle license. This background check looks not only for convictions of a crime or crimes, but also to see if the applicant is one that would operate their dealership with proper moral and ethic business standards. Failure to disclose convictions could result in a temporary license not being granted. However, having a prior criminal record does not automatically disqualify one from becoming a licensed California motor vehicle dealer.

This background check is an additional way the state helps ensure consumer protection. If the applicant has committed a crime that pertains to the license they are applying for, the license may be refused.

Step 3: Required Forms, Fees and Permits for California Motor Vehicle Dealer Licensees

There are quite a few forms, fees and permits are required for the California Motor Vehicle Dealer application process.  Because of that, the DMV has complied a document that contains all required forms for the application. To access that document, you can click here.  Along with the required forms are required fees.  The fee schedule for applying for a California Motor Vehicle License Dealer is as follows:

• $175.00 Application fee, which is not refundable.
• $1.00 Family Support Program fee.
• $100.00 For Autobrokers, in addition to the original $175.00 application fee
• $ 70.00 For each additional branch of the dealer.
• $300.00 New Motor Vehicle Board Fee that is required for new auto-commercial and motorcycle dealers, all-terrain vehicle, motor home, and recreational trailer dealers only per location.
• $ 70.00 Optional fee for each dealer plate, excluding additional county fees.
• $ 72.00 Optional fee for each motorcycle plate, excluding additional county fees.

This list covers most costs for the license, but it does not include the small cost of obtaining the required surety bond or the other permits this application requires (see Step 4). For the California Motor Vehicle Dealer license application, licensee are required to get the following two permits/licenses: the Resale Permit from the California Board of Equalization and the proper city and/or county business license. In addition, the application needs to include a copy of you fictitious name statement, lease or rental agreement and photographs of the location of the business that adhere to each license’s standards.

Step 4: Get Bonded

One of the most important steps of the application process for becoming a licensed California Motor Vehicle Dealer is the  Motor Vehicle Dealer Surety Bond (a copy of the bond form can be found in the list of forms needed for the application). This is required by the state to ensure that you will not financially harm or deceit customers and the public. If an applicant does not have this bond on file with the State of California, they cannot be granted a license.  If this bond is not kept valid or if it is not renewed timely, a granted license could be revoked. This bond will either be in the amount of $10,000 or $50,000 depending on which motor vehicle dealer license you are applying for.

Step 5: Apply for License

Once you have completed all of these tasks, forms, and payments, you are ready to complete and submit your application to the Department of Motor Vehicles. Once submitted, the DMV will allow you to check the status of your license as it is in the process of being reviewed. It could take up to 120 days to process the application and run the background check, but if all forms are filled out truthfully and correctly, it likely will take less! Once the application is approved, you are ready to start business as an official California Motor Vehicle Dealer!