Dealer Licensing - FAQ
How many vehicles can I sell before I need a license?
The law does not refer to a specific number of vehicles. You may need a
license if you sell only 1 or 2 vehicles per year. The law says that if you
are in the business of buying, selling, brokering or otherwise dealing in
vehicles, you need a dealer license. In the law, "vehicle" means: any
vehicle required to be titled, motor vehicles, trailer coaches, and trailers
weighing over 2500 lbs.
What type of dealer license do I need?
The type of license you need depends on the type of business you intend to operate.
If you want to buy and sell used vehicles, you need a Class B Used Vehicle Dealer License. The Class B
license allows you to buy vehicles from any source - including auctions -
and to wholesale and/or retail vehicles that you own - including exports to
foreign countries.
If you want to buy vehicles to dismantle them for parts, you need a Class C Used Vehicle Parts Dealer License or a
Class R Automotive Recycler License. Businesses that rebuild salvage titled
vehicles need both the Class B and Class C or R licenses.
Additionally, only a Salvage Vehicle Agent may buy salvage or scrap titled vehicles at an auction. Class C and
Class R dealers will also need to have the Salvage Vehicle Agent license.
What do I need to get a dealer license?
All dealers must complete an application; have an established place of business;
complete 2 fingerprint cards; have a sales tax number and provide copies of
Articles of Incorporation or Assumed Name Filing for the business.
New and used vehicle dealers must also
have a surety bond in the amount of $10,000; Michigan No-fault fleet type
insurance; either their own registered repair facility or an agreement with
a registered repair facility; and at least 2 dealer plates. New vehicle
dealers must have a franchise agreement with a manufacturer.
Used vehicle parts dealers and automotive recyclers
must have evidence of Worker's Compensation insurance or a notice of
exclusion.
- Established Place of Business: An established place of business is a place where the dealer keeps his books and records and conducts his business. You must have approval from the local zoning authority and be open at least 4 consecutive hours each week during normal business hours. New and used vehicle dealers need a display area large enough to display at least 3 vehicles.
- Surety Bond: A surety bond is like an insurance policy and can be obtained from insurance companies or bonding companies. It must be a continuous bond for the amount of $10,000.
- Michigan No-Fault Fleet Insurance: You must have 20/40/10 fleet-type insurance indicating coverage for "any vehicle" or "all owned vehicles".