Who Needs a Dealer License?

How many vehicles can I sell before I need a license?

A dealer's license will be required if a person conducts the buying, selling, brokering, leasing, negotiating a lease, or dealing in 5 or more vehicles in a 12-month period. The law states 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.

Class A (New Vehicle Dealer) - A licensed new vehicle dealer buys and sells new vehicles under a franchise agreement or contract with the manufacturer of the new vehicle.

Class B (Used Vehicle Dealer) - A licensed used vehicle dealer buys and sells used vehicles.

Class C (Used Vehicle Parts Dealer) - A licensed used vehicle parts dealer buys or otherwise acquires late model major component parts for resale, either at wholesale or at retail. The dealer may also acquire whole vehicles to dismantle for the resale of parts, selling the remainder as scrap.

Class D (Broker) - A licensed broker is a dealer who, for compensation, brings a buyer and seller together, negotiates the terms of a transaction, or displays a vehicle offered for sale. In the broker's role regarding the sale, purchase, lease or exchange of vehicles or salvageable parts, the broker does not have title or other legal interest in the vehicle or salvageable part. A person who conducts a vehicle auction is a type of broker and requires a Class D license.

Class E (Distressed Vehicle Transporter) - A licensed distressed vehicle transporter dealer may buy, transport, and sell vehicles only to a Class C Used Vehicle Parts Dealer; Class F Scrap Metal Processor; or Class R Automotive Recycler.

Class F (Vehicle Scrap Metal Processor) - A licensed vehicle scrap metal processor dealer processes vehicles into scrap metal by shredding, shearing, fragmenting, baling, or similar means. Crushing is not considered a scrap metal process since it is not the final step before remelting.

Class G (Vehicle Salvage Pool) - A licensed vehicle salvage pool dealer stores and displays damaged or distressed vehicles for insurance companies.

Class H (Foreign Salvage Vehicle Dealer) - A licensed foreign salvage vehicle dealer is licensed in another state and is engaged in this state in the business of purchasing, selling, or otherwise dealing on a wholesale basis in salvageable parts or late model distressed vehicles. This dealer buys or otherwise acquires late model major component parts for resale, either at wholesale or at retail. The dealer may also acquire whole vehicles to dismantle for the resale of parts, selling the remainder as scrap.

Class R (Automotive Recycler) - A licensed automotive recycler dealer buys or otherwise acquires late model major component parts for resale, either at wholesale or at retail. The dealer may also acquire whole vehicles to dismantle for the resale of parts, selling the remainder as scrap.

Class W (Wholesaler) - A licensed wholesaler dealer engages in the business of buying and selling used vehicles from and to licensed vehicle dealers. Wholesalers may not buy, sell or otherwise deal in vehicles to a person other than a licensed vehicle dealer.

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; obtain fingerprints through Identix and provide copies of Articles of Incorporation or Assumed Name Filing for the business.

New and used vehicle dealers must also have 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.

Zoning and Municipal Approval: An applicant for a dealer license (with the exception of a foreign salvage vehicle dealer - Class H license) must provide written verification from the appropriate municipal and zoning authority that the applicant's established place of business meets applicable municipal and zoning requirements. Municipal and zoning approval forms will be included with a dealer license application and must be completed by the appropriate municipal and zoning authority. Self-certification by the applicant will not be permitted.

Established Place of Business: An established place of business is a place where the dealer keeps his books and records and conducts business. All applicants for a new or used vehicle dealer's license must certify that the business location meets the expanded established place of business requirements required by P.A. 495 of 2004. For specific information on established place of business and other dealer requirements, you may contact the Bureau of Regulatory Services at 1-888-SOS-MICH (1-888-767-6424), or check the Secretary of State Web site by clicking on "Services to Businesses" at www.Michigan.gov/sos.

Surety Bond: Applicants for a new vehicle dealer, used vehicle dealer, or broker's license must obtain a 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. See Consumer & Industry Services, authorized Surety Company List.

Michigan No-Fault Fleet Insurance: You must have 20/40/10 fleet-type insurance indicating coverage for "any vehicle" or "all owned vehicles".

How much does it cost to get a dealer license?

The license fee for Class C, Class H and Class R dealers is $160. All other licenses cost $75. Dealer plates are $10 each.

If you would like to apply for a Michigan Vehicle Dealer License, the application is available on the Secretary of State Web site by clicking on "Services to Businesses" at www.Michigan.gov/sos or you may call the Bureau of Regulatory Services at 1-888-SOS-MICH (1-888-767-6424) and request a dealer license application packet.