Dealer Licensing in Michigan

So you want to be a car dealer in Michigan. If you buy, sell, lease, or negotiate any of those deals for more than five vehicles in a 12-month period, you may already be one, according to the state. And if you are, you need to have a Michigan dealer's license.

The state defines "vehicle" as any item that needs a title, be it a motor home, trailer, motorcycle, or car, so selling more than five of any combination of vehicles within 12 months will trigger the need for you to be licensed.

What kind of license you need will depend on whether you plan to sell new or used vehicles, (a Class A or B license, respectively), or used parts (a Class C license).

If you're planning on conducting vehicle auctions, or on brokering deals between two or more parties, you'd need a Class D license.

If you're in the business of buying wrecks and selling them as scrap, you'd need a Class E license. You need a Class F license if you're planning to process wrecked cars into scrap. Storing damaged vehicles for insurance companies? Class G.

Perhaps you're located in another state and want to salvage and buy or sell parts and components from damaged cars in Michigan? Class H, or Class R if your business is in Michigan.

Finally, you'd need a Class W license to buy and sell used vehicles from and to other licensed dealers.

Getting Licensed

Getting a Class A or Class B dealer license is a little complicated, so it's important for you to know what's required. You need to start by having an actual place of business, because a post office box won't do. You'll also need a sales tax number, you have to be fingerprinted, and you will have to submit a copy of your Articles of Incorporation to the Secretary of State.

If you're selling new and/or used cars, you also need:

• A surety bond of $10,000.

• 20/40/10 no-fault fleet-type insurance for all owned vehicles.

• A registered repair facility or a formal agreement with a registered repair facility.

• At least two dealer license plates.

• For new car dealers only, a franchise agreement with a manufacturer.

And all dealers (except Class H) must have written verification from the local zoning authority that their place of business meets applicable codes and zoning requirements.

Fees

Licensing fees for all classes (except C, H, and R) are $75. C, H, and R licenses cost $160. Additionally, fingerprint processing costs $54. Auto dealer licenses must be renewed every year by December 31, when they expire.

The Secretary of State's Dealer Application Packet contains all the documents you need to apply for a license, as well as information about the regulations and requirements for doing so. Alternatively, you may call the Bureau of Regulatory services at (888) 767-6424 for more information.

The state's Dealer Manual goes even further. It gives you extensive details about the bases you'll need to cover both during the licensing process and after you become a dealer.

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