Licensing Requirements

Texas is a very big state, and reliable vehicles are a necessity for getting around its wide-open spaces. With so many Texans owning motor vehicles, the auto sales industry boasts high-volume turnover.

To regulate this trade, the state subjects Texas automobile dealers to many legal restrictions and requirements. Number one among the requirements is that you fill out application forms―stacks of them.

The Texas Department of Transportation has just issued, for the first time, a dealer manual. This is not yet available online, but a you may complete a request form to obtain one. It'll help you understand the business you're entering.

Application Requirements

General Distinguishing Number

For a new dealer in Texas, the first step is to obtain a General Distinguishing Number (GDN). This requires, among other things, a permanent place of business, signage in accordance with regulations, and sufficient space to display five vehicles of the type the dealer intends to sell.

You'll need a GDN whether you sell new cars or used. If you also (or instead) sell motorcycles, RVs, or other trailers, you'll need a separate GDN for each class of vehicle.

Each original GDN costs $500; it is only $200 to renew. The necessary forms can be downloaded in PDF format from the Motor Vehicle Division's licensing forms page.

Note that franchise dealers (new vehicles) and independent dealers (used vehicles) have different forms and instructions, so be sure to download the appropriate files. The licensing forms page also provides handy links to the portions of the Texas legal code that apply to both new and used auto dealers, so it's quite a useful resource.

Franchise Agreements for Selling New Cars

In addition to the GDN requirements, new car dealers also need to have a franchise agreement with the manufacturer of each make of new car they sell. This doesn't apply to used car dealers, who can sell any make and model.

Finance Licensing

In addition to the GDN (and the franchise agreement, if applicable), a new dealer in Texas needs a license from the Office of Consumer Credit Commissioner (OCCC). This separate license pertains to all aspects of motor vehicle financing. You can download the OCCC's Motor Vehicle Sales Finance Licensing Kit, which contains the necessary application forms.

Additional License Types

Other vehicle-related business licenses offered by the Texas Department of Transportation include the following:

• Converter license

• Intransit license

• Lease facilitator license

• Lessor license

• Manufacturer/distributor license

• Representative license

Application forms for all of these licenses are available on the licensing forms page in PDF format. You can view, download, save, and print the forms using Adobe's free Reader software.

More regulations for Texas car dealer licensing are detailed in the State of Texas Vehicle Code, Chapter 503.

Further Resources

Applicants may benefit from networking with the major car dealer associations in Texas during the application process. These organizations also offer seminars, classes, and other support for would-be dealers. The Texas Independent Automobile Dealers Association specializes in used car dealers, while the Texas Automobile Dealers Association primarily serves the franchised new car dealer community.

The State of Texas also offers seminars designed to guide dealer applicants through the process and make sure they have enough information to operate their businesses in accordance with the many laws that apply to them. Read our Dealer-related Information article for more details.