Michigan Motor Vehicle Dealer License Guide

The Michigan motor vehicle dealer license is a document issued by the state of Michigan that allows individuals or businesses to buy, sell or lease motor vehicles. It is required by law for anyone who wishes to operate as a motor vehicle dealer in the state of Michigan. In this article, we will discuss when you need a dealer license, the steps on how to get a licenses, as well as how to renew the licenses. We will also give an overview of what types of licenses Michigan offers as well as how to obtain the bonds and insurance policies required to become a dealer. 

Who needs a Michigan Motor Vehicle Dealer License

In Michigan, anyone who wishes to sell more than five motor vehicles per year, on a retail or wholesale basis, must obtain a license. 

Retail means anyone who wishes to engage in the business of selling motor vehicles. This includes any individual or organization involved in the dealing of motor vehicles can do so to the public. The license is necessary for both new and used vehicle sales.

Wholesale means anyone who buys motor vehicles from manufacturers and sells those vehicles to other motor vehicle dealers. 

In the sections below, we will go into more of the nitty gritty of what kinds of dealers require licenses. 

Now you know why you need the license, we will go into how to actually acquire the license. 

Step 1: Figure out what license type you are applying for

The state of Michigan offers 10 different dealer licenses. Each requires an annual fee of $160. In the table below, we give definitions of each dealer license as well as which licenses can be held simultaneously by one business:

Categories of Licenses and Their Definitions

• Class A (New Vehicle Dealer):
  • Buys new vehicles.
  • Sells new vehicles.
  • Operates as per a contract with the manufacturer of the vehicles.
• Class B (Used Vehicle Dealer):
  • Buys used vehicles.
  • Sells used vehicles.
• Class C (Used Vehicle Parts Dealer):
  • Acquires and sells major components of late model vehicles (manufactured within the past 5 years).
  • AND/OR acquires whole vehicles to dismantle, sells parts, and sells remaining parts as scrap.
  • Requires a Salvage Vehicle Agent license.
• Class D (Broker):
  • Brings a vehicle buyer and seller together.
  • Negotiates transaction terms between buyers and sellers.
  • Displays vehicles for sale.
  • OR conducts vehicle auctions.
  • Brokers have no financial interest in the vehicle or its parts.
• Class E (Distressed Vehicle Transporter):
  • Buys, transports, and sells vehicles.
  • Sales are limited to Class C, Class F, or Class R license holders.
• Class F (Vehicle Scrap Metal Processor):
  • Processes vehicles into scrap metal (e.g., shredding, shearing, fragmenting, baling).
  • Excludes vehicle crushing.
• Class G (Vehicle Salvage Pool):
  • Stores damaged vehicles for insurance companies.
  • Displays damaged vehicles for insurance companies.
• Class H (Foreign Salvage Vehicle Dealer):
  • Licensed in another state to:
    • Purchase or sell vehicle parts wholesale.
    • Acquire late model parts for resale.
    • Acquire and dismantle whole vehicles to resell parts.
• Class R (Automotive Recycler):
  • Buys/acquires components of late model vehicles to resell (wholesale or retail).
  • AND/OR acquires whole vehicles to resell parts.
  • Requires a Salvage Vehicle Agent license.
• Class W (Wholesaler):
  • Buys and sells used vehicles exclusively to and from licensed vehicle dealers.
  • Only a Salvage Vehicle Agent can buy salvage or scrap vehicles at an auction.

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Some dealers may want to hold more than one license in order to diversify their business. If that is you, refer to the guide below to see what licenses are compatible with each other.

License Compatibility

• Class A (New Vehicle Dealer):
  • Compatible with Class B, C or R, and E licenses.
• Class B (Used Vehicle Dealer):
  • Compatible with Class A, C or R, and E licenses.
• Class C (Used Vehicle Parts Dealer):
  • Compatible with:
    • Class A, B, and E;
    • Class E and F;
    • Class W.
• Class D (Broker):
  • Compatible with Class G license.
• Class E (Distressed Vehicle Transporter):
  • Compatible with:
    • Class A, B, and/or C;
    • Class C and/or F;
    • Class A, B, and/or R;
    • Class R and/or F.
• Class F (Vehicle Scrap Metal Processor):
  • Compatible with:
    • Class C and/or E;
    • Class E and/or R.
• Class G (Vehicle Salvage Pool):
  • Compatible with Class D license.
• Class H (Foreign Salvage Vehicle Dealer):
  • No compatible licenses (n/a).
• Class R (Automotive Recycler):
  • Compatible with Class C or R licenses.
• Class W (Wholesaler):
  • No compatible licenses.

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The next steps will be required for ALL types of licenses except when specified. 

Step 2: Complete pre-licensing training

Step Only Required By: Class B

Class B license applicants must complete pre-licensing training 90 days before receiving the Class B license. 

The dealer training covers the requirements of the Michigan Vehicle Code, dealer functions, licensing requirements, as well as Secretary of State CARS e-Services. 

You must pre-register for the training by going to this website. This page also provides dates of upcoming pre-licensing training. 

You must have the following information prepared to register:

• Date(s) of the training you will be attending
• Name(s) of all participants attending training
• Dealership name
• Dealership address (if known)
• Contact information (phone number & email address) for each attendee

After you get your class B license, you or your business must designate an individual to attend additional training every 24 months. 

Step 3: Obtain zoning and municipality approval

The third step is to obtain zoning and municipality approval from your local zoning authority. The point of this requirement is to make sure you follow all zoning and municipal regulations of the county you are located in. In order to get your zoning approval, fill out the Michigan Department of State Dealer Zoning form and submit it with your license application. 

Refer to the Michigan Dealer License Application for business location requirements. Requirements for Class A and B dealers are on pages 9 and 10. Requirements for Class W dealers are on page 10. Requirements for the remaining dealer licenses are on pages 10 and 11. 

Step 4: Obtain the Michigan motor vehicle dealer bond 

Step Only Required By: Class A, B, and D

For Class A, B, and D dealers, a motor vehicle dealer bond is required. Applicants must obtain a $25,000 bond. Applicants must fill out the Michigan Department of State Uniform Vehicle Dealer Surety Bond form and submit it along with the license application. 

Michigan requires motor vehicle dealer bonds (or auto dealer bonds) to guarantee that vehicle dealers fulfill their legal obligations to the state as well as professional obligations to their clients. A surety bond is essentially financial protection for those who work with vehicle dealers in Michigan. For example, if a dealer sells a car without a valid title, then the client can make a claim against the dealer’s bond. 

SuretyNow offers a solution for obtaining your Michigan vehicle dealer bond. By filling out our 3 minute form, you will be able to get your bond within an hour.

Step 5: Secure no-fault fleet insurance

Step Only Required By: Class A, B, and W

No-fault fleet insurance is the coverage of multiple vehicles under one insurance policy. Fleet insurance includes two major component of any auto insurance coverage: automobile liability and automobile physical damage. 

Classes A and B dealers must acquire no-fault fleet insurance. Class W dealers must obtain this insurance only if their customer wants the dealer plates along with the vehicles. 

Dealers are required to obtain a minimum of 20/40/10 no-fault fleet insurance. 20/40/10 means the following:

• Coverage up to $40,000 for all persons injured and a limit of $20,000 per each injured individual
• $10,000 coverage for property damage

You can purchase your no-fault fleet insurance from any insurance company, for example NEXT Insurance (no affiliation). With your chosen insurance company, you must come up with a policy that follows the requirements listed above. The company must then provide a Certificate of Insurance which you will submit with your license application. 

To submit your insurance, fill out the ACCORD Certificate of Liability Insurance form. You must check the boxes: “any vehicle” or “all owned vehicles.” If not, your application will not be processed. 

Step 6: Purchase dealer plates 

Step Only Required By: Class A and B

Classes A and B dealers are required to purchase a minimum of two dealer plates. Licensed dealers use dealer plates to operate vehicles that are lawfully operated or owned by the dealer. To purchase dealer plates, fill out the AR-0036 Application for Additional or Replacement Dealer Plates form. 

Step 7: Get workers’ compensation insurance 

Step Only Required By: Class C, R, and H

Classes C and R dealers are required to obtain workers’ compensation insurance for their business’s employees. Class H dealers must have this insurance if their home states requires it. 

You could potentially be excluded from this requirement. Contact Department of Insurance and Financial Services at 517-284-8992 to determine eligibility.

Workers’ compensation insurance provides medical and wage benefits to employees who are injured or become ill at work. To obtain this insurance, you can contact your insurance company or SuretyNow. You will then attach your Certificate of Insurance with your license application. 

Step 8: Register your business

You must also register your business. There are four business types you can choose from: individual owner, partnership, corporation, or limited liability company (LLC).

Motor vehicle dealers are mostly either sole proprietors (individual owners), LLCs, limited partnerships (LPs), or for-profit corporations. Being an individual owner is the easiest for solo dealers, since they require the least amount of work to get started. LLCs/LPs are helpful for established businesses where the owners want the liabilities of the business separate from their own assets. For-profit corporations are helpful for dealers who wish to raise outside capital for their dealership. 

To register as an individual owner or partnership, you need a copy of the Assumed Name Filing from the County Clerk. You can find this on the official county website of the area you will operate in. 

To register as a corporation or limited liability company (LLC), you need a copy of the Article of Incorporation, Articles of Organization, or Certificate of Good Standing from the Michigan Department of Consumer and Industry Services. You can find these forms online on the Michigan Licensing and Regulatory Affairs website.

Step 9: Complete and submit license application

The next step is to complete and submit your application. Below is the information you must provide on your application: 

1. Business name
2. Business location
3. Business telephone & email address
4. Business type
5. License classification
6. Contract or franchise agreement (Class A only)*
7. Business days and hours**
8. Owners, partners, corporate officer, directors
9. Servicing facility requirement (Classes A and B only)
10. Business location description
11. Dealer plates and fleet insurance (Classes A, B, W only)
12. Fees
13. Workers’ compensation insurance (Classes C and R only)
14. Applicant history
15. Signatures and certifications

* Contract requirements (Step 5)

• List the makes of the new vehicles
• Need copy of franchise agreement indicating contract allowing you to act as a factory representative, factor distributor, or distributor representative to sell retail of the vehicle

** Business hour requirements (Step 6)

• Class A and B: minimum of 30 business hours per week
• Class W: minimum of 15 hours per week between 8am and 5pm, Monday through Friday
• Class C, D, E, F, G, and R: minimum of 15 hours per week, at least 5 of the hours between 8am and 5pm, Monday through Friday

The application is on pages 19 to 22 of the Michigan Dealer License Packet. 

To submit your application and all other required documents, visit the official website of the Michigan Department of State and click the link labelled “Dealer Services.” There you will find the option to “Apply for a Dealer License.” Further instructions will be provided once you click on that link.

Step 10: Get and submit fingerprints

All individuals listed in Number 8 of the license application must be fingerprinted.

Fingerprinting should occur after you have submitted your license application. To schedule an appointment to be fingerprinted, visit the IdentoGO Michigan Fingerprinting & Enrolment Services website. 

After being fingerprinted, you must immediately submit your Live Scan Fingerprint form. To get a Live Scan Fingerprint form, contact the Business Licensing Section at 1-888-SOS-MICH (or 1-888-767-6424). The form will be emailed to you. Once that is completed, you will receive a signed receipt from your fingerprinting agency for your use as proof of your fingerprints. 

Step 11: Pass the pre-license business location inspection

The last step is the pre-license inspection of the business location. Your business must meet the requirements set forth in Section 14 of the Michigan Vehicle Code)/mileg.aspx?page=getObject&objectName=mcl-257-14).

How to Renew Your Michigan Motor Vehicle Dealer License

There are two ways to renew your Michigan motor vehicle dealer license:

The first is renewing it online. You can renew your license with your CARS e-Services (Business Services -> Dealer Services) dealer account login as well as a valid credit card or alternative electronic payment. Once you’ve logged in, fill out the dealer license renewal application. The dealer license renewal application is similar to the original license application. 

The second is renewing it by mail. You must submit your dealer license renewal application as well as make a money order or check to the State of Michigan. You can mail your application and payment to the following address:

Michigan Department of State

Business Licensing Section

Lansing, MI 48918