Step-by-Step Guide: How to Become a Car Dealer in California

Discover the essential steps to becoming a licensed car dealer in California. Follow our detailed guide to navigate the licensing process, meet state requirements, and kickstart your automotive dealership business.

Steps to Become a Car Dealer in California

1. Determine the Type of Dealership
   • Decide whether you want to sell new or used vehicles, as the requirements differ.
   • Choose between a retail or wholesale dealership based on your business model.
2. Complete the Required Training
   • Enroll in a pre-licensing dealer education program. For used car dealers, a six-hour training course is mandatory.
   • Obtain a certificate of completion to show you have learned the essentials of dealership operations and laws.
3. Prepare a Business Plan
   • Develop a comprehensive business plan outlining your dealership’s structure, market analysis, financial projections, and sales strategy.
4. Secure a Business Location
   • Find a commercial location compliant with local zoning laws for vehicle sales.
   • Ensure the facility meets the California Department of Motor Vehicles (DMV) requirements, including an office, display area, and signage.
5. Obtain a Business License
   • Apply for a business license with the local city or county where your dealership will operate.
6. Register with the DMV
   • Complete the DMV’s Application for Original Occupational License (Form OL 12).
   • Provide proof of your pre-licensing education completion, business location, and business license.
7. Secure a Surety Bond
   • Obtain a surety bond, which protects customers against fraudulent or unethical actions by the dealer. The required bond amount varies based on the type of dealership.
8. Obtain Liability Insurance
   • Acquire garage liability insurance to cover potential accidents or damages involving the vehicles at your dealership.
9. Submit Fingerprints and Undergo Background Check
   • All dealership owners and certain employees must submit fingerprints and undergo a background check as part of the licensing process.
10. Pay the Licensing Fees
    • Submit the necessary fees for your dealer license application, which include licensing, application, and fingerprint processing fees.
11. Pass the DMV Inspection
    • Schedule an inspection with the California DMV to ensure your dealership meets all the physical and operational requirements.

Final Thoughts

Becoming a car dealer in California involves a detailed process of education, preparation, and compliance with legal and regulatory requirements. By methodically following these steps and maintaining a strong focus on ethical business practices, you can successfully establish and operate a car dealership in the state.