Do you want to open a dealership in Michigan? Whether this is your first dealership ever or just your first dealership in the state, you’ll need to be aware of the specific procedures required by the State of Michigan to ensure the process goes smoothly. We’ve put together this step-by-step guide to help you ensure accuracy and efficiency in your process. As always, check with the Secretary of the State in case of any changes or updates. Let’s dive right in. 

Getting Your Michigan Dealer License 

1. Identify which type of license you need

In order to legally operate a dealership in Michigan, you must obtain the correct license. The state has many variations, so identify which one(s) you’ll need. In this article, we will be focusing on dealers looking to sell new or used vehicles, but we are including a list of the other options for your reference¹: 

• New vehicles
• Used vehicles
• Used vehicle parts
• Motor vehicle brokers
• Distressed vehicle transporters
• Motor vehicle scrap metal processors
• Motor vehicle salvage pool dealers
• Foreign salvage motor vehicle dealers
• Automotive recyclers
• Wholesaler dealer 

Regardless of the license type you need, you’ll need to fill out an application and submit it to the Secretary of State. 

2. Register your business

This step is a requirement for every car dealership in Michigan, and you can complete it through the Michigan Department of Licensing and Regulatory Affairs. In addition to registering with the state, you’ll need to get a sales tax number, and then an Employer Identification Number (EIN) with the IRS.

3. Establish a location for the business

Your dealership is required to have a physical location in Michigan, and that location needs to meet a handful of criteria to pass regulations and inspections. Here is a checklist as you look for a property to lease or buy: 

• The site must be for commercial use only.
• All local zoning requirements must be met.
• There must be 650 sq. ft. for customer parking at minimum.
• It must have a repairs facility, or you must have a contract with an existing repairs facility that is within 10 miles.
• You must have signs that clearly indicate business hours.
• Register a publicly listed phone number. 
• The space must be 1,300 sq. ft. at the minimum and be able to display 10 or more vehicles.
• The office area must be at least 15 sq. ft. and store all important business documents.

4. Complete a training program to sell used or new vehicles

This rule doesn’t apply to other dealer licenses, but if you sell new or used vehicles, you must complete the pre-license dealer program. It’s an online course with a selection of pre-scheduled times to choose from, and you can register within your Secretary of State account². 

5. Obtain a surety bond and insurance

For either new or used vehicle dealerships, you must get a Michigan surety bond before submitting your application for the license. A surety bond protects the public and the state from any wrongdoing by the dealership. In Michigan, the required amount is $10,000, but you won’t have to pay that full amount as the premium. Personal factors,  including your credit score, will determine the interest rate you get for the bond.

You will also need 20/40/19 fleet no-fault insurance that covers either any vehicle or all vehicles owned.³

6. Gather your documents and submit the application

Once you have the above steps in place, you can submit your application online and submit the following forms and documents as proof: 

• Copy of the franchise agreement. 
• Copies of owner fingerprints (submitted through Identix).
• Fill out the Designated Branch Office form and the Municipality Approval form.

7. It’s time to submit the application and pay your fees

In Michigan, the application fee is $75, and each dealer plate is $10 (you must purchase at least two).

You can send your application to: 

Michigan Department of State 
Business Licensing Section 
Lansing, MI 48918

After you’ve submitted… 

8. Schedule and pass your inspection 

After submitting your application, the Department of State will reach out to you to schedule a date and time to come and inspect your property. If the inspection is successful, you will be issued a license. 

This is not intended as legal advice. If you have questions about dealer licensing requirements, please seek the assistance of legal counsel.

Partner with ACV Auctions 

Once you get your Michigan dealer license, work with us at ACV Auctions. As an online auction, we offer dealers a choice of inventory from across the US, helping you to build your stock and boost your business along the way. Reach out to us to learn more. 

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Sources

1. Risk Strategies Bryant Surety Bonds. “Michigan Auto Dealers License Guide” Retrieved September 12, 2023. https://www.bryantsuretybonds.com/blog/get-michigan-dealer-license 
2. EZ Surety Bonds. “How to Get a Michigan Dealers License.” Retrieved September 12, 2023. https://www.ezsuretybonds.com/blog/how-to-get-a-michigan-dealers-license 
3. JW Surety Bonds. “Michigan Auto Dealer License Guide.” Retrieved September 12, 2023. https://www.jwsuretybonds.com/states/michigan/auto-dealer-license