Information valid for the state of California. Other states will vary as every DMV has their own policies and procedures.
Did you ever dream of running your own used car dealership? A wholesale-only dealer license may be a great choice for you-and you don’t need a traditional dealer lot! ***Information is valid for the state of California***
Starting a wholesale auto dealership is easier than you might think. In this article, we will walk you through the basics of how to get a car dealer license without a lot, so you can sell cars even from home without the expensive overhead. Ready? Let’s get started!
What is a Wholesale-Only Dealer?
As its name implies, a ‘wholesale-only ’ is a type of dealer that buys cars and sells them to other dealers, wholesale auction businesses, or licensed personnel such as dismantlers. Since auto wholesale dealers are not allowed to directly sell cars to the public and are also not allowed to advertise vehicles for sale.
Running Your Very Own Dealership
The license limitations discussed previously does not prevent you from running a successful business. You can opt to sell your inventory in either car auctions or by consigning vehicles to another dealer for resale. Below is a brief outline of the typical process you should follow to run your own dealership.
Building Up Your Inventory
For any auto dealer having an awesome inventory is crucial. That is why you should ensure building up a good inventory containing easy to sell vehicles that do not cause you any trouble down the road. Auto wholesale dealers are allowed to source vehicles from
- Dealer only auctions
- Public auctions
- Other public platforms such as Craigslist, OfferUp, Let Go, Facebook Marketplace
It is recommended that each vehicle passes through a ‘reconditioning’ process consisting of:
- A thorough mechanical inspection
- Car detailing and embellishment
- Ensuring the vehicle comply with emission regulations
- Getting the vehicle’s history report
Used Car Auctions
This is a great option to make a profit from your inventory. By participating in car auctions you are taking advantage of the advertisement and heavy foot traffic at the same time. The key to getting the most from car auctions will rely on your ability to wisely choose the best-selling models at bargain prices, and then resell back to the same auction or another auction for a quick profit.
Consigning Vehicles to Retail Dealers
While it is true that you cannot sell cars directly to the public, nothing prevents you from partnering with one or more used car retail dealers to sell your inventory. Used car retail dealers have both the privilege of buying and selling to anyone, including the public. The process to sell vehicles this way is summarized below.
- Find one (or more) trustworthy retail dealerships to partner with. Ideally, those dealers should be as near as possible to your location.
- Negotiate a commission for the vehicle. Usually, it will vary depending on the vehicle and its condition.
- Once you reach an agreement, the retail dealer will enter your vehicle into its inventory and advertise it for sale.
- The retail dealer will take care of the entire selling process, including all necessary forms to complete the deal with the buyer.
- Once the vehicle is sold, the retail dealer pays you (within 20 days of the sale) according to what was negotiated.
Application Process For A Wholesale-Only Dealer License
Assuming that you already have a business license and dealer location, getting your wholesale-only dealer license is not hard, all you need is time and patience. We compiled a summary of the steps you may expect during the process:
- Complete the Dealer Education Program and pass the used dealer test
- Visit dmv.ca.gov and download the application checklist
- Complete all the required forms and applications and attach the necessary documentation
- Pay the corresponding fees and submit your application
- Enjoy your very own auto wholesale dealership!