How to Get a Dealer License in Michigan (11 Steps)

In Michigan, any individual or business that buys or sells five or more motor vehicles per year must hold a valid vehicle dealer license issued by the Michigan Department of State. The state issues 10 different dealer license classes, each covering a specific type of business activity, and licenses expire annually on December 31.

This guide covers every step of the application process — from choosing the right license class and securing a compliant business location to submitting your application and renewing each year.

Michigan Auto Dealer License Classes

• Class A – New Vehicle Dealer: Buy and sell new vehicles under a franchise agreement. Compatible with B, C, R, and E.
• Class B – Used Vehicle Dealer: Buy and sell used vehicles to the general public and other licensed dealers. Compatible with A, C, R, and E.
• Class C – Used Vehicle Parts Dealer: Buy and sell late-model major parts for resale; acquire vehicles to dismantle. Not compatible with Class R or Class D.
• Class D – Broker: Arrange sales of vehicles or parts between two parties without taking ownership. Compatible with Class G only.
• Class E – Distressed Vehicle Transporter: Buy, transport, and sell scrapped or junked vehicles at wholesale only to Class C, F, or R dealers.
• Class F – Scrap Metal Processor: Process vehicles into scrap metal. Compatible with C and/or E, or E and/or R.
• Class G – Vehicle Salvage Pool: Store and display damaged vehicles for insurance companies. Compatible with Class D only.
• Class H – Foreign Salvage Motor Vehicle Dealer: Licensed outside Michigan, selling vehicle parts wholesale to Michigan dealers. Requires a $25,000 bond.
• Class R – Automotive Recycler: Acquire vehicles to dismantle and resell parts. Not compatible with Class C or Class D.
• Class W – Wholesale Dealer: Buy and sell used vehicles exclusively between licensed dealers — no sales to the general public. Must transact at least 24 vehicles per year to retain this license.

1. Secure a Permanent Business Location

All Michigan dealers must operate from an established place of business before a license can be issued. A pre-license inspection of the business location is conducted by the Department of State before issuing the license. Requirements differ by class.

Class A and Class B (New and Used Vehicle Dealers)

The location must include all of the following:

• A permanently enclosed building or structure that is not a residence, tent, or temporary structure, used exclusively for commercial purposes
• All business books, records, and files are maintained on-site
• An office of at least 150 square feet with standard office furniture, working utilities, a working restroom, and a telephone listed in the business name (a cellular phone is acceptable)
• A display area of at least 1,300 square feet that can accommodate a minimum of 10 vehicles, plus a separate customer parking area of at least 650 square feet — both must be adequately surfaced and well-lit
• A permanently affixed exterior sign displaying the dealership name, with letters clearly visible from the nearest highway
• Business hours are posted conspicuously, with a minimum of 30 hours per week
• A registered repair facility on-site, or a written servicing agreement with a registered facility within 10 miles of the dealership (the agreement must be conspicuously posted in the office)

Class W (Wholesale Dealers)

The location must include a permanently enclosed building or structure that contains an office at least 8 × 8 feet with a door, four rigid walls, working utilities and telephone in the business name, a working restroom, a desk, and a locking filing cabinet. The premises must not be a commercial mailbox and must not be within 200 feet of another licensed wholesaler. Minimum 15 posted business hours per week (8 a.m.–5 p.m., Monday–Friday). No vehicle display area is required.

Classes C, D, E, F, and R

These classes require a permanently enclosed building with an office at least 8 × 8 feet, four rigid walls, working utilities, and a telephone in the business name, a restroom, a desk, and a locking filing cabinet. A permanently affixed exterior sign with the business name visible from the roadway is required. Minimum 15 posted business hours per week, with at least 5 of those between 8 a.m. and 5 p.m., Monday–Friday.

2. Post a Permanent Sign

All dealers must display a permanently affixed exterior sign showing the business name, with letters clearly visible from the nearest street or highway. For Class A and Class B dealers, this sign must identify the established place of business.

3. Secure Zoning and Municipal Approval

Before submitting your dealer application, you must obtain zoning approval from the local zoning authority and municipal approval from the local municipal authority. Both forms must be signed within 90 days of the Department of State receiving your application. The enclosed forms in the application packet must be completed by the local authority. In Detroit, only forms with the city seal are accepted from the Department of Buildings and Safety Engineering.

Class H (foreign salvage) dealers are the only class exempt from this requirement.

4. Complete the Required Dealer Training (Class B Only)

Class A applicants are encouraged to complete the training, but only Class B applicants are legally required to do so before applying. All licensed Class B dealers must also complete continuous education dealer training within 90 days of receiving their license, and then once every 24 months thereafter.

5. Obtain a $25,000 Michigan Auto Dealer Surety Bond

Class A, Class B, Class D, and Class H dealers are all required to file a $25,000 Uniform Vehicle Dealer Surety Bond with the Michigan Department of State before a license can be issued. Classes C, E, F, G, R, and W are exempt from the bond requirement.

Important: The bond amount was increased from $10,000 to $25,000 effective January 23, 2023. All active dealers were required to file rider amendments to reflect the increase by December 31, 2023. New applicants must file a $25,000 bond from the outset.

The bond must be filed on the Michigan Uniform Vehicle Dealer Surety Bond form. The exact business name and address on the bond must match the dealer license application exactly. Individual owners and partners must be listed by name in addition to the business name. The bond is continuous, but must remain active — if it is cancelled, a new bond is required.

The premium you pay to the surety depends on your credit profile. Applicants with strong credit typically pay between 1% and 3% of the bond amount per year.

6. Obtain No-Fault Fleet Insurance

Class A, Class B, and Class W dealers are required to carry Michigan no-fault fleet insurance before a license is issued. The insurance must cover “ANY VEHICLE” or “ALL OWNED VEHICLES” and must be evidenced by a completed ACORD 25 form with the exact business name as it appears on the dealer license application.

Minimum liability coverage required:

• $20,000 per injured person
• $40,000 per accident
• $10,000 for property damage

If the ACORD 25 form does not list “ANY VEHICLE” or “ALL OWNED VEHICLES,” the application cannot be processed.

7. Obtain Workers’ Compensation Insurance (Classes C and R Only)

Class C (Used Vehicle Parts Dealer) and Class R (Automotive Recycler) dealers are required to provide proof of workers’ compensation insurance for employees classified as automobile dismantlers, or to submit the notice of exclusion if no such employees are engaged. To determine eligibility for a Form WC-337, contact the Department of Insurance and Financial Services at (517) 284-8922.

8. Register Your Business and Obtain a Sales Tax Number

Most dealers are also required to obtain a sales tax number from the Michigan Department of Treasury. Contact the Registration Division at (517) 636-6925 to confirm whether your license classification requires a sales tax license.

9. Submit Your Dealer License Application

Vehicle Dealer License Application online or by mail. Applications can take up to 30 days to process. Incomplete applications will delay processing. After your application is received, the Department will send you the appropriate instructions to complete the background check process, which includes fingerprinting. Do not get fingerprinted until you receive these instructions.

Your application packet must include all applicable items for your license class. The full requirements chart is included in the application packet. At a minimum, for Class A and Class B licenses, include:

• Completed Vehicle Dealer License Application
• Zoning approval form (signed by zoning authority within 90 days of application receipt)
• Municipality approval form (signed by municipal authority within 90 days of application receipt)
• Copy of articles of incorporation, articles of organization, or assumed name filing
• Dealer Selection for Designated Branch Offices form
• $25,000 Uniform Vehicle Dealer Surety Bond (Classes A, B, D, H)
• Certificate of fleet insurance (ACORD 25, Classes A, B, W)
• Franchise agreement from the manufacturer (Class A only)
• Servicing repair facility agreement if no on-site repair facility (Class A and B)
• Workers’ compensation insurance or notice of exclusion (Classes C and R)
• Sales tax number from the Michigan Department of Treasury
• License fee and dealer plate fees (see fee table below)

Mail completed applications to:

Michigan Department of State

Business Licensing Section

Lansing, MI 48918

10. Pay the Required Fees

Application fees are non-refundable. Checks or money orders should be made payable to the State of Michigan. Only Class A and Class B dealers qualify for dealer plates; both must purchase a minimum of two plates.

11. Pass the Business Location Inspection

Before your dealer license is issued, a representative from the Michigan Department of State will conduct a pre-license inspection of your business location to verify it meets all established place of business requirements for your license class. Once the location passes inspection, the Department will issue your license.

Background Check

After your application is received, the Department of State will send you the appropriate form and instructions to complete the background check, which includes fingerprinting through Livescan. The Department is authorized to receive and review criminal history from the Michigan State Police and the FBI. Do not get fingerprinted until you receive these instructions from the Department.

Michigan Auto Dealer License Renewal

Michigan dealer licenses expire annually on December 31, regardless of when the license was issued. You must renew before the expiration date to continue operating. Dealers who allow their license to lapse for more than 30 days must apply for a brand new license rather than renewing.

Renew online through the Michigan Secretary of State e-Services portal, or by mail to the Business Licensing Section at Lansing, MI 48918. Supplemental locations are automatically renewed with the primary dealer renewal.

Key renewal requirements:

• Your license must be renewed before December 31 each year
• Class B dealers must certify that the designated individual has completed continuous education training within 90 days of the license issue date and once every 24 months thereafter
• The Department will not renew licenses for dealers who have not bought or sold at least 5 vehicles in the preceding 12 months
• Class W dealers must have transacted at least 24 vehicles in the preceding year to retain the wholesale license
• Your $25,000 surety bond must remain active — it is continuous, but must be renewed annually with your bond provider to avoid cancellation
• Fleet insurance (ACORD 25) must remain current for Class A, B, and W dealers
• If renewing by mail and the deadline has passed by more than 30 days, renewal by mail is required (online renewal is not available)

FAQs

How many vehicles can you sell in Michigan without a dealer license?

You may sell up to four motor vehicles per year in Michigan without a dealer license. Selling five or more vehicles in a calendar year triggers the licensing requirement under the Michigan Vehicle Code.

What is the bond amount for a Michigan auto dealer license?

Class A, Class B, Class D, and Class H dealers must maintain a $25,000 Uniform Vehicle Dealer Surety Bond. This requirement was updated effective January 23, 2023, when the amount was increased from $10,000. Classes C, E, F, G, R, and W are exempt from the bond requirement.

Is dealer training required in Michigan?

Pre-licensing dealer training is required only for Class B (Used Vehicle Dealer) applicants and must be completed within 6 months before the application date. Class A applicants are not required to complete pre-licensing training, though it is available. Class B dealers must also complete continuous education training within 90 days of receiving their license and once every 24 months thereafter.

How long does it take to get a Michigan dealer license?

Applications can take up to 30 days to process. Incomplete applications will delay processing. The timeline also includes the pre-license inspection of your business location, which is scheduled after the application is reviewed.

Can I apply for multiple license classes at once?

Yes. Michigan allows a dealer license to be issued in one or more compatible classes. Not all classes are compatible with each other. Review the compatibility chart in the application packet or the Dealer Manual before selecting your classes. Incompatible class combinations will not be approved.

When do Michigan dealer plates expire?

Dealer plates expire annually on March 31 and can be renewed at a Secretary of State office for $5 per plate. Only Class A and Class B dealers qualify for dealer plates, with a minimum of two required. Class W dealers may apply for plates, but there is no minimum, and only one plate is initially issued.

Where do I mail the Michigan dealer license application?

Mail your completed application, fees, and supporting documents to: Michigan Department of State, Business Licensing Section, Lansing, MI 48918. For questions, contact the Business Licensing Section at (888) 767-6424 or [email protected].