How To Start an Auto Dealership in NYC?

To sell vehicles retail or wholesale in New York, you must be registered as a dealership with the Division of Vehicle Safety Services at the New York Department of Motor Vehicles. The process of becoming an auto dealership is fairly involved, as the industry is highly regulated, but if you take it step by step you'll find it more manageable. Here's what you need to know to get started.

First off, do you even need to register as a dealer? Obviously, you are permitted to sell a vehicle in the newspaper as a private-party transaction without a dealer license. However, you must register as a dealer if the following applies to you:

·         {C}You bought the vehicles in order to resell them AND one of the following:

§  {C}You display three or more vehicles for sale at one time on premises that you own or control

§  {C}You display three or more vehicles for sale within one month at such a location

§  {C}You sell six or more vehicles in a calendar year

Note that the above applies to dealers of motor vehicles, motorcycles, and trailers, not mobile home trailers.Requirements

If you've established that you're required to register as a dealer, the first thing to do is read the Motor Vehicle Dealers and Transporters Regulations publication from the DMV. Forty-five pages of requirements, regulations, and responsibilities might turn you off to the whole idea (not to mention another 45 pages of sample dealer forms)―but again, it's all doable if you're committed to it, so soldier on.

You'll need to lay the groundwork for registering as a dealer by obtaining the following:

§  {C}A business certificate from your county clerk

§  {C}If you'll have employees, a federal employee ID number and proof of worker's compensation and disability insurance coverage

§  {C}A sales tax number and a copy of the Certificate of Authority issued by the New York State Department of Taxation and Finance (assuming you will collect sales tax)

§  {C}Proof of insurance that will cover vehicles owned or operated by the dealer and sporting dealer plates

§  {C}A surety bond in an amount ranging from $20,000 to $50,000, depending on the type of dealership

§  {C}Franchise agreements with manufacturers of new vehicles you intend to sell (not required for selling used vehicles)

§  {C}A statement of ownership or permission to use the place of business

§  {C}A photocopy of the driver license or non-driver photo ID from the company's owner, president, or partner

You'll need to include all items in the above list when you send in your application, along with the appropriate application and business fees. You'll also need to have the following, which will be inspected as part of the review process for your application (these are explained further in the regulations: 

§  {C}Satisfactory premises in the state of New York with proper security for business records and display space for vehicles

§  {C}A permanent sign

§  {C}Bills of sale and other forms dealers use, and a book of registry for record keeping.

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There are few businesses that are as unique as automotive dealerships in this country, and for some people, the challenge of being at the helm of one—or at the top of a region chain, with many stores under the umbrella—seems like an irresistible challenge. If you’re one of those people, and you’re wondering what to do to get started, well, look no further.

Getting Started

Because the vast majority of dealerships are independently owned, the path to ownership is a bit unusual. But just like any industry, there are certain steps that need to be taken in order to get started.

The first thing to do is to get certified. Each state offers a certification class, which you will need to take before taking the certification exam (there is usually a fee for taking the exam). Once you’ve passed the exam, it’s time to move on to the next step.

Location, Location, Location

Cars and trucks are a physical product, and you will need an office, showroom, and lot. So the first task will be to find a suitable location. You’ll also need to decide on a name for the store. After that is done, you will need to decide if you are going to sell used or new cars. Should you choose to sell new cars, you’ll need to enter into a franchise agreement with a manufacturer—this usually has to be bought. Automakers will likely have their own requirements that they expect their dealers to meet, such as having a certain exterior design.

Fill Out The Required Paperwork

Once you’ve chosen a location, secured a franchise agreement if necessary, and decided what type of cars to sell, you’ll need to work with your local government to get the usual building permits and zoning approval. You’ll also need a Web site to help attract business.

After receiving approval from your local government, you’ll need a surety bond, which you can secure based on your credit history (you may need additional collateral if your history is shaky). A surety bond is an agreement that says that you, the dealer, will honor all the fees that are associated with the store, and the amount will be no less than $10,000. You will also need a business license.

Obtaining Capital

If you aren’t moving into an existing structure, then you’ll obviously need to obtain capital and build a facility. Capital can be obtained through a bank loan. Once the building is finished, you’ll need to stock it with the usual items: Furniture, computers, telephone lines, fax machines, printers, filing cabinets, cubicles, plants, signage, decorations, and most importantly, cars and trucks.

Final Steps

The final step is to pass a Department of Motor Vehicles inspection, once that’s done, you’ll be granted dealer license plates and other state-issued forms.

Of course, those are just the basic bureaucratic hoops. But there’s more to it than that. You’ll need to learn the business first, perhaps by selling cars, managing a dealership, or working for an auto manufacturer. There are even colleges that have curriculums that teach students how to own and manage a dealership.

You’ll also need to obtain the capital to start, which can be difficult if you cannot get approval for a bank loan. And you’ll need to choose locations carefully should you choose to become a franchisee for an original equipment manufacturer (OEM)—automakers don’t like it when their dealerships are too close together.

Other Considerations

Another aspect that must be considered is the service aspect—most dealerships also offer car repairs along with auto parts sales, and franchise stores that perform repairs will need to honor manufacturer’s warranties. The parts and service side of the business—referred to as “fixed operations”—can be very profitable if managed correctly, so it’s wise not to overlook this part of the business.

Most importantly, you’ll need to ability to work hard. Running a business is a labor of love, and since customer service and retail sales are the lifeblood of car dealerships, that means that maintaining a good reputation with the public is a must. The best way to keep customers coming in the door—thus maximizing profits—is to work hard. Otherwise, all the above steps will go for naught.

If you follow the appropriate procedures, make good business decisions, and work hard, you too can become an auto dealer.

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Here at advantage we can help you step by step to start your great auto dealership business venture. Simply give us a call at: (929) 290-8609 or Come by our office located at: 88-45 164th Street, Jamaica, NY 11432