Let’s discuss who needs a dealer license.
A person is required to hold a license if they are regularly and actively engaged in the business of buying, selling or exchanging vehicles directly or indirectly, including by consignment. TxDMV issues and oversees lots of different types of licenses.
But, within the independent license category of GDN, or General Distinguishing number, there are several different classifications. Namely: independent motor vehicle – which is the main license type that a used car dealer needs to obtain; independent motorcycle, travel trailer, utility trailer, wholesale and independent mobility.
May buy, sell, or exchange any type of used cars, trucks, motor homes, and neighborhood vehicles. May buy, sell, repair, or rebuild salvage motor vehicles and nonrepairable motor vehicles. May use dealer’s temporary tags, buyer’s temporary tags, and metal dealer license plates on motor vehicles only. Must provide a bond.
May buy, sell, or exchange any type of used motorcycles, motor scooters or ATVs. May buy, sell, repair, or rebuild salvage motor vehicles and nonrepairable motor vehicles. May use dealer’s temporary tags, buyer’s temporary tags, and metal dealer license plates on motorcycles, motor scooters or ATVs only. Must provide a bond.
May buy, sell, or exchange used travel trailers. May buy, sell, repair, or rebuild salvage motor vehicles and nonrepairable motor vehicles. May use dealer’s temporary tags, buyer’s temporary tags, and metal dealer license plates on travel trailers only. Exempt from the security requirement.
May buy, sell, or exchange new or used utility trailers and/or semitrailers. May buy, sell, repair, or rebuild salvage motor vehicles and nonrepairable motor vehicles. May use dealer’s temporary tags, buyer’s temporary tags, and metal dealer license plates on trailers/semitrailers only. Exempt from the security requirement.
May sell or exchange vehicles only with other licensed dealers. Are NOT required to have a five-vehicle display area. May NOT sell vehicles to retail purchasers. Wholesale vehicle dealers may buy, sell, or exchange used vehicles, including motor vehicles, motorcycles, and travel trailers. May buy, sell, or exchange new or used trailers and/or semitrailers. May use temporary tags and metal dealer license plates. Must provide a bond.
Allows a dealer to offer to sell new mobility motor vehicles. A “mobility motor vehicle” is a motor vehicle designed and equipped to transport a person with a disability. May use dealer’s temporary tags, buyer’s temporary tags, and metal dealer license plates. An independent mobility dealer is also required to hold a Converter license. Must provide a bond.
A dealer’s license is technically referred to as a General Distinguishing Number, or GDN. It is also known as a “P number,” because the GDN starts with the letter “P.” Licenses are issued for two-year periods, and currently cost around $700 plus dealer plates, which are currently $90 each. A new licensee is typically limited to two dealer plates.
License renewals are also for two-year periods and are currently $400 plus dealer plates.
Keep in mind that you may only sell the types of vehicles for which you hold licenses.
A dealer is welcome to hold more than one type of license. However, a separate application has to be completed for each of those license types, and if a bond is required for that license type, a separate bond is also required.
An additional license is required to sell new vehicles, a franchise license. The Definition of a NEW motor vehicle is one that has not been subject to a prior retail sale.
Now, if you hold an independent dealer license you do NOT need a separate salvage dealer license to act as a salvage dealer, as long as this is done at the same physical location as your GDN. If you have a salvage operation at a separate location, then you DO need a salvage license for that location. However, there are additional rules and forms required to sell salvage and salvage rebuilt vehicles in Texas. We will only briefly touch on these rules in the pre-licensing course. More information can be found on the TxDMV and the Texas Comptroller websites.