What is the difference between an automobile broker and a dealer?
mccoyblues asked:
Are the licensing requirements different? I want to start buying and selling used cars. Should I get be a broker or a dealer?
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Are the licensing requirements different? I want to start buying and selling used cars. Should I get be a broker or a dealer?
November 23rd, 2009 at 4:04 pm
Broker survives on commission and incentives, a dealer makes money on wholesale profit. The best option for you would be to become an independent dealer, because you will have control over your business and besides, it’s better being a dealer than a broker who is working on targets. Eternity
November 26th, 2009 at 2:55 pm
The difference between being a broker or a dealer is a broker just sells cars for wholesale either at the auctions or from dealer to dealer. With a dealer license you can sale both wholesale and to the public. jlbarber1979
November 27th, 2009 at 1:30 am
I didn’t know there was a difference, but a dealer has to “lease” the cars on his/her lot, then when they are sold, has to pay the company something for the car.
I would guess a broker just buys the cars and sells them……if they don’t sell…..lucky son or daughter, I guess……
I’m not sure, I’m just going with what I know about dealerships, they lease or rent the cars on their lot and have to pay the company back, that much I know for sure. kaliroadrager
November 28th, 2009 at 7:45 am
The value of an auto broker is that (s)he can protect the consumer from the games that are played at car dealerships.
A good auto broker has tremendous buying power, based on volume sales, that an individual consumer simply does not wield when walking into a dealership. Moreover, the consumer deals with salesmen and finance managers, while a good broker will have established relationships with CEOs and other higher-ups at the major automobile conglomerates (e.g., Auto Nation, Penske Auto, etc.). These conglomerates own multitudes of dealerships that sell every make and model vehicle available in the U.S. If a broker sells 100 cars per month, that becomes an important income source to the conglomerate, whereas an individual consumer is merely a speck in the big picture.
An auto broker acts as the consumer’s agent, effectively representing the consumer in the car-buying process. In the best instance, the consumer will not have to set foot into the dealership; rather, the vehicle and prepared paperwork will be delivered to the broker’s office, and the consumer will complete the transaction there. The paperwork is drawn up by the dealer, and the purchase or lease of the vehicle is strictly between the dealership and the consumer. However, after doing the work of locating the vehicle, the broker negotiates - or ideally, dictates - the final price (which should be provided to the consumer in advance, in writing), so there are no surprises in store for the consumer.
License Classifications
The type of dealer license depends on the type of business to be operated. A dealer license may be issued in one or more classifications (classes), depending on the business activity performed.
The law requires different things from different classes of dealers. Sometimes the requirements will not allow one type of dealer to do something another type of dealer would be permitted to do. Because of this, not all license classes are “compatible” with each other. The following descriptions tell you in general what activities each class allows and which classes are compatible.
Class A (New Vehicle Dealer)
This dealer buys and sells new vehicles under a franchise agreement or a contract with a new vehicle manufacturer.
Class A is compatible with B, C or R, and E classes.
Class B (Used Vehicle Dealer)
This dealer buys and sells used vehicles.
Class B is compatible with A, C or R, and E.
Class C (Used Vehicle Parts Dealer) and Class R (Automotive Recycler)
These dealers buy or otherwise acquire late model major component parts for resale, either at wholesale or at retail, and/or acquire vehicles to dismantle for the resale of their parts, selling the remains as scrap. These are the only classes which can legally buy late model distressed vehicles (salvage or scrap vehicles) or late model major component parts from insurance companies, or through auctions, brokers, or salvage pools in Michigan.
Note: A Class C or Class R dealer may only be represented at an auction, broker, or salvage pool by its own Licensed Salvage Vehicle Agent. Contact the Licensing Section to obtain a Salvage Vehicle Agent application.
Class C and Class R are compatible with A, B, and E; or E and F. Class C and Class R are NOT COMPATIBLE with each other or with Class D or Class G.
Class D (Broker)
This dealer “brokers” the sale of vehicles or late model major component (salvageable) parts by arranging (or offering to arrange) for the sale of the vehicles or parts between two parties. A broker may not take ownership of the vehicles or major component parts. Examples of brokers are new car brokers, vehicle sales listing agencies, consignment lots, flea markets, auctions, and salvage pools.
Brokers cannot buy vehicles at auctions.
Class D is compatible only with Class G.
Class E (Distressed Vehicle Transporter)
This dealer may:
buy or acquire ownership of,
transport,and
sell scrapped or junked vehicles only.
Vehicles may be sold at wholesale only to:
Used Vehicle Parts Dealers (Class C); or
Scrap Metal Processors (Class F); or
Automotive Recyclers (Class R).
This dealer may NOT dismantle vehicles or sell parts.
Note: A vehicle “crusher” is one type of distressed vehicle transporter.
Class E is compatible with A, B, and/or C; or C and/or F; or A, B, and/or R; or R and/or F.
Class F (Vehicle Scrap Metal Processor)
This dealer processes vehicles into scrap metal by shearing, fragmenting, baling, shredding, etc. (Crushing vehicles is not considered a scrap metal process since it is not the final step before remelting.)
A scrap metal processor who acquires vehicles only from licensed dealers is not required to be licensed but must keep certain records and make them available for inspection.
Class F is compatible with C and/or E; or E and/or R.
Class G (Vehicle Salvage Pool)
This dealer engages in the business of storing and displaying damaged or distressed vehicles for insurance companies.
Class G is compatible only with Class D.
Class W (Wholesaler)
A licensed wholesaler dealer engages in the business of buying and selling used vehicles from and to licensed vehicle dealers. Wholesalers may not buy, sell or otherwise deal in vehicles to a person other than a licensed vehicle dealer.
Class W is compatible with Class C and Class R.
This is a brief introduction, and is not exhaustive. techno_trance22
November 30th, 2009 at 4:27 am
Here are some reasons why an
Auto Broker may be a better choice than going to a regular auto dealer.
• We will save you money!
• We will search for the vehicle you are looking for
• We will not try to talk you into anything else
• We will advise you on every car we find that matches what you want me_hn_me_ph
December 2nd, 2009 at 7:21 am
A dealer buys cars from manufacturers or private parties (used cars) and sells them to customers.
A broker finds the car his customers wants for them, typcially for a fee, but doesn’t keep an inventory of cars and doesn’t actually own any cars. Say you want a specific car with specific options - a car broker will go find it for you and then charge a fee or a % of the purchase price.
If you want to buy and sell used cars you should be a dealer. J P