If you’re planning to open a vehicle dealership in South Dakota, you will first need to apply for a dealer license. This process has many detailed steps, so we have compiled a list to help you complete your application accurately and efficiently. This guidance will make it easier to launch your business as soon as possible. 

5 Steps to Earning Your South Dakota Dealer License

1. Choose Your Dealer License Type 

In South Dakota, the Motor Vehicles Division manages the dealer licenses, and the first step is to select the one that fits your business. They break them down by category: 

• Vehicle dealer
• Used vehicle dealer only 
• Mobile home dealer
• Motorcycle dealer
• Snowmobile and boat dealer 
• Trailer dealer 
• Emergency vehicle dealer 

Keep in mind that the application is similar for all types.¹ 

2. Register Your Business 

In order to operate your dealership, you will need to get a business permit. This means getting an Employer Identification Number (EIN) from the IRS, then registering with the SD Division of Business Services, and finally getting a local license. 

3. Establish a Business Location 

Before submitting your application for a dealer license, you need to secure a location. In order to be granted a license, this location will have to meet a list of criteria. Ensure that your place of business has the following qualities:

• An enclosed structure easily accessible to the public 
• Listed business hours 
• A display lot big enough to show five vehicles 
• An office to contain all records and books for the business 
• A listed telephone number. 

Any new dealer must have a repair area, and all dealers must comply with local zoning and building codes and include a letter of zoning approval from the town.² 

4. Get Liability Insurance and an Auto Dealer Bond

Anyone applying to be a vehicle dealer, a used vehicle dealer, or a motorcycle dealer must get liability coverage of at least $300,000. All other license types do not need it. 

Furthermore, you will need to obtain a surety bond worth $25,000 for new and used dealers or $5,000 for motorcycles and snowmobiles. The amount you pay will be a fraction of the total value, depending on your personal financial standing. 

5. Submit your Payment and Dealer License Application 

In addition to everything detailed above, you will need to submit some additional documents, including a copy of your business location’s lease agreement and a franchise agreement if you are selling new vehicles. 

Now, it’s time to get your payment ready and submit your application. The fees depend on the license type and are the following: 

• Vehicle, used vehicle, emergency vehicle, and mobile home dealers: $300
• Motorcycle and boat dealers: $250 
• Snowmobile dealers: $150 
• Trailer dealers: $125

You will need to fill out a separate application for this and submit a payment of $84 per plate.

Keep in mind, in South Dakota you must apply to renew your license every year, even though the licenses are issued for five years. 

This is not intended as legal advice. If you have questions about dealer licensing requirements, please seek the assistance of legal counsel.

Secure the Best Used Car Inventory in South Dakota Using ACV Auctions

Once you are licensed to sell vehicles in South Dakota, partner with ACV Auctions. We can provide you with the best used car inventory from South Dakota and other states through our state-of-the-art online auctioning platform. Every vehicle we list gets individually inspected by a member of our team, and you can access their report to ensure you feel confident about every bid you place. Register with us today to learn more. 

‍

Sources

1. Bryant Surety Bonds. (2020). “How to get a South Dakota Dealer License” Bryant Surety Bonds. Retrieved December 7, 2023. https://www.bryantsuretybonds.com/blog/south-dakota-dealer-license 
2. JW Surety Bonds. “South Dakota Auto Dealer License Guide.” Risk Strategies: JW Surety Bonds. Retrieved December 7, 2023. https://www.jwsuretybonds.com/states/south-dakota/auto-dealer-license