Wholesale Dealer License Abuse

My independent auto dealer colleagues have alerted me to a major problem within many states: rampant wholesale-only dealer license abuse.   For those states that have a wholesale-only license, it provides the dealer with access to a dealers-only motor vehicle auction but under the restriction that the dealer could only sell to other dealers.   When you search the list of phone numbers associated with wholesale-only motor vehicle dealers into Harmari Search for Craigslist under “cars + trucks – for sale by owner”, you will find a percentage of them advertising there.  There they are: dealers openly selling retail to the public online, clearly a violation of their license.

How prevalent is this trend nationally?  Recently, Indiana General Assembly has passed new laws to eliminate their state’s Wholesale-only dealer license as of June 30, 2015. After studying each state’s dealer licensing policy, LTAS obtained listings of wholesale-only dealer licenses for each state.  LTAS cross-referenced each of those dealer’s phone numbers against its Harmari Search for Craigslist database and found the following results:

State Wholesalers Studied Wholesalers Retailing on Craigslist Percentage Notes
Arizona 854 482 56% full list
Minnesota 33 15 45% sample
Michigan 127 48 38% sample
California 100 30 30% sample
Colorado 52 15 29% full list
Florida 66 16 24% full list
South Carolina 259 61 24% sample
Wisconsin 127 28 22% full list
North Carolina 33 6 18% full list
Kansas 11 2 18% full list
New York 311 47 15% sample
Oklahoma 96 14 15% full list
Idaho 45 6 13% sample
Washington 119 15 13% full list
Texas 405 49 12% sample
Alabama 797 31 4% full list

Note that due to the limitations of the data format provided for free on the state regulator’s website, LTAS could only obtain samples of wholesale-only licensees rather than the full list. For example, LTAS obtained the list of wholesale-only dealers within the 5 largest counties within Michigan for this study.

If you are a regulator within any of these states, LTAS can provide you with the list of wholesale only licensees upon request.

The following states do have a wholesale-only dealer license, but LTAS was unable to successfully obtain the phone numbers of the licensees at the time of publishing:  Delaware, Indiana, Kentucky, Maryland, Missouri, Montana, New Hampshire, New Mexico.

The following states do not have a wholesale-only dealer license: Arkansas, Alaska, Connecticut, DC, Georgia, Hawaii, Iowa, Illinois, Louisiana, Massachusetts, Maine, Mississippi, North Dakota, Nebraska, New Jersey, Nevada, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Virginia, Vermont, West Virginia, Wyoming.