Every automotive dealership in Iowa is required to be licensed by the Iowa Department of Transportation (DOT). Anyone that sells more than six (6) motor vehicles within twelve (12) months may be presumed to be engaged in the business and should be licensed. See Iowa Code § 322.4(1) and § 322.2(8). Further, anyone that is buying cars for the sole purpose of reselling them should also have a dealer’s license. Id.

Acquiring a motor vehicle dealer’s license involves meeting the statutory requirements, completing paying the licensing fees, and, in the case of operating a used motor vehicle dealership, additional required training. Dealers must have an office with a landline telephone where regular business hours are maintained, a repair facility with minimum space and equipment to repair at least one vehicle of at least 14 feet by 24 feet, and adequate outdoor display facility. Display facilities for new motor vehicle dealers must also include an indoor display space that is at least 18 feet by 30 feet. See 761 IAC 425.12. Automotive dealerships also have specific insurance requirements, including a $75,000 surety bond that must be filed with the Iowa DOT and minimum liability requirements of $100,000. Iowa Code § 322.4(g) and § 322.4(h).

Dealers also must renew registration and pay licensing fees every two years, with the license expiring on December 31 of even-numbered years. Currently, licensing fees are $70 for each registration, $70 for each license, and $20 for every extension lot within the same city. See Iowa Code § 322.5(1) and § 322.29. The Iowa DOT does not prorate the amount of this fee, which means that a license purchased on January 1, 2017 and December 20, 2018 will cost the same and both expire on December 31, 2018. Additionally, if a dealership is registered it can obtain dealer plates for operation of certain vehicles on the roadways. Each dealer requires an additional fee of $40.

Finally, if a used-vehicle dealer does not qualify for an exception, it is also required to attend a dealer licensure-training program. The pre-licensing class is a minimum of eight (8) hours, with a five (5) hour continuing education class required every two years to renew the dealer license. At least one person from the dealership such as an owner, officer, member, or partner must attend the training. The training is offered through the Iowa Independent Automobile Dealers Association, with classes generally offered monthly.

Many new motor vehicle dealerships also participate in leasing programs for new motor vehicles. Any motor vehicle dealership that will lease a motor vehicle for use for a period of more than sixty (60) days must obtain a separate leasing license from the Iowa DOT. Currently, the fee for a motor vehicle leasing license is $30.

Once you have jumped through all of the hoops to get your license, the State of Iowa allows you to sell vehicles at your main dealership and registered extension lots. Dealers can also obtain temporary permits, for an additional $10 fee, to display vehicles at fairs, shows, and exhibitions. Although dealers are allowed to offer vehicles for sale at such events, the final sale must take place at the dealer’s registered principle place of business. Additionally, certain motor vehicle dealers can sell vehicles at certain events (e.g fairs, show, exhibition) that are located within its area of responsibility for new vehicles, see Iowa Code § 322.5(2)(a) and 761 IAC 425.26, or the same county as its principal place of business for classic vehicles, see 761 IAC 425.29.

The aforementioned summary is a quick overview of the licensure requirements in Iowa; it is not meant to be an exhaustive list of requirements or to address every situation or exception. If you have questions about licensure requirements, fees, or what your license permits in Iowa, contact the knowledgeable professionals at Arenson Law Group, PC. Arenson Law Group, PC, is here to assist you with any of your dealership’s legal questions. Call us today at (319) 363-8199.

Written by James H. Arenson

Last Updated : February 13, 2024