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January Dealer Renewal Notices

January 2010 dealer renewal notifications were not issued.
The error has been identified and corrected.
Renewal notifications will be issued as soon as possible.

Penalty fees for all January dealer licenses renewals will be waived; however, dealers must still renew within the 30-day renewal grace period per California Vehicle Code (CVC) §11717(c).

License Renewal Procedures
Dealers requiring renewal must:

Visit the department’s website for licensing information at: www.dmv.ca.gov/vehindustry/ol/dealer.htm.

Complete the Renewal Application (OL 45) form available at: www.dmv.ca.gov/forms/ol/ol45.htm.

Review the mandatory dealer education requirements in the Vehicle Industry Registration Procedures Manual available at: www.dmv.ca.gov/pubs/reg_hdbk_pdf/toc.htm.

Access dealer education providers at: www.dmv.ca.gov/vehindustry/ol/dlr_edu_provider.htm.

Renew dealer license plates using the Application for License Plates, Stickers, Registration Card (OL 22) available at: www.dmv.ca.gov/forms/ol/ol22.htm.

Contact their local inspector prior to license renewal if they have added a branch office or changed a location, firm name, or ownership.

Mail the renewal application and accompanying forms to:
Department of Motor Vehicles
Occupational Licensing Section
PO Box 932342 MS L224
Sacramento, CA 94232-3420

Additional Information

Dealers with license plates that are lost, stolen, or need to be surrendered, must complete a Statement of Lost, Stolen, or Surrendered Special Plates (OL 247) available at: www.dmv.ca.gov/forms/ol/ol247.htm.

Dealer license renewal status is updated daily and can be verified on the department’s website at: https://mv.dmv.ca.gov/olinq2/welcome.do.

Background

Normally, courtesy dealer license renewal notices are sent in advance. Due to an error identified, January 2010 notices did not generate.

Distribution

Notification that this memo is available online at www.dmv.ca.gov/pubs/olin/olin.htm
was made via e-mail alert service in January 2010 to the following:

Dealers

Contact

Questions regarding this memo may be directed to the Occupational Licensing Firms Unit, at (916) 229-3126.

MARY GARCIA, DMV Chief Occupational Licensing

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car dealers offering financing must soon obey the red flag rules
red flag rules compliance is about offering financing to car buyers
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_________________________
OPINION of EDMUND G. BROWN JR. Attorney General DIANE E. EISENBERG Deputy Attorney General
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________________________________________________________________________
TO BE PUBLISHED IN THE OFFICIAL REPORTS
OFFICE OF THE ATTORNEY GENERAL
State of California
EDMUND G. BROWN JR.
Attorney General
No. 08-804
December 31, 2009

THE HONORABLE NOREEN EVANS, MEMBER OF THE STATE ASSEMBLY, has requested an opinion on the following question:
Is the single document requirement for automobile sales contracts satisfied if the document consists of multiple pages that are attached to each other and integrated by means such as inclusive sequential page numbering (e.g., “1 of 4,” “2 of 4,” etc.)?

CONCLUSION
The single document requirement for automobile sales contracts is satisfied if the document consists of multiple pages that are attached to each other and integrated by means such as inclusive sequential page numbering (e.g., “1 of 4,” “2 of 4,” etc.).

ANALYSIS Under California’s Automobile Sales Finance Act (ASFA),

1 automobile sales contracts must contain certain terms and disclosures

2 for the protection of consumers.

3 In addition, certain provisions of such contracts are required to be prominently displayed in fonts of specified size, and in specified locations and sequences, again for the protection of consumers. On top of that, regulated sales contracts are required to be reproduced as a “single document,”

4 so that the necessary terms and notices may not be concealed from consumers by being shunted to an unseen appendix. The extensive formalities and requirements are mandatory,

5 and a contract that does not substantially conform to the requirements is unenforceable.

6 1 Civ. Code §§ 2981–2984.6. 2 Civil Code section 2982 provides that a conditional sale contract subject to the ASFA must contain disclosures mandated by federal Regulation Z, 12 C.F.R. §§ 226.1– 226.48 (2009). Regulation Z implements the Truth in Lending Act, which is found at 15 U.S.C. §§ 1601–1667f. 3 See, e.g,. Cerra v. Blackstone, 172 Cal. App. 3d 604, 608 (1985) (“The legislative purpose in enacting the [ASFA] was to provide more comprehensive protection for the unsophisticated motor vehicle consumer.”). 4 Civ. Code § 2981.9 (part of the ASFA).
Although our analysis focuses on automobile sales contracts, we note that the same language appears in other consumer sales statutes, and we have no reason to believe that our analysis would not apply to them as well. See Civ. Code § 2985.8 (part of the Vehicle Leasing Act, Civ. Code §§ 2985.7–2994); Civ. Code § 1803.2 (part of the California Retail Installment Sales Act). 5 Civ. Code § 2982(m) states that the required terms “may” be printed according to the specified regulations.

However, experts in the field and judicial decisions uniformly construe these consumer-protection rules as mandatory. See, e.g., Justice William Masterson (Retired), Justice Elizabeth Baron (Retired) & Louise LaMothe, California Civil Practice Business Litigation, § 58:11 (Thomson Reuters 2009); Cynthia L. Fatica, California Transactions Forms: Business Transactions Vol. 5, § 34:33 (Thomson Reuters 2009); Kunert v. Mission Fin. Serv. Corp., 110 Cal. App. 4th 242, 248 (2003). 6 See Kunert v. Mission Fin. Serv. Corp., 110 Cal. App. 4t h at 248. 2 08-804

Taking all of the rules into account, an automobile sales contract must now be approximately 24 inches long (printed on both sides) in order to contain all of the required provisions in their required sizes. This is an unwieldy size for a business document, and incompatible with standard office printing and reproduction machines. This incompatibility leads to significant trouble and expense for automobile dealers, as well as for those consumers who need to make or transmit copies of their sales contracts.

We have been asked to determine whether the single-document rule would be satisfied if the document were to consist of multiple pages that are attached to each other and are properly integrated by appropriate means, such as inclusive sequential page numbering that presents the page numbers as “1 of 4,” “2 of 4,” and so forth. In order to answer this question, we apply well established rules of statutory construction, looking first at the plain language of the relevant statutes with the aim of ascertaining the Legislature’s intent.

7 To that end, we turn to Civil Code section 2981.9, which sets forth some of the requirements for conditional sale contracts governed by the Automobile Sales Finance Act: Every conditional sale contract subject to this chapter shall be in writing and, if printed, shall be printed in type no smaller than 6-point, and shall contain in a single document all of the agreements of the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle, including any promissory notes or any other evidences of indebtedness.

8 Orr v. City of Stockton, 150 Cal. App. 4th 622, 629 (2007); see also Dyna-Med, Inc. v. Fair Empl. & Hous. Commn., 43 Cal. 3d 1379, 1386-1387 (1987).
8 Emphasis added. See also Civ. Code § 2985.8(a) (“Every lease contract shall be in writing and the print portion of the contract shall be printed in at least 8-point type and shall contain in a single document all of the agreements of the lessor and lessee with respect to the obligations of each party.”); Civ. Code § 1803.2 (“[E]very retail installment contract shall be contained in a single document that shall contain . . . [t]he entire agreement of the parties . . .”)

There is no definition in the ASFA of the term “single document.” Nor do we find the term defined in other statutory schemes. Therefore, we look to the usual and ordinary meaning of the words, bearing in mind the context in which they are used.

9 The most relevant definition of “single” in this context is “a separate individual member of a large class of similar or identical objects.”

10 The most relevant definition of “document” is “an original or official paper relied upon as the basis, proof, or support of something.”

11 Thus, the term “single document” means a separate or individual official paper. Nothing in this definition suggests that the entirety of the document must be contained on one page or on one sheet of paper. There is also no such suggestion in the few cases arising under consumer protection laws in which the rule is discussed. In Kroupa v. Sunrise Ford, the Court of Appeal decided that when a consumer traded in two vehicles, received a rebate from the dealer, and entered into a vehicle lease, all as part of the same negotiation, the three occurrences constituted a single transaction that should have been memorialized in a single document.

12 Other documents contained information about the rebate and the trade-ins, which affected the financing terms of the lease, but the lease did not. The absence of a single document that contained all the parties’ agreements with respect to their obligations was held to constitute a violation of the single document requirement.

13 The Court did not state, however, that the required information all had to be contained on one sheet of paper. Earlier, in Morgan v. Reasor Corp., the California Supreme Court held that the single document requirement in the Unruh Act was not met where an installment contract and a promissory note were not physically attached to each other.

14 Implicit in this holding is the notion that separate pages physically attached to each other may constitute a single document.15 9 See Dyna-Med, 43 Cal. 3d at 1387.

10 Webster’s Third New International Dictionary of the English Language
(Unabridged) 2123 (Philip Babcock Gove, ed. in chief, Merriam-Webster Inc. 2002). 11 Id. at 666. 12 Kroupa v. Sunrise Ford, 77 Cal. App. 4th 835, 843 (1999) (as modified, Jan. 20, 2000). 13 Id. 14 Morgan v. Reasor Corp., 69 Cal. 2d 881, 892 (1968).

15 The holding in Morgan is also consistent with a prior opinion issued by this

Currently, the federal Truth in Lending Act (provisions of which are incorporated by reference into the ASFA

16 does not include a single document requirement.

17 But case law construing a previous version of the Truth in Lending Act suggests that such a requirement was understood to be part of the earlier law, and some of these cases describe the requirement. For example, in finding a disclosure statement that simply said “refer to note” to be inadequate, the Ninth Circuit Court of Appeals stated: We think that this provision [former 15 U.S.C. § 1639(b)] means that the required disclosures can be made by including all required information in the instrument of indebtedness, not that some of the information can be disclosed in the disclosure statement while other information is disclosed in another document. The whole purpose of the Truth in Lending Act is to provide meaningful disclosure to a borrower. Such a goal is not met if the borrower must examine several documents to learn the terms of the loan agreement.

18 It is apparent that these authorities deem the purpose of the single document rule to be the facilitation of the consumer’s review of all of the parties’ agreements before the consumer signs the sale or lease contract, so that the consumer has complete and accurate information. The rule also helps to avert later disputes about the terms of the parties’ final agreement.

While a single-sheet document, which forecloses the possibility of pages becoming detached, may serve these objectives well, the single document rule does not require that the document consist of only one sheet of paper.

In 45 Ops.Cal.Atty.Gen. 8 (1965), we assumed without discussion that a contract entered into pursuant to the Unruh Act would be violated if “a deed of trust that was attached as part of the contract were detached from the rest of the document by means of tearing along perforations or removal of staples.” Id. at n. 9. 16 See Civ. Code § 2982.

17 Under federal Regulations M and Z, disclosures must be made “clearly and conspicuously in writing, in a form that the consumer may keep.” See 12 C.F.R. § 213.3 (Reg. M); 12 C.F.R. §§ 226.5, 226.17, 226.31 (Reg. Z). 18 Ljepava v. M. L. S. C. Prop. Inc., 511 F.2d 935, 942 (9th Cir. 1975). 5 08-804

Our conclusion is bolstered by a recent decision of the California Supreme Court, Alan v. American Honda Motor Co., Inc., in which the Court construed a particular rule of court to include a single document requirement, even though the term “single document” does not appear in the language of the rule.

19 As the Court stated, [W]e see no reason why the clerk could not satisfy the single-document requirement by attaching a certificate of mailing to the file-stamped judgment or appealable order, or to a document entitled “Notice of Entry.” Obviously a document can have multiple pages. But the rule does not require litigants to glean the required information from multiple documents or to guess, at their peril, whether such documents in combination trigger the duty to file a notice of appeal.

20 A rule of court is not drafted by the Legislature, and the rule at issue in the Alan case pertains to litigant protection, rather than consumer protection in the commercial arena. We nonetheless find it significant that, in applying ordinary principles of statutory construction to the rule ,

21 the Court’s view of the function of the single document requirement was the same as that of the Ninth Circuit in Morgan. And we find both cases relevant to, as well as consistent with, our understanding of the ordinary meaning of the term “single document.” Accordingly, we conclude that the single document requirement for automobile sales contracts is satisfied if the document consists of multiple pages that are attached to each other and integrated by means such as inclusive sequential page numbering (e.g., “1 of 4”, “2 of 4”, etc.). *****

19 Alan v. Am. Honda Motor Co., Inc., 40 Cal. 4th 894, 903–905 (2007) (holding that the phrase “a document” in Cal. Rule of Court 8.104, which governs the timeliness of appeals in specified circumstances, means “a single, self-sufficient document satisfying all of the rule’s conditions”). 20 Id. at 905 (emphasis added). 21 Id. at 902 (ordinary principles of statutory construction govern interpretation of the Cal. Rules of Court). 6 08-804

http://ag.ca.gov/cms_attachments/opinions/pdfs/o546_08-804.pdf

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Diesel Inspection Procedures

What is the diesel Smog Check inspection procedure? …

No, dynamometer testing will not be part of the diesel Smog Check inspection. …

www.bar.ca.gov/…/05_Legislative/RegulatoryActions/FAQs%20for%20Diesels%2012-24-09_Final.pdf

The pros and cons of going diesel
By Lucy Lazarony • Bankrate.com

Looking for a car with super fuel economy? You may want to consider a diesel.

Diesel cars and trucks deliver great fuel economy, 20 to 30 percent better than comparable vehicles with gasoline engines.

And while today’s diesels may not be squeaky-clean, they’re a far cry from the noisy and smelly pollution hogs that they used to be.

Here’s a closer look at the pros and cons of going diesel on your next auto purchase.

One of the biggest advantages of choosing a diesel car or truck is fuel economy. A diesel’s extra 20 to 30 percent of fuel efficiency makes a difference. You’ll use less fuel as you drive and fill up your tank less often. Fewer trips to the pump means more money stays in your wallet. Just ask any diesel driver.

“People who own them love them and tend to spread the gospel about them,” says Tony Fouladpour, a spokesman for Volkswagen of America.

“First and foremost, it’s the fuel economy. On the New Beetle it’s almost 50 miles per gallon. You can drive from Chicago to New York without stopping for fuel. They’ve got tremendous driving range.”

The fuel savings on a diesel is so impressive that you’ll make up the extra cost of the engine in just a few years.

Take a look at this example from Walter McManus, an auto analyst at J.D. Power and Associates. He compared the cost of buying a 2004 Jetta GLS with a 2.0-liter gasoline engine and the cost of buying a 2004 Jetta GLS with a 1.9-liter turbo diesel.

The price of the gasoline Jetta is $19,460. The cost of the turbo diesel Jetta is $20,480, a difference of $1,020. But the turbo diesel Jetta gets much better fuel economy, 46 miles per gallon, compared to the gasoline Jetta’s 31 miles per gallon.

Let’s say you drive 15, 000 miles a year. According to the U.S. Energy Information Administration, (week of June 21, 2004), the national average cost per gallon of diesel was $1.90; the average cost per gallon of regular was $1.94.

Driving the turbo diesel Jetta, you’d save $383 in fuel costs each year. In three years, you’d save $1,149 in fuel costs, $129 more than the cost of your diesel engine.
Diesels in America
Passenger cars
Volkswagen Golf
Volkswagen Jetta
Volkswagen Jetta Wagon
Volkswagen New Beetle
Volkswagen Passat ( April 2004)
Mercedes E-320 sedan (April 2004)

Sport utility vehicles
Volkswagen Touareg SUV (2004)
Chrysler Jeep Liberty ( Fall 2004)

Pickup trucks
Chevy Silverado
GMC Sierra
Dodge Ram
Ford E-series, F-series

Here’s one more thing to consider. A turbo diesel Jetta holds its value better than a gasoline Jetta. McManus estimates that a 3-year-old turbo Jetta will be worth nearly $300 more than a 3-year-old Jetta with a gasoline engine.

So even if you only owned your turbo diesel Jetta for three years, you’d save $1,149 in fuel costs and pick up an extra $300 when you sold the car. Your total savings for going diesel after just three years is $1,449, which more than makes up for the extra $1,020 you paid for the engine.

That’s pretty impressive. But many diesel car drivers would balk at the notion of keeping their cars for a measly three years.

With proper maintenance it’s not unusual for a diesel engine to run for 250,000 miles. And some diesel car owners are determined to get every penny of fuel savings out of their never-say-die engines.

“You’ll see these ancient Mercedes diesels that just don’t quit. They keep running and running and running,” says Paul A. Eisenstein, publisher of the automotive Web site, TheCarConnection.com. “It’s almost a matter of pride for diesel owners.”

Another advantage of buying a diesel is driving performance. Anyone who likes to zip away from a stop sign will like a diesel engine’s pep.

“You take off quicker,” McManus says. “It will be noticeably peppier and more fun to drive. So not only do you have better fuel economy, you have better performance, more of a sporty kind of drive.”

Diesels are also great at towing. So if you need to haul heavy loads with your car or truck, you may want to consider a diesel. A diesel handles a heavy load a lot better than a comparable vehicle with a gasoline engine. And that’s why larger, heavy-duty pickup trucks from Chevrolet, GMC, Dodge and Ford are available with diesel engines.

If you’re worried about the noise associated with driving a diesel car, don’t be. Modern diesel engines are a lot quieter than diesels 20 years ago. Today’s diesel engines are almost as quiet as gasoline engines.

“The engine is slightly noisier than a gasoline engine but they’re getting real close now. It’s really tough to tell,” says Robert Larsen, director of the Center for Transportation Research at Argonne National Laboratories.

The biggest downside to driving a diesel car has to do with emissions. Diesel cars may be cleaner than they used to be but they’re still dirtier than gasoline cars, and a whole lot dirtier than a hybrid. And there’s still a bit of a smell.

“What you see and smell out of the tailpipe is typically worse than with a gasoline engine,” says Larry Webster, technical editor at Car and Driver.

Diesel cars spit out more particulates — tiny particles of soot — and more oxides of nitrogen (NOx), which contribute to local smog.

But because of their excellent fuel economy, diesel cars also burn less fuel and emit less carbon dioxide (CO2) than gasoline cars.

“There’s a trade-off. You emit a little more particulate and oxides of nitrogen, NOx, but a lot less C02,” Webster says. “Burning less fuel is better in the long run, but some people are worried about NOx and particulates contributing to smog.”

Here’s another thing you should think about before you buy a diesel — where will you buy fuel?

Fueling up on the highway is easy — all you have to do is find the nearest truck stop. Finding a neighborhood service station that sells diesel fuel may be more difficult. According to Diesel Technology Forum, only 30 percent of neighborhood retail service stations sell diesel fuel.

“If you buy a diesel, make sure diesel fuel is conveniently available in your area,” Eisenstein says. “A lot of people don’t like to go to truck stops because that means they have to gas up in line with big 18-wheelers.”

A final downside to buying a diesel is you don’t have that many vehicle choices. Only 3.6 percent of passenger cars in America are available with diesel engines. They include the Volkswagen Golf, Jetta, Jetta Wagon, Passat and New Beetle. And Mercedes, which stopped selling diesel sedans in the late 1990s, launched a diesel version of its E-320 sedan.

Early in 2004, Volkswagen rolled out the Touareg V10 TDI, a diesel sport utility vehicle. Chrysler Jeep Liberty will be available with diesel engines this fall.

http://www.bankrate.com/brm/news/auto/20030804a1.asp

Vehicle Industry News VIN 2009–28
Smog Certification for Diesel-Powered Vehicles

New Legislation

Effective January 1, 2010, smog emission inspections are required for diesel-powered vehicles manufactured in or after 1998, and have a gross vehicle weight rating (GVWR) of 14,000 pounds or less for original registrations and transfers.

Biennial smog inspection requirements will be phased-in beginning with a registration renewal date of April 30, 2010.

Procedures
A smog check inspection is required:

http://www.dmv.ca.gov/vehindustry/vin_memos/vin2009/09vin28.pdf

The 4-year rule that currently exempts gas-powered vehicles, four or less model-years old, from transfer smog is not applicable to diesel-powered vehicles. A smog transfer fee will not be due for diesel-powered vehicles as they must obtain a smog certificate.
•
The 6-year rule that currently exempts gas-powered vehicles, six or less model-years old, from biennial smog is not applicable to diesel-powered vehicles. A smog abatement fee will not be due for diesel-powered vehicles as they must obtain a smog certificate.
•
Exemptions applicable to gas-powered vehicles located in non-biennial counties, family transfers, and obtaining a smog for a transfer within the past 12 months, will also apply to diesel-powered vehicles.
New vehicle dealers may certify on the New Vehicle Report of Sale (REG 397) that new diesel-powered vehicles with a GVWR of 14,000 pounds or less, meets emission requirements.

Vehicles that fail the smog check inspection may be eligible for the Consumer Assistance Program (CAP). Qualified consumers will be eligible for financial assistance for emission-related repairs or they can choose to retire their high-polluting vehicle.

All questions regarding diesel-powered vehicle smog requirements should be referred to the Bureau of Automotive Repair (BAR), at 1-800-952-5210, or visit www.smogcheck.ca.gov.
Background

Effective January 1, 2010, legislation expands the motor vehicle smog inspection program to include “diesel-powered” vehicles manufactured in 1998, and newer, with a GVWR of 14,000 pounds or less for original registrations, transfers, and renewals.

Distribution

Notification that this memo is available online, at www.dmv.ca.gov under Publications was made via e-mail alert in December 2009.

Contact
Call the DMV Customer Communications Section, at (916) 657-6560 for further clarification of this memo. Upon request, this document can be produced in Braille or large print.
JEAN SHIOMOTO, DMV Deputy Director Communication Programs Division

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Road to Success
You can still find a place in the auto industry–you just have to know where to look.
By Laura Tiffany | Entrepreneur Magazine –
Auto-Inspired Businesses

When customers walk into Dale Fox’s car rental business in Venice, California, they aren’t greeted by a choice of compact, sedan or SUV; they’re greeted by art–both on the walls and on four wheels. Spin Automotive Group, Fox’s company, offers rentals of classic, one-of-a-kind automobiles in museum-quality condition.

“[In Los Angeles,] there are lots of places where you can go out and rent a new Ferrari for a day. They’ve become ordinary,” says Fox, 41. “But if I pull up behind a [Lamborghini] in a 1961 Alfa Romeo, I guarantee you that I’ll come out after five minutes and there will be 12 people standing around the car. [Classics] are very inclusive, not exclusive. They strike up conversations, and I find that it’s a way of engaging the world in a really authentic, genuine fashion rather than trying to say, ‘I’m cooler than you.’”

Fox has found a unique niche in a marketplace full of multinational household names and is set to bring in $5 million in his first full year of business. “The [automotive] industry–especially dealerships–is populated with many second-, third- and even fourth-generation family businesses,” says Les McKeown, a serial entrepreneur, author and consultant who has advised many automotive aftermarket, dealership and rental businesses. “These are tough incumbents to unseat. They have longevity, customer loyalty and detailed insider’s knowledge of the industry on their side.”

As entrenched as the auto industry is, footholds do exist for new entrepreneurs who are niche-oriented, innovative and passionate about cars.

For Sale by Owner
Leslie Vander Baan had her entrepreneurial epiphany while navigating the difficult task of selling a car on her own. She recalls sitting on the curb outside “a bowling alley in Timbuktu” while waiting for a family to return with her car that they had taken for a mechanical inspection. “When it came time to facilitate the transaction, they were spooked about my title because I had just moved and it was out of state,” says Vander Baan, 30. “I was concerned that the money I was taking wasn’t going to be legit–that it wouldn’t deposit and clear. I just thought there has to be a better way to do this.”

“One-third of used car market [sales are] owner-to-owner, and they’re navigating this really frustrating, inconvenient process because of the savings involved,” says Vander Baan, adding that opting for dealer trade-ins usually results in $1,500 to $2,500 less for the car owner. “So we developed a solution for that hassle.” That solution is Automotive Consignment, a unique kind of used-car dealership that Vander Baan started with her husband, Mike, in 2003. The company’s nearly a dozen employees help people sell their cars on consignment by conducting test drives, handling paperwork, offering financing and providing a one-stop location for any other car-selling needs.

Licensed to Sell

We couldn’t pass up the opportunity to dig a little deeper and uncover their secrets to success.

If you want to sell cars, navigating the licensing maze can be a challenging process. “Licensing laws have typically been fairly strict on who can sell a motor vehicle because of the possibility of fraud,” explains Jim Moors, director of franchising and state law with the National Automobile Dealers Association. “You have significant issues with vehicle condition [and] odometer accuracy.” All states have different laws, but typically there’s a limit to the number of vehicles you can sell each year before you’re required to obtain a dealer’s license. There are often several types of licenses–auction dealers, new-car dealers, used-car dealers and salesperson licenses–but for any type of car dealer’s license, you typically need a physical location and signage for your business, a surety bond and insurance.

Most dealer licensing falls under the jurisdiction of your state’s motor vehicle department, and you can usually find more information on its website, including paperwork downloads, application fees and requirements.

The Road Less Costly

Dealerships are the Big Kahunas of the automotive industry. Because of the prime real estate involved, the inventory and the red tape, startup costs can be phenomenal, as entrepreneur Leslie Vander Baan can attest. But there are less pricy opportunities out there for car-loving entrepreneurs. “If you’re a bootstrapper, I’d look for a higher margin niche business–’primo’ detailing, high-end rental, luxury parts–where the margins and demand are somewhat less vulnerable to the current economic pressures,” advises consultant Les McKeown.

Franchising is another option you may want to consider. Entrepreneur’s Franchise Zone (entrepreneur.com/franchise) lists nearly 20 automotive franchises, including windshield repair and auto appearance reconditioning, that can be started for less than $20,000.
As with many car entrepreneurs, the auto business is in Vander Baan’s blood. She’s a third-generation dealership owner, and her father was her original silent investor, helping her secure $500,000 in startup capital and a $1.5 million property on auto row in Charlotte, North Carolina. Both of her parents now work with Vander Baan in her business, which she expects will bring in $4.9 million this year.

Trey Cobb also has cars in his blood. His father owned a tire shop in Rockwell, Texas, but it was imports (Subarus, specifically) that caught Cobb’s eye. Back in 1999, Cobb was unable to find the performance parts he wanted for his Subaru Impreza 2.5RS, so he claimed a corner of his father’s shop and began manufacturing parts on his own. His first products, an intake system and a camshaft, have now blossomed into 40 to 50 aftermarket products for Infinitis, Mazdas, Mitsubishis, Nissans and, of course, Subarus.

Cobb’s computer science background led him to specialize in tuning solutions for car computer systems, including his signature AccessPORT product. Cobb Tuning–now 35 employees strong and headquartered in Salt Lake City, which allows for weather-friendly product testing–brings in more than $6 million annually.

Cobb has carved out a specific market in the auto industry: His customers are tech-savvy enthusiasts with strong brand allegiances. His marketing strategy hasn’t changed much since he began in 1999. “We’ve always maintained a high level of grass-roots effort, going to various enthusiast meets and race events,” says Cobb, 33, who started up with just $10,000. “We also do quite a bit with discussion forums; we have our own blog. You really have to be involved on the grass-roots level so you can immediately respond to your customers’ changing demands.”

Vander Baan finds most of her business through referrals, repeat business, drive-by traffic, online ads and her website. Fox, on the other hand, decided to use a unique tactic for marketing his business: art. “We used [our] art gallery as leverage,” says Fox, whose business is located in the heart of Venice’s art gallery district. “Once a month, there would be an opening gala [for a local artist we would feature]. The people who [attended] are influencers. They’re high-wealth individuals and in the know about Los Angeles. So our strategy was: ‘Let them tell the story.’”

Fox rents out classic cars including a ’61 Alfa Romeo Giulietta and a ’58 Jaguar MkVIII to vacationers, locals celebrating special occasions, film and TV producers, and other clients. And he’s hired former employees of noted car collector Jay Leno and Galpin Auto Sports, the shop that pimps rides on MTV, to keep his rentals in tiptop shape.

The Red Tape
Finding a niche and a market to go along with it is just the first step. The most difficult startup hurdle may be the red tape inherent with auto-related businesses. “The hardest part was licensing and permitting,” says Fox, who has a dealer’s license and plans to start a classic car investment fund this year. “We changed a lot of things about the building. Doing that and getting the property permitted to legally be able to buy and sell cars was one of the biggest challenges. It took almost a year to get all that [approved].”

Finding a way to finance car sales was one of Vander Baan’s biggest challenges. “The financing aspect of the business is a very, very tricky one,” says Vander Baan, who eventually plans to take her consignment services online. “The banks in general don’t seem to like giving financing to independent car dealers. It’s a high-risk business for them.” She says it can take as long as five years to build deals with major lenders, but she was able to make it happen after just two-and-a-half years. Prior to that, she had to send buyers to their banks with bills of sale.

In the aftermarket parts industry, you may be able to forego the dealer’s license hassle, but the safety, emissions and other regulations are still a concern. “Often, as an enthusiast who decides to make a business out of it, you may not be exposed to all the laws and regulations,” says Cobb. “That’s where joining one of the organizations such as SEMA [Specialty Equipment Market Association] is important, so you can start to get that information.”

The Right Stuff
Being passionate is a huge plus in the aftermarket parts industry. “We see a lot of companies come in with a lot of capital–really good business-minded people–but they’re not enthusiasts or enthusiastic about the product they’re selling,” says Cobb. “And especially in these smaller niche markets, the customers can easily tell. They’ll immediately pick up on if that person is there just to try to turn a profit or if they’re there as a fellow enthusiast.”

But as with all businesses in which passion is a driving factor, jumping in too quickly is a common error. “Sometimes the attraction [to cars] borders on obsession, and that can make an individual blind to the often real problems and challenges with getting traction in the marketplace,” says McKeown.

McKeown says another common mistake he sees is startups over-investing too early: “Inexperienced entrepreneurs, especially first-timers, often think starting a business is like a pro baseball game. If they come out swinging for the fences, they [think they] can get a big early win.”

McKeown suggests being frugal when starting up, as Fox was in starting his high-end rental company in a prime real estate location for less than $100,000. “Save your money,” says McKeown. “You’re going to need all you have–and more–to last for a very long time. Start small, prove the market, get some early success and reinvest.”

Vander Baan echoes this sentiment based on her experience: “There’s a big reason you hear people say it will cost two times as much and take twice as long [as you expect].” She ticks off her startup expenses: “You need significant amounts of insurance, there are dealer licensing provisions, and you’ve got to get your bonds secured, refit the building and invest in inventory.” She also advises budgeting adequately for payroll, because “there is no one else doing it but you,” she says. “It’s like bringing home a baby. It never lets you sleep. You need a good support network in place to help you through when you just have to go to sleep.” Vander Baan credits her parents with the survival of her business; right when she was burning out, they stepped in to help.

Above all, McKeown stresses that business know-how is the key to success in the auto market. “Recognize that no matter how deep your passion for cars, that passion is no substitute for business acumen. Too many genuinely enthusiastic hobbyists launch what they hope will be a successful, thriving business only to find out too late that they haven’t got the skills to launch and grow a viable business,” says McKeown.

Vander Baan grew up working in the industry and had guidance from her father; Fox is a serial entrepreneur, having had many business successes. For those without that kind of experience, McKeown suggests turning to other entrepreneurs for advice. “Almost every successful entrepreneur I’ve met has a laser-like radar when it comes to judging whether or not someone else has ‘got it,’” he says. “Go see three or four entrepreneurs, share your vision and goals, answer their questions and ask for their candid advice. At this stage, the advice you get from them will be worth more than any business school program.”

Laura Tiffany is a web editor and freelance writer from Orange County, California.

A
ANTIQUE – a general description of an object having special value because of it’s age (usually more than 100years old) in automotive terms it tends to refer to a vehicle that was built prior to 1915.
ALL WEATHER – a term used in the twenties and thirties to denote a four door convertible sedan.

B
BAQUET- the literal translation is ‘bath tub’. It refers to cars at the beginning of the century in Europe with two rows of raised seats (single seats or divans) similar to those used in turn of the century horse drawn carriages. Baquets were generally without front doors, a top or a windshield. In the United States the term ‘touring’ was often used. Also see Phaeton
BARCHETTA – an open top car dedicated to racing without doors or a top and with uniform and streamlined bodywork. It could have one or two separate seats.
BAROUCHE- a carriage term very rarely used for automobiles. The driver sat in an open front seat with two couples facing each other inside a closed cabin. There was a folding top over the rear seat.
BATEAU – The shape of the rear end of open-topped racers at the beginning of the century, which looked like the hull of a boat. Also see Boattail.
BERLINE – a sedan
BOATTAIL – the tapered form of the rear-end. The term literally describes the shape of the vehicle tail, which resembled the bow of a boat. Popular in racing. Also see Bateau
BONNET – English term for panel that covers the engine. Americans call it a hood.
BOOT – English term for panel that covers the rear luggage compartment. Americans call it a trunk.
BROUGHAM – in early motoring this broad term signified a closed car for two or four persons. In later forms it was often found to describe a car with an open front driver’s compartment. When coupled with sharp lines and flat surfaces it may be called a ‘Panel Brougham’.
BULLNOSE – a term in use in England during the 1920′s to indicate a type of radiator, which supposedly resembled the nose of a bull! E.g.: Bull-nose Morris.
BUSINESS COUPE – a simple two-door coupe without a rumble seat, such as used by doctors, bankers and salesman etc. Everyday transport for the middleclass.

C
CABRIOLET – generally this means a convertible car with windows. However, this term has changed meaning significantly over the years and can even mean different things in different countries. During the 1920′s and 30′s in Europe it meant an open car with a top, two doors and four seats, which was most often derived from a sedan. The equivalent in Great Britain was called a drop-head coupe while the English used the term Cabriolet to mean a four door open top car. Concurrently in the United States, the term used was Convertible coupe. Today Cabriolet describes open top cars derived from a sedan or coupe. It could also be understood to mean an open top car with two rows of seats with just two doors. Although in reality it can have any number of doors and windows.
CHUMMY – In England from 1920 and up, a chummy was an open top car. The vehicle was usually a 2+2 i.e.: two full-sized seats up front with two small ‘occasional’ seats in the rear.
CLASSIC – according to the Classic Car Club of America this term refers only to specific or important marques built between 1925 and 1942 (with certain post-war exceptions). It is however applied today by owners of almost any collectible car more that is more than 25 years old.
CLUB COUPE – a two-door closed car with a rear seat.
COACH-LINE – a painted accent line on the body of a car. Modern equivalent is the pinstripe.
CONCOURS (d’Elegance) – a gathering or show of the elegant.
CONVERTIBLE – In short, a car with a folding top and windows! In the US from 1927 on, the term was used to mean a car with a soft, retractable top was hooked permanently to the bodywork, and therefore not removable like a roadster’s was. Other requisites were side windows that opened and the absence of any framework above the waist of the car apart from the windshield. The most common example of the was therefore called a convertible coupe these had two doors, whilst cars with four doors were called convertible sedans. In both cases four or five people could be seated.
CONVERTIBLE ROADSTER – a convertible is an open car with windows; a roadster is an open car without windows, hence a term which contradicts itself. Used by Lincoln, Chrysler and others about 1930 to emphasize sportiness.
CONVERTIBLE VICTORIA – a four passenger two door two-window cabriolet.
COUPE – a closed car with two doors for two or three people and a roofline that generally curves at the back. May also have a rudimentary rear seat in which case it is usually called a Club Coupe.
COUPE CHAUFFEUR – chauffeur driven car with passengers fully enclosed and the chauffeur exposed. Body has a blind rear quarter.
COUPE DeVILLE – or “town coupe”, applied imaginatively to various body styles Usually a four passenger two-door car with a permanently closed roof over the rear seats and a removable top covering the front seats. See Sedanca
COUPELET – a term used especially by Ford to describe a Model T two seater Cabriolet.
COUPE LIMOUSINE – chauffeur driven car with the passengers fully enclosed and the chauffeur exposed. Body has rear quarter windows.
CYCLE FENDERS – usually a front and sometimes a rear fender similar to that used on a motorcycle which follows the curvature of the wheel.

D
DeVILLE EXTENSION – a sliding roof over the front seat with side arms that folded back into the remaining roof thus producing a Sedanca configuration in metal rather than the usual fabric.
DICKEY – or Rumble seat. An extra external seat that could be accessed by lifting a forward-opening ‘trunk-like’ lid in the rear of the car.
DROPHEAD COUPE – British term for the equivalent of the American convertible, or the European Cabriolet.
DUAL COWL – a design of touring car, which saw the cab, divided into two compartments, front and back. Separated with a rear windshield mounted on a folding cowl, which covers part of the rear compartment.

E
ESTATE CAR – a station wagon, or four-door, four passenger car with an extended roof line plus a gate or hatch in the rear for increased cargo capacity.

F
FAUX CABRIOLET – a fixed head coupe made to resemble a cabriolet.
FENCERS MASK – The term used to describe a type of radiator grille design from the 1930′s which resembled a fencers mask for it’s shape and fine weave of the grille.
FIXED HEAD COUPE – a closed coupe.
FORDOR – Ford’s name for a four door sedan.

G
GOUTTE d’EAU – a body with a ‘tear drop’ design, flowing down to the rear.
GOVERNOR – a device used with the carburetor to restrict maximum engine speed.
GRAN TURISMO (GT) – grand touring
GP – Grand Prix or Great Prize.
GT – Grand Touring

H
HARD TOP – a removable top to replace the soft-top. It typically made from fiberglass, although sometime steel and usually painted the same color as the body of the car.
HOOD – American terminology for the sheet metal panel covering the engine.
HOOD – British terminology a convertibles soft-top.
HORSELESS CARRIAGE – a term defined by the Horseless Carriage Club of America applying to cars built before 1915 (See also Antique)

I J K

L
LANDAU- a partially opened limousine. The open part was usually in the front where the driver sat.
LANDAULET – a Landau limousine in which the section over the rear seats also opens or folds down.
LIGHT – a small window as in sidelight, quarterlight, skylight etc.
LIMOUSINE – a chauffeured sedan often with a longer wheelbase and usually with a division between the driver and the passengers. The rear compartment had luxurious features with controls for heating, radio and opening and closing the glass or wood division.

M
MARQUE – a make or brand of car.
MM – Mille Miglia, a 1000 mile Italian road race from 1927 to 1957.
MOTHER-IN-LAW SEAT – a single sideways-facing rear seat. Usually found in coupes or cabriolets.

N

O
OPERA COUPE – a two door closed car with a small folding seat beside the driver. This allowed easy passage to a rear seat for two, usually offset to the right in left-hand drive cars.

P
PANEL BROUGHAM – see BROUGHAM
PHAETON – it means opened top car with four seats. French term taken from the Greek “Phaeton” who drove the chariot of his sun-god father, Helios. A small four door open touring car.

Q
QUARTER WINDOW or QUARTER LIGHT- the small triangular side window to the rear most of the rear door glass, and foremost of the front door main glass.

R
RAGTOP – See soft-top
RIB – a bow made of metal or wood that makes up part of the rigid or semi-rigid frame of a convertible top.
ROADSTER – The term roadster has had several meanings depending on the origin and period. One thing everyone agrees on is that they did not have a top. Most recently the term has meant sportscar, generally it’s accepted to mean, small and powerful two-seater sportscar.
ROLL BAR – A metal bar fashioned in such a way to protect the driver in the event the car rolls over.
RUNABOUT – A small light two seater. Runabout was mainly an American term to indicate small open car, very basic and cheap. Predecessor to the Roadster.

S
SEDANCA – A type of early body design in which the top extended for a quarter of a circle and covered only the passengers in the rear seats.
SHOOTING BRAKE – This is a European term used typically to describe a car that is a cross between a two-door sports coupe and an estate car. Made popular by the well heeled as they wanted a vehicle to move larger than normal amounts of cargo (even dogs when grouse shooting) without having to resort to a dowdy estate car or station wagon!
SPORTIF – a very tight or narrow type of Phaeton.
SPORT COUPE – a closed coupe with a cloth top and sometimes landau irons resembling a convertible.
SPYDER – a light two-seater roadster (also called a Spider). The European term for the English Roadster.
SS – Super Sport
STATION WAGON – a utility car built of wood, typically with four doors.
SUBURBAN – a seven passenger limousine
SUICIDE DOOR- a rear hinged door, typically for the front seat. At speed any chance opening would cause the door to whip backward with great force.
SUPERLEGGERA – super light

T
TARGA – a coupe with a removable roof panel (or panels) from above the heads of the front seat occupants.
THREE POSITION COUPE – A Coupe de Ville which may be presented as a fully closed coupe, a deVille Coupe with the front section open or a fully collapsible convertible.
TONNEAU – the rear compartment of a car body, usually an open touring body. i.e. Phaeton
TONNEAU COVER – soft cover used on parked roadsters to protect the cab from rain when the top is down.
TORPEDO – a long wheelbase very smooth touring car with flat panel’s low doors and sides that offered no protection from the weather. They succeeded Tourers and Phaetons.
TOURING CAR – a four door open car, four seats and without windows. US equivalent of the European Baquet.
TOWN CABRIOLET – A town car in which the covered rear section converts to an open car.
TOWN CAR – a chauffeur driven car with the passengers fully enclosed and the chauffeur exposed. Also known as a Sedanca de Ville or Town Brougham
TUDOR SEDAN – Ford’s term for a two door.
TWIN SIX – Packard’s first twelve-cylinder car introduced in late 1915 and produced until 1920. When Packard reintroduced the new V12 in 1932, the term was reused for that first year only.

U
UNDERSLUNG – an automobile whose frame passed underneath the axles. Used primarily by the American Motor Company of Indianapolis from 1907 to 1914

V
VICTORIA – a close coupled two-door sedan or an enlarged coupe with a rear seat. Also a four door open car with folding top over the rear seat only.
VINTAGE – formerly a term describing cars built between 1915 and 1925 but now used broadly, especially in England, to include cars manufactured between 1920 and 1942.
VIS A VIS – a term used generally to describe a seating arrangement where the passengers sit facing each other.

W
WEYMANN – a patented body in which wooden frame members were joined by metal strips preventing the wood from touching and squeaking.
WINDOW STRAP – a strap attached to the base of a window, which passed inside the body up to the sill, and into the interior of the car. It could be used to pull the window up. Holes in the strap could be buckled against an interior pin to hold the window at various elevations.
WINDSCREEN – English term for windshield
WING – English term for fender
WINTER FRONT – a patented name for a shuttered radiator cover by the Pines Co., which could be opened and closed to regulate engine temperature.
WOODY – a motor vehicle incorporating natural finished wood for structure and all exposed parts of the body. The term has been loosely applied to any car, which uses wood coverings, even over metal.

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