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Motor dealers 

This page is to assist motor dealers in various important areas of the industry. If you are unsure of your obligations you should refer to the Motor Dealers and Repairers Act 2013 (the Act), the Motor Dealers and Repairers Regulation 2014 (the Regulation) or seek legal advice.

Licensing 

You will need a motor dealer licence if your business involves buying, selling or exchanging motor vehicles as a retailer or on a wholesale basis. Motor vehicles include cars, motorcycles, caravans, and some trailers.

A trailer is a vehicle built to be towed, or is towed, by a motor vehicle and is not capable of being propelled on roads without being towed by a motor vehicle. This does not include a trailer with a tare weight of 250 kilograms or less.

A towable recreation vehicle is a trailer with living space or sleeping facilities and includes a caravan, fifth wheeler, pop-top caravan, camper trailer or tent trailer.

A motor dealer’s licence is not required for certain types of vehicles. These include:

  • vehicles not acquired for the transport of goods or passengers on public roads (e.g. agricultural equipment)
  • vehicles that are not capable of being registered in NSW (e.g. quad bikes, segways, motorised wheelchairs and battery powered bikes).

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How to get a licence 

An application for a motor dealer’s licence must be lodged with Service NSW or NSW Fair Trading. To be granted a licence, you must meet the following criteria:

  • be over the age of 18
  • be a fit and proper person to hold a licence
  • not be a controlled member of a declared organisation
  • not be a person disqualified from holding a licence
  • not be an undischarged bankrupt
  • have approval from the relevant local council
  • not, as an adult, have been found guilty, in the past 10 years, of a motor vehicle stealing offence
  • have sufficient financial resources to carry on the business.

Licensees will have the choice of a 1 or 3 year licence. Licensees who choose a 3 year licence will save on processing fees.

You can apply for a motor dealer licence online at Service NSW. For more information please call 13 77 88 or visit a service centre.

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Signs and advertising 

Licensed motor dealers must include their name, and the words ‘licence number’, ‘Lic. No.’ (or a similar abbreviation) followed by their licence number, on a sign at each place of business for which the licence is granted. The business name can be included on the sign, but not in place of the licensee’s name. The sign must be readily visible to anyone who approaches the place of business.  

Licensed motor dealers must include the same details in any advertisement related to their business so that consumers know who they are dealing with. The requirement covers any material that gives publicity for, or otherwise promotes, a business. For example, if a licensee advertises on TV and mentions their places of business, they would be required to display their licence details in the advertisement. This requirement does not apply where only products are advertised, such as when a franchisor advertises its brand or products on behalf of all franchisees.

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Obligations 

Record keeping 

Motor dealers must keep a register to record the acquisition and disposal of motor vehicles (Form 1). If you operate from more than one licensed premises, you must keep at each of the premises a register of the vehicles sold and disposed of at that place of business.

A register can be kept in writing or by means of data processing equipment (i.e. a computer program).

A register that is kept in writing must be kept in a book, or series of books, that meet the following requirements:

  • each book must consist of pages permanently bound together
  • each book must bear on its front cover a number corresponding to its number in the series (such as, Book 1, Book 2 and so on)
  • each book must be used for the purposes of one kind of register and for no other purpose.

Each record must be on white standard A4 sized paper and be clearly readable, contain no deletions and is not torn or damaged. Matters in the register can be altered or deleted, but the deleted particulars must still be readable, with the preferred method being a line drawn through them.

A register that is kept by means of data processing equipment must ensure that:

  • the information in the register can be displayed and printed, on demand, at each place of business
  • the information in the register when displayed or printed, each page in the register is in the form prescribed
  • the information in the register includes the date on which each record was made.

It must also ensure that, in the event that any information in the register is amended or deleted, a record is kept:

  • of the information in the form in which it was before the amendment or deletion
  • the date on which the information was amended or deleted.

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Motor dealer’s notices 

The Act requires motor dealer's notices when you sell certain vehicles. For further information on the notices that must be used, please see:

A licensee is required to keep a copy of a motor dealer’s notice for three years after the sale of the motor vehicle to which the notice relates.

Where notices are produced electronically, all copies produced (including any that are incorrect or contain errors) must be kept and filed in sequence by the registry entry number.

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Consignment sales 

Consignment selling is where a licensed motor dealer agrees to sell a vehicle on behalf of an individual owner of a motor vehicle. After the sale, the motor dealer pays the owner the sale proceeds less an agreed commission.

A motor dealer who agrees to sell a motor vehicle on consignment must have a written agreement for the consignment. The consignment agreement which must include:

  • the name and address and licence number of the consignor and the consignee
  • a description of the vehicle, including registration number or vehicle identification number (if not registered)
  • the details of any encumbrance (including the amount) or a statement that there is no encumbrance
  • an agreed price
  • the directions for disbursements of the agreed price
  • the date of commencement and termination and period of consignment.

A motor dealer must maintain a trust account at an authorised deposit-taking institution in NSW for amounts received for vehicles for sale on consignment. Once the vehicle is sold you must deposit the full sale price into the account by the next business day. The only time money can come out of the account is to pay the consignor the agreed price as set out in the consignment agreement, and for a limited range of other purposes. Accounting records of the account must be retained for at least 6 years after the last entry was made in it.

The trust account must be audited every 12 months. For an audit to be carried out you must keep a trust receipt book, and a trust deposit book and a trust account cash book or its electronic equivalent.

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Offences 

Unlicensed motor dealing 

Unlicensed motor dealing in NSW is an offence and can result in the issue of a penalty notice of $5,500 or prosecution with a maximum penalty of $110,000. In the case of a second or subsequent offence, the maximum penalty is $110,000 or imprisonment for 12 months, or both. A court may also order a person convicted of unlicensed motor dealing to forfeit any proceeds made from any vehicles sold.

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Odometer tampering 

It is also an offence in NSW to interfere with an odometer reading by either altering the reading, removing or replacing the odometer or rendering the odometer inoperative or inactive by any means. Odometer interference can result in prosecution with a maximum penalty of $22,000 and you may also be liable to pay the losses of a purchaser through civil action.

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Other offences 

There are many minor offences motor dealers can commit under the Act. These offences include motor dealers:

  • offering or displaying a vehicle at a premises other than the main place of business
  • making a false representation about a motor vehicle including false details of the year of manufacture, vehicle registration and/or the vehicle model
  • failing to provide appropriate motor dealer notices and inspection reports
  • failing to provide written notification when selling motor vehicles on consignment
  • failing to maintain trust account obligations in relation to amounts received for sale on consignment.

Minor motor dealer offences are punishable by a maximum penalty of $2,200.

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