So you want to get into buying and selling used cars in Hawaii. You have come to the right place. This is the first in a series of short guides on how to become a car dealer in Hawaii.
If you want to get a car dealers license in Hawaii you first have to meet the licensing requirements.
In Hawaii you are required to get a Dealers License if you sell more than 2 cars per year. Those requirements, along with a short guide, are below.
It goes without saying, but I am NOT an Attorney and this is no way legal advice. If you somehow manage to burn your house down, or get yourself landed in the hoosegow I have no part in it. Neither I nor anyone on this site take responsibility for your poor decision making process. That said, enjoy the article, I hope you find it useful.
The DCCA, PVL division of the State of Hawaii has done a really nice job updating their website and their license application. It makes for a nice checklist. Today we’re going to give you an overview of the process, while pointing out some of the pitfalls and adding a few tips to speed up the process.
The Department of Commerce and Consumer Affairs (DCCA) Provisional and Vocational Licensing division (PVL), is responsible for all of the business licensing from chiropractors to contractors. They are sticklers for the rules, everything has to be correct to the letter. Their job is to protect the general public from unscrupulous business practices. From the numerous times I have been in their office, they appear to be generally understaffed and under funded. Consequently, they are usually heavily backed up; expect the Dealer license approval process to take anywhere from 6 months to two years. The biggest problem with lead time is that a lease must be signed to start the process, and that same lease must have a year left on it when the application is approved. This means that your business must be completely set up with office, space and ready to operate - then have enough capital to pay all the bills for a year plus until you can begin operations. While this sounds intimidating, it isn’t always the case. It is, however, something to be aware of.
If you have the mental and financial fortitude to deal with that major caveat than everything else is relatively straightforward.
The list of requirements is as follows:
1. You will need to have a $25,000 Bond if you sell less than 60 cars a month or $50,000 if you sell more than 60 cars a month. A bond works sort of like an insurance policy except that you have to pay the money back in the event that it is drawn against. A better explanation can be found here. http://www.entrepreneur.com/encyclopedia/bonding.
2. You will need a space for the vehicles. This is defined by the state as having 3 parking stalls that can accommodate vehicles with an average wheelbase of 90”. For reference, the average parking stall is about 9 feet by 18ft. Compact stalls are in the 8ft by 16ft range. Here is a site with a whole lot more on parking stalls and lot design if you are interested. http://www.qcode.us/codes/southpasadena/view.php?topic=36-3-36_310-36_310_080
3. You will need a securable office space to keep keys and important documentation such as titles. This CAN be an office trailer on a parking lot. However, the wheels must be removed and the trailer must be on stands. A great resource for office trailers in Hawaii is “Hawaii Modular Space”. They are well known in the islands which means they are well known to the licensing board as well. This, in theory, should save you some hassle. They can be found here: http://www.hawaiimodularspace.com/
4. There will need to be sanitation of some kind on the property. This can be a mobile sanitation stall but you will be much happier with a full-fledged restroom. If you go the porta potty route there are several venders available. http://www.paradiselua.com/ or http://www.vipsanitation.com/
5. DCCA is going to want a lot drawing with all abutting street names, as well as labels to show where your office is, the parking stalls and the restroom. They will NOT accept blue prints. Using a program like Microsoft publisher is a great way to make a nice lot drawing. Another thing that is helpful is to take advantage of Google maps and screenshot the lot area. I recommend 3 screenshots, one using the satellite image, one with street-view if you can get it, and finally the standard view. Grab a red marker or a highlighter and highlight the borders of the property. Do not use the Google map screen shots as your only lot drawing. They WILL hand it back to you. Typically with government agencies I am of the belief that you should add only what they ask for and no more. In the case of the DCCA, add everything you can. In this case more really is more. It will make their lives easier, and yours as well. The DCCA will require a copy of the executed lease.
6. You will need a written description of the property. I wrote mine from a personal perspective of what I would see walking into the property. This seemed to be a functional way of doing it as it passed muster. NOTE: Your office space and your lot must be on the same piece of property for your “Main Office”. You cannot share a single office with another person or business. You can however share office space as long as your office is a separate and lockable space.
7. You are going to need a financial statement “no more than 1 year old” at time of initial application submittal. The financial statement must be signed by a licensed accountant and must match the applicant’s name.
8. You will need to include a check for the fees. This will range between $300 and $552 dollars, at the time of this writing, depending on the time of year.
In all likelihood, an inspector will not be out to visit the lot. What this means to you is that you must be very exacting in your specifications and quality in your presentation in picture taking. For instance, once your parking stalls are painted take a tape measure and extend it to the length of the parking stall lines and lay it on the ground next to the parking stall line. Photograph it as a whole and then at the end to show the length of the lines. This will prove that the stall will accommodate a certain size vehicle.
Common problems: It is likely that your application will be returned 30-60 days later with a letter listing corrections that need to be made to your application or property. Once the corrections are made and re-submitted one would assume that this would be it and you would be ready to go. This is rarely the case. Typically it will be another 30-60 days before you receive a new letter listing different problems. Typically this process will repeat several times. It can be frustrating, but remember the people in the office are doing the licensing for EVERYTHING in the state and there are very few people to do the job. Be patient and gracious, you catch more flies with honey than with vinegar.
Currently the application itself can be found here, it is setup as a very nice checklist with what you need:
A word of warning for the uninitiated…
Hawaii has, what may be considered to some to be, a politically hostile business environment. To have a greater understanding of why, you can look into such ventures as the “Hawaii Super Ferry” or the “Thirty Meter Telescope”. All of which are beyond the scope of this article. It is however fair to say that one should be prepared for this prior to entering the business market in Hawaii.