Motor dealers

NSW Fair Trading wants to help you understand your obligations under the Motor Dealers and Repairers Act 2013 (the Act), the Motor Dealers and Repairers Regulation 2014 (the Regulation).

Licensing

You’ll need a motor dealer licence if your business involves buying, selling or exchanging motor vehicles as a retailer or a wholesaler. 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 does not include a trailer that weighs 250 kilograms or less when empty. A towable recreation vehicle with living space or sleeping facilities is also classified a trailer. A wholesaler is unable to sell vehicles to the public.

You don’t need a motor dealer’s licence for:

  • vehicles that do not transport 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).

How to get a licence

You can apply for a motor dealer’s licence at  Service NSW or NSW Fair Trading. To get a licence, you must:

  • 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 or dishonesty offences
  • have sufficient financial resources to carry on the business.

You can choose between a one or three year licence.

Go to the Service NSW website, call 13 77 88 or visit a service centre to apply for a licence.

Signs and advertising

You must display your licence name, and the words ‘licence number’, ‘Lic. No.’ (or a similar abbreviation) followed by your licence number, on a sign at each place of business that falls under the licence. The business name can be included on the sign if nominated on the licence, but not in place of the licensee’s name. The sign must be visible to everyone on approach to the business. You must include the same details in any advertisement, including Facebook, websites, business cards, flyers.

Obligations

Record keeping

You 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 a record at each place. A register can be kept in writing or through data processing equipment. Entries in a register must be made within one business day of the transaction. 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 have a number corresponding to its number in the series (such as, Book 1, Book 2 and so on)on the front cover
  • 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. Anything in the register can be altered or deleted, but the deleted bits must still be readable, with the preferred method being a line drawn through them.

Data processing equipment records must make sure 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 make sure 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.

Motor dealer’s notices 

You must keep notices when you sell certain vehicles. Used vehicles offered and displayed for sale, must have a notice attached. Go to the prescribed forms for the motor industry page for more information. You are required to keep a copy of a motor dealer’s notice for three years after the sale of the motor vehicle. 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 Form entry number in a loose leaf folder.

Consignment sales

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

If you agree to sell a motor vehicle on consignment you must have a written agreement. The consignment agreement must include:

  • the name, 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 to be paid to the consignor
  • the directions for disbursements of the agreed price specifying any required amount to discharge any encumbrances
  • the date of commencement, termination or period of consignment.

You must maintain a trust account at an authorised deposit-taking institution in NSW for any money 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 or credit provider as set out in the consignment agreement, and for a limited range of other purposes. Payment must be made to the consignor within 14 days. Accounting records of the account must be kept for at least six 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.

Offences

Unlicensed motor dealing

Unlicensed motor dealing in NSW is an offence and can result in 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 the vehicles sold.

Odometer tampering

It’s also an offence to interfere with an odometer reading by either altering the reading, removing or replacing the odometer or rendering the odometer inoperative or inactive. If you interfere you can be issued a penalty notice of $1,100 or prosecution with a maximum penalty of $22,000 and you may also be liable to pay the compensation to the purchaser being the difference between the sale price and its fair market price at time of sale upon conviction or through civil action.

Other offences

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

  • 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 display correct signage at business address
  • failing to attach a notice to a vehicle offered and displayed for sale
  • failing to provide appropriate motor dealer notices and inspection reports
  • failing to keep prescribed records, being a dealer’s register or notice
  • failing to comply with a statutory notice
  • failing to provide written notification of intent to sell motor vehicles on consignment
  • failing to maintain trust account obligations in relation to amounts received or dispersed for sale on consignment.

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

Trading premises

You can only offer or display motor vehicles at the place of business specified in the licence with the exception of display at trade shows.

Trade show exception

A licensed dealer can offer and display new motor vehicles at a trade show. You can advise customers on the quality, performance and characteristics of the vehicles but can only make offers to enter into agreements for sale. You can exchange a deposit but the balance of the purchase price and exchange of the vehicle needs to be done at the place of business specified in the licence. Second-hand motor vehicles, including demonstrators, cannot be displayed at a trade show.

Interstate dealers and manufacturers

If you offer, display or advertise for sale motor vehicles within NSW, whether at a trade show or otherwise, you or your NSW selling agent must hold a NSW motor dealers licence. Any offer, display, advertising or contract must be done by the NSW licensed dealer.

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