Authorized use of dealer plates is one of the most tested and most enforced areas of California dealer compliance. Dealer plates (special plates) and other controlled dealer supplies (like Report of Sale books) are privileges tied to your licenseallowing limited operation of qualifying inventory vehicles without registering each vehicle to the dealership. Misuse (or letting others misuse your plates or supplies) can trigger enforcement action, including suspension or revocation.
What counts as authorized use of dealer plates?
Dealer Educator teaches a simple starting point that should be in every dealership policy: dealer plates may be used only on vehicles the dealer owns or lawfully possesses and holds in inventory for sale.
Who may drive a dealerplated vehicle for any purpose?
If the vehicle qualifies as inventory for sale, Dealer Educator outlines these common categories of authorized drivers (when actively engaged in the business):
- Sole proprietor, general partner, LLC manager, or corporate officer/director actively engaged in management and control of operations.
- General manager, business manager, or sales manager actively engaged in management and control when the above owner/officer category is not present.
- A licensed driver (for example, a chauffeur) when an authorized owner/manager is also in the vehicle.
- A licensed driver in the same household as an owner/manager, but only for limited purposes such as picking up or dropping off that owner/manager.
Other authorized uses (with documentation controls)
- Employees on duty: Employees may drive dealerplated vehicles when acting within the course and scope of their employment.
- Prospective buyer test drives: Prospective buyers/lessees may test drive a dealerplated vehicle for up to seven days. If unaccompanied, they should carry a dealerissued authorization letter identifying the vehicle and the approved time period.
- Contract drivers at special events: Contract drivers may be authorized when they carry a letter of authorization identifying the vehicle, event location, duration, and authorized operator.
Common misuse scenarios that get dealers disciplined
Most enforcement problems come from predictable patterns. Build your training around these highrisk behaviors:
1) Lending or sharing plates and controlled supplies
Dealer Educator emphasizes: do not loan or allow others to use your dealer plates, temporary tags, Report of Sale forms/books, or even your license certificate for sales. The dealership remains responsible for activity performed under its credentials.
2) Personal/nonbusiness driving and noninventory vehicles
Dealer plates are a business tool. Using them for personal errands, or putting them on vehicles that are not truly held in inventory for sale (or not lawfully possessed), is a common path to citations and discipline. Dealer Educator also warns against placing dealer plates on work/service vehicles (for example, tow trucks or parts delivery vehicles) or using plated vehicles for hauling freight.
3) Poor physical control (lost, stolen, or borrowed plates)
Dealer Educator recommends secure storage: keep plates, plate frames, Report of Sale books, and other controlled supplies under lock and controlled access. If plates are lost or stolen, report it immediately to the DMV and law enforcement.
4) Sales at unlicensed locations or unapproved offsite events
Another frequent violation is conducting sales from an unlicensed address (home, secondary lot, or popup spot). Dealer Educator teaches that vehicle sales must occur at your licensed location or an approved branch/temporarypermit site.
For California dealers, the DMV also publishes guidance on industry procedures through its Vehicle Industry Registration Procedures Manual (VIRP). See the DMV handbook for related dealer compliance topics, including controlled forms and special plate procedures: https://www.dmv.ca.gov/portal/handbook/vehicle-industry-registration-procedures-manual-2/.
Quick audit workflow: a daily/weekly dealerplate compliance check
Use this short workflow as a standing operating procedure. It works for daily opening/closing checks and for manager spotaudits.
Step 1: Confirm every plated vehicle is eligible inventory
- Verify the vehicle is owned or lawfully possessed by the dealership and truly held for sale.
- Confirm the vehicle is not a service/work vehicle or used for freight/hauling.
Step 2: Match each driver to an authorized category
- Owner/officer/manager: confirm they are actively engaged in management/control.
- Employee: confirm the drive is within course and scope of employment.
- Test drive: ensure the customer is within the allowed duration and has a dealer authorization letter when unaccompanied.
- Event/contract driver: ensure a written authorization letter is completed and carried.
Step 3: Check documentation you should be able to produce quickly
- Dealerissued letters for unaccompanied test drives and any contract drivers.
- Internal log showing which plate number is out, on what stock/VIN, and who has custody.
Step 4: Lock down controlled supplies
- Store dealer plates and Report of Sale books in a locked cabinet or safe with limited key access.
- Assign custody to a specific role (for example, compliance manager, office manager, or GM).
- Reconcile plate checkout/checkin daily and investigate exceptions immediately.
Step 5: Verify all sales activity is tied to a licensed or approved site
- Confirm contracts, deposits, and tradein acceptance occur only at the licensed business address or an approved branch/temporary site.
- If you display vehicles offsite, train staff on the difference between display only and sales activityand the signage and permit rules that apply.
Training takeaway: make plate rules part of onboarding
To reduce enforcement risk, treat plate control like cash control. Dealers that perform well during investigations and inspections usually do three things consistently:
- They have a written plate policy that matches the Dealer Educator curriculum.
- They train every new hire before any vehicle movement or customer test drive.
- They maintain simple logs and letters that can be produced immediately when asked.
Fast reference table: permitted vs. highrisk plate activity
| Scenario | Lowrisk approach | Common violation to avoid |
| Manager drives inventory vehicle | Confirm manager is actively engaged in dealership operations and vehicle is held for sale | Using plates on a noninventory/personal vehicle |
| Unaccompanied test drive | Provide a dealer authorization letter (vehicle + duration), enforce the maximum time limit taught in training | Letting customers keep the car beyond the allowed test drive window |
| Offsite display event | Display only with required signage; complete sales only at licensed/approved locations | Taking deposits or negotiating/contracting at an unlicensed location |
| Plate storage | Locked storage, controlled keys, daily reconciliation | Plates left accessible in desk drawers, vehicles, or shared key boxes |
| Report of Sale forms/books | Controlled inventory, assigned custodian, no sharing outside the dealership | Lending forms to another dealer or individual |
