STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6852

June 2, 1995

MOTOR VEHICLE CODE:

Licensing of dealers and sale of used vehicle parts

The difference between an automotive recycler license and a used vehicle parts dealer license under the Michigan Vehicle Code is that the automotive recycler license is restricted to those licensees who engage in business primarily for the purpose of selling salvage vehicle parts at retail.

A used car dealership or body shop may sell used vehicle parts if the business qualifies for and obtains either an automotive recycler license or a used vehicle parts dealer license.

Honorable James McNutt

State Representative

The Capitol

Lansing, Michigan

You have asked several questions regarding recent amendments, by 1993 PA 300, to the Michigan Vehicle Code (MVC), MCL 257.1 et seq; MSA 9.1801 et seq. Your first question asks whether there is any difference between the licensure requirements under the MVC for an "automotive recycler" and those for a "used vehicle parts dealer".

The 1993 amendments to the MVC were intended to increase its effectiveness in combatting car theft and crime by further regulating trade in salvage and scrap vehicles and parts. See, House Legislative Analysis, HP 4391, April 5, 1994, p 1. The amendments added "automotive recycler" as one of the nine classifications of vehicle dealer for which licensure from the Secretary of State is required and also expanded the definition of "used vehicle parts dealer." They further restricted those dealers who could engage in "the business of buying, selling, brokering, or dealing in distressed, late model vehicles or salvageable parts" to three categories of licensees: (1) a used vehicle parts dealer (also called a used or secondhand vehicle parts dealer), (2) an automotive recycler, or (3) a salvage pool operator. Section 248(10) of the MVC. Your question concerns the difference between the first two of these licensing classifications.

The definition of "used vehicle parts dealer," in section 78a of the MVC, was expanded by 1993 PA 300. As originally enacted, section 78a included within that definition only those persons "engaged in the business of buying or otherwise acquiring vehicles for the purpose of dismantling the vehicles and selling used parts and remaining scrap material." As amended by 1993 PA 300, this definition was expanded to include persons who simply engage in the business of buying and selling salvageable parts.

"Automotive recycler" is a new licensing category added by 1993 PA 300, and is defined by section 2a of the MVC as follows:

Based upon these definitions, the principal difference between these two types of licenses lies in the primary purpose of the business operated by the licensee. A person may be licensed as an automotive recycler only if that person "engages in business primarily for the purpose of selling at retail salvage vehicle parts." (Emphasis added.) A person licensed as an "automotive recycler" may, in addition, sell salvage motor vehicles at retail and may manufacture or sell gradable scrap metal; these additional activities, however, must be secondary to the licensee's primary business purpose of selling salvage vehicle parts at retail. In contrast, a used vehicle parts dealer may engage in the same kinds of activities, but need not demonstrate that the sale of salvage or used vehicle parts at retail is the primary purpose of the licensee's business.

Notwithstanding this definitional difference in focus between an automotive recycler and a used vehicle parts dealer, section 248(11) of the MVC requires that license applications for both contain the same basic information as is required for all types of dealer license applicants concerning business ownership, form, location, previous licensure, etc. Subsection 248 (11) (k) imposes additional requirements specifically applicable only to applicants for used vehicle parts dealer licenses and automotive recycler licenses. Applications for such licenses must include:

Thus, except for the difference in the focus of the business activities authorized by the two licenses, the qualifications for obtaining a used or secondhand parts dealer license and an automotive recycler license are the same.

It is my opinion, therefore, in answer to your first question, that the difference between an automotive recycler license and a used vehicle parts dealer license under the MVC is that the automotive recycler license is restricted to those licensees who engage in business primarily for the purpose of selling salvage vehicle parts at retail.

Your second question asks whether a used car dealership or a body shop may sell used vehicle parts by obtaining an automotive recycler's license.

Section 248(13) of the MVC expressly authorizes a person to apply for more than one classification of license:

Thus, a used car dealership is authorized to apply for an additional license that would authorize the dealership to sell used vehicle parts at retail.

While body shops are licensed under a separate statute, the Motor Vehicle Service and Repair Act, 1974 PA 300, MCL 257.1301 et seq; MSA 9.1720(1) et seq, nothing in either statute prohibits a body shop from seeking concurrent licensure as an automotive recycler, provided of course that the applicant is otherwise qualified to hold each of the licenses in question. Therefore, a body shop may also apply for a license that would authorize the shop to sell used vehicle parts at retail.

It does not necessarily follow, however, that a used car dealership or body shop will be eligible to receive an automotive recycler license. As is observed above, an automotive recycler license, by definition, is available only to an applicant who is engaged in business "primarily for the purpose of selling at retail salvage vehicle parts." Used car dealerships or body shops would not meet this qualification unless they changed their primary business from selling or repairing vehicles to selling salvaged parts at retail. The MVC does not, however, impose a similar restriction upon applicants for a used vehicle parts dealer license. Thus, a used car dealership or body shop may apply for and receive a used vehicle parts dealer license without changing the focus of the business.

It is my opinion, therefore, in answer to your second question, that a used car dealership or body shop may sell used vehicle parts if the business qualifies for and obtains either an automotive recycler license or a used vehicle parts dealer license.

Frank J. Kelley

Attorney General