Out-of-state auto sales give dealerships a great revenue stream – but if you don’t manage them correctly, they can also make you pace up and down the halls like an expecting parent. Why? Because until the title clears, the dealership doesn’t see the money on the deal: even if your customer is already happily down the road in their new (or new to them) car.
There are great reasons to do out-of-state (OOS) sales, as more and more dealerships have discovered – especially since the advent of online car buying.
Three benefits that come right to the forefront are a bigger customer base, faster-moving inventory (since you’re able to tap into that bigger customer base and get them into the dealership), and a competitive advantage over not just dealerships in your own geographic area who aren’t equipped to handle OOS sales but also over dealerships in neighboring states who might not be serving their local customers as well as you could.
But OOS sales aren’t as straightforward as sales to customers who live in your own state, and they can be tricky – especially if this is a new venture for your dealership. Ready to learn more? Here are 5 complexities that dealers like you run into when beginning or scaling up their out-of-state sales. If you turn these into deliberate pit stops, you can avoid them being pitfalls. Let’s hit the road!
- State-specific regulations: Every state has its own laws, regulations, and requirements for auto sales, tax, titling, and registration. When a customer from out of state purchases from you, you must follow their state’s documentation, titling, registration, and sales tax regulations to the letter. Failure to comply with these regulations can lead to hefty fines and penalties, negative customer experiences, and even criminal charges.
- Licensing requirements: Although you are licensed to sell vehicles in your state, you might need to abide by different or additional licensing requirements in the out-of-state customer’s state as well. This is another area where a seemingly small oversight could lead to fines, penalties, and a terrible experience for your customer.
- Advertising compliance: Multiple federal and state laws regulate advertising requirements. Broadly, they require you to accurately represent vehicle prices, clearly disclose any additional fees or conditions, and avoid deceptive marketing practices. Since the finer details can vary from state to state, if you advertise outside of your own state, you must ensure you comply with both your state’s laws and those of the states where you are expanding your advertising and marketing.
- Sales tax considerations: Sales tax requirements can vary significantly from state to state, so you need to clearly understand the sales tax obligations associated with selling to out-of-state customers. This includes determining whether the dealership is responsible for collecting and remitting sales tax to the customer’s state, or whether the customer is responsible for paying the tax directly. It’s a smart idea to hire a tax specialist or a lawyer well versed in interstate commerce law.
- Title and registration process: Each state has its own procedures and documentation requirements for titling and registering vehicles. Dealerships need to provide accurate and complete documentation to facilitate the transfer of titles and registration to out-of-state customers, and it’s a big process that involves coordinating with the customer, providing necessary paperwork, and guiding them through the steps required by their state’s motor vehicle department.
The bottom line? Out-of-state sales and the associated tax, title and registration process are incredibly complex and time-consuming. The process subjects you to regulatory, legal, and financial risk and most importantly takes your focus away from selling more cars and providing great customer service.
That’s why using Automotive Titling Company (ATC) is always a smart move. We can handle all of your out-of-state titling and registration, with unmatched speed and guaranteed accuracy. With in-house expertise covering all 50 states, you can trust us to ensure that every OOS sale you make is 100 percent compliant, and our processing speed improves your cash flow by getting money from OOS sales in your hand faster.
Take a look at what we offer and see why more than 10,000 dealerships have left bad OOS sales in the dust by using ATC. If you’d like to see firsthand how we can help your dealership, we’d love to show you a demo. Sign up for one today, and if you become a customer, we will waive the first 90 days of your subscription charges.