Licensing requirements for buying an auto shop in California
By Mainshares
Aug 3, 2023
In Buying a Business
The automotive industry in California is more regulated than in other states. This cuts both ways. On the one hand, there are higher barriers for techs and owners to get started in the automotive industry. On the other hand, emissions regulations drive more repeat business as customers need to get annual inspections.
As one of the leading states in the automotive industry, the California Bureau of Automotive Repair (BAR) boasts over 35,000 repair shops and handles licensing for the industry. With many of the owners of these shops nearing retirement, many entrepreneurs are beginning to explore acquiring existing independent shops.
While this transition of shops is exciting, it’s important for prospective business buyers of automotive shops to be aware of the licensing requirements at play. This post dives into the licensing requirements to own an automotive repair shop in California.
The Role of the Bureau of Automotive Repair
If you’re considering owning an automotive repair shop, the BAR will become a familiar organization to you. Nested under the Department of Consumer Affairs (DCA), the bureau regulates the auto repair industry and handles administrating the emissions programs required by the state.
With a broad mandate, the BAR regulates:
Automotive repair dealers (defined as “ person who, for compensation, engages in the business of repairing or diagnosing malfunctions of motor vehicles”)
Smog Check stations
Brake and lamp stations
Repair technicians and inspectors
The Smog Check Program
License Requirements to Serve as a Technician
Before we review the requirements for a shop, it’s important to note that California requires individual techs to be licensed to perform any work related to smog checks, brake adjusting and lamp adjusting.
For smog check inspectors, they must complete Smog Check training within the last 2 years, and have one of a number of other certifications (e.g., ASE in electrical/electronic systems, engine performance AND advanced engine performance; or an associates degree or higher in automotive technology AND one year of repair experience).
The bar for smog check repair techs is slightly lower. It requires taking the license exam and one of a number of other requirements (such as the ASE certifications listed above).
For brake and lamp adjusters, all that is required is to complete the relevant examination.
The application fees for any of the above individual licenses range from $10 to $20.
License Requirements to Run an Automotive Shop
Any person looking to buy an automotive repair shop will need to ensure that it is registered as an automotive repair dealer (ARD) to operate. This registration needs to be renewed each year and can be revoked for violating the requirements enforced by the Bureau, including:
Making misleading or untrue statements
Allowing a customer to sign any work order that does not state the repairs being requested or the odometer reading at time of repair
Failing to give to a customer a copy of any document requiring signature as soon as a customer signs
Fraud and gross negligence
New automotive repair shops can get started on the BAR website.
In addition to registering as an ARD, you will need additional licenses if you plan to engage in smog checks, brake work, or lamp work.
On the other hand, if you only plan to handle Smog Check work, you need to be certified as either a Smog Check test-and-repair station or a test-only station.
The license fees range from $10 (for just a brake or lamp station) to $200 (for an automotive repair dealer).
Where Do Certifications Like ASE Come Into Play?
As many in the industry know, the National Institute for Automotive Service Excellence (ASE) provides certification for various areas of repair services. While ASE certifications are not required by the California regulators for all techs, they are one of the paths towards qualifying for the individual licenses.
Like in most states, ASE is not required by law but many technicians go through the certification process as insurers and other payors may require them.
Information posted on this page is not intended to be, and should not be construed as tax, legal, investment or accounting advice. You should consult your own tax, legal, investment and accounting advisors before engaging in any transaction.
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