The DMV Select Program is a partnership, authorized under § 46.2-205 of the Code of Virginia, between the Department of Motor Vehicles (DMV) and local agents (Select Agents) to offer limited-service outlets to supplement full-service DMV Customer Service Centers (CSCs). There are currently 59 DMV Select locations. 35 of these locations are operated in partnership with Constitutional Officers. The remaining 24 locations are split evenly between private entities and town governments or localities. Select Agents offer a range of vehicle transactions and are paid based on a percentage of annual gross revenue collections. The payment scheme for DMV Selects is set in the budget bill that is passed by the legislature.

During the 2025 session, the General Assembly enacted an amendment to the budget, introduced by Delegate Hodges, which added paragraph P to Item 426. Paragraph P requires DMV to “conduct an analysis of the DMV Select Program to evaluate its potential financial impact on participating localities, including any associated costs of program administration and operations" and to “complete the analysis and report its findings to the Chairs of the House Appropriations and Senate Finance and Appropriations Committees no later than December 1, 2025."

In response, DMV has conducted an analysis and prepared this report, based on three areas of focus:

• start-up and ongoing costs associated with operating a DMV Select location and how these costs are allocated;

• total revenues earned by Select Agents and the adjusted unit cost per transaction, including such factors as labor costs and employee transaction time, for purposes of estimating profitability for Select Agents based on the frequency of income from certain transactions; and

• the characteristics and business practices of DMV Selects that would increase the profitability of Select Agents.

In conducting its analysis, DMV excluded auto auctions and the VIADA processing center, as they are outside of the scope of the analysis required by Item 426(P).

After researching and analyzing the available information, DMV determined that DMV Select locations that are operated by localities and Constitutional Officers are less impacted by key expenses associated with the operation of a DMV Select location, such as advertising costs and labor costs, when compared to private Select Agents. DMV Select locations operated by localities can utilize existing staff to reduce or eliminate labor costs. Moreover, DMV Select locations operated by localities are often operated out of buildings owned by the localities, which reduces or eliminates rent, mortgage, and property tax expenses. DMV Select locations operated by localities also can utilize several free or low-cost advertising methods that are not available to privately operated DMV Select locations.

DMV’s research and analysis also revealed two important details regarding DMV Select compensation. Analysis of Select data shows that the highest earning Select Agents also have the highest number of out-of-state transactions. DMV does not have information relating to agreements that DMV Selects may have with out-of-state dealerships to process titling transactions, but a Select Agent that processes an unusually high volume of original title transactions and also processes a very high volume of out-of-state transactions1 would likely have an arrangement with one or more out-of-state dealers. While these types of transactions are inconsistent with the purpose of the Select program, these agreements are not prohibited in the Code or any agreements between DMV and Select Agents. Given the significant impact that these out-of-state transactions seem to have on revenue generation for Select Agents, DMV has concluded that establishing an agreement with out-of-state dealers and pursuing original title transactions is a key practice of the most successful Select Agents.

DMV’s analysis also revealed that certain transactions, when accounting for labor costs, could result in a net loss for Select Agents. While a potential increase or modification in the DMV Select compensation structure might resolve this issue, any such changes would need to be tied to a broader study of DMV’s fee structure to avoid impacting DMV’s budget or the Commonwealth Transportation Fund and is beyond the scope of this study.