Which statement about dealer demo plates is true?

Answer: C — They may only be displayed on vehicles owned by the dealer.

The correct statement regarding dealer demo plates is that they may only be displayed on vehicles owned by the dealer. This is important because dealer demo plates are specifically designated for use on vehicles that are part of the dealer's inventory, allowing them to showcase these vehicles to potential customers. By limiting the use of these plates to dealer-owned vehicles, the regulations ensure that the plates are utilized in a manner consistent with their intended purpose, which is to facilitate the testing and demonstrating of vehicles available for sale at the dealership. This helps to maintain accountability and traceability for the vehicles being operated under dealer demo plates, thus preventing misuse that could arise if the plates were applied to vehicles not owned by the dealer. Other options might imply inappropriate use of dealer demo plates, which does not align with the legal requirements in the state of Colorado.