How to start a car rental business in Dubai, UAE
There’s a long list of attractive reasons to start a business in Dubai. From its 0% tax rate to its strategic location, all have been well documented.
When it comes to starting a car rental business, however, there are a couple more reasons that make Dubai the perfect location.
For one, the emirate has a large ex-pat community who may not wish to purchase a car while in the UAE, instead relying on public transport for the daily commute and hiring a vehicle for longer trips.
Then there is Dubai’s rising visitor numbers which have increased by around a million year on year and are expected to reach 20m this year. Many of these visitors will require a car to get around and are happy to pay for the service.
These factors and more are the reason behind the emirate’s vast and growing car rental market. In 2018, the UAE car rental and lease market was estimated at USD 1.8bn. By 2023, this is expected to increase to USD 2.5bn.
And there’s never been a better time to get involved. With Expo 2020 on the horizon, Dubai is set to see record numbers of business travellers – many of whom will require the services of a car rental firm.
Sound interesting? Then read on to find out how to open a car rental business in Dubai.
How to start a car rental business in Dubai
When you work with a company setup expert, the process of starting a car rental company in Dubai is straightforward from start to finish.
Step 1: Decide on a location
When starting a car rental business in Dubai, you’ll need to take on physical premises – both an office and a lot or garage to house your fleet.
Ideally, this should be in a built-up location or at transport hub such as an airport or train station.
When setting up in the UAE, you have the choice of doing so in the mainland or in a free zone. While free zone setup is often more cost-effective, keep in mind that you would need to open a branch or use a distributor to trade directly with the UAE market.
Step 2: Outlining your business activities
When starting a UAE business, it’s vital that you clearly outline your business activities. Failure to do so can cause issues further down the line and carrying out unlicensed activities can lead to fines or even license revocation.
Your stated activities must be chosen from the official list published by the Dubai Department of Economic Development (DED). When starting a car rental business, the official DED activity is ‘Car rent and passenger transport’.
Under this activity, you are permitted to ‘…rent automobiles for short periods of time, without drivers…’
Step 3: Choosing your company name
The third step is equally important: choosing a company name. There are a few key things to keep in mind at this stage – many that would not apply anywhere else in the world.
Be aware that you must abide by a strict set of naming conventions. In short, you should avoid any offensive or blasphemous language. Avoid names of well-known organisations and avoid abbreviations if naming your company after yourself – i.e. Dave Mann Consulting, rather than D Mann Consulting. You must also check that your chosen name is available to register.
Step 4: Making your license application
To operate a car rental business in Dubai and the wider UAE, you will require a commercial license.
When applying for your license, you will be required to submit:
- Completed application form
- Passport copy of the proposed owner or owners
- Two colour passport size photos
On top of your commercial license, you will also need approval from the Road Traffic Authority (RTA). Your staff may also be required to undergo RTA training.
Step 5: Making your visa applications
Finally, if you do not already have one, you will require a UAE visa in order to work here.
Again, with the right guidance, the visa application process can be incredibly straightforward. Most company formation agents can help you with this step as well as with your license application.
As the holder of a UAE business license, you can also sponsor others for their visas too. This could be a spouse, parent or child, or a domestic worker such as a housekeeper.
The maximum number of visas you can apply for will depend on the size of your company, your chosen setup and, for dependant visas, your personal earnings.
What is the cost of starting a car rental business in Dubai?
There are many costs to starting a car rental business in Dubai. There is the price of the license, the lease of your premises and the cost of any approvals required by the RTA.
On top of this, you will need to consider the cost of your vehicles. While it is up to you how many vehicles you have in your fleet, most reputable firms have at least 10. These can either be purchased outright or taken on lease.
Such is the variation between car rental businesses – in terms of size, location and level of service – that it is not possible to offer a rough guide on the cost of setting up.
The best way to get an idea of the costs involved in starting a car rental in Dubai would be to meet with a company formation expert and outline your requirements.
Are you ready to start your car rental business in Dubai?
Hopefully this guide has made clear that if you’re armed with the right knowledge, setting up a car rental business in Dubai doesn’t have to be overly complex.
That being said, it does require a level of prior knowledge of the process. What’s more, it is important to note that the application process is only straightforward if your license application is complete at the time of submission and free from errors.
To help you to ensure that this is the case, it’s a good idea to work with a company formation specialist such as Business Incorporation Zone (BIZ) when establishing a new company in the UAE.
We are a team of company registration professionals who are passionate about bringing the dreams of aspiring entrepreneurs and SMEs to life.
As well as handling your license application, BIZ can also assist with the opening of corporate bank accounts and advise on the most appropriate financial institution to suit your specific needs.
We also offer visa and immigration services and can handle all government formalities, permissions, work permits and visas applications that are required to trade in the UAE.
In short, our experts can establish your company on your behalf, make your license and visa applications, and take care of all the necessary admin – leaving you free to get on with running your business.