Dubai stands out for its cutting-edge infrastructure, diverse population, and inclusive job market, offering opportunities for both locals and foreigners. With its world-class amenities, it’s often hailed as a city of the future and a prime destination for investors. While sectors like real estate, import/export, and healthcare dominate as lucrative ventures, others like the automobile industry offer promising prospects. For instance, starting a car rental business in Dubai is seen as a favorable option due to its relatively low investment requirements.
The Dubai car rental business is booming, mainly due to the increasing number of tourists. Dubai is a top tourist spot, expecting 20 million visitors this year. Analysts predict a 8.9% growth in the UAE Rent a Car Market from 2022 to 2027. The UAE’s favorable policies, easy licensing, and a booming tourism sector are driving this growth. Major events like Auto Expos, attracting millions of people, also boost the demand for car rentals. Want to start a car rental business in Dubai? Here’s how.
Learn all about starting a car rental business in Dubai, UAE right here.
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Car Rental Business in Dubai
The allure of Dubai as a premier tourist destination draws millions of visitors each year, all seeking convenient transportation to explore the city’s wonders. Despite the extensive public transport network covering the city, car rentals remain a popular choice among tourists. Renting a vehicle grants travelers the freedom to make spontaneous stops and extend their stays at captivating destinations. Moreover, Dubai’s prominence in hosting major auto events like Automechanika Dubai 2021 further solidifies its status as a motorsports hub.
Luxury and sports cars are a common sight in Dubai, with many rental services offering top-of-the-line vehicles. Beyond tourists, locals also rely on car rentals for airport transfers, hotel pickups, and making grand entrances at events. Some even opt for long-term rentals instead of purchasing a car outright. With such diverse demand, starting a car rental business in Dubai promises a lucrative audience and ample opportunities for growth.
How to Star a Car Rental Business Dubai?
Starting a car rental business in Dubai presents a lucrative opportunity, given the substantial expat and tourist population who often prefer renting vehicles over purchasing them, especially with the added benefit of zero percent income tax. Below is a step-by-step guide outlining the process and required documents for launching a car rental business in Dubai:
1. Choose the Location for You Car Rental Business in Dubai
Begin by selecting a suitable location for your car rental business. Ideally, opt for a spacious area capable of accommodating a large fleet of vehicles. You’ll also need to decide whether to establish business in the mainland or a free zone. While free zones offer cost-effective options, trading directly within the Emirates market may require utilizing a distributor or opening a branch.
2. Define Your Business Activities
Thoroughly define the services your car rental business will offer to avoid potential fines. Offering unlicensed services within Dubai is strictly prohibited. You must select the appropriate services for car rental from the list available on the official website of the Department of Economic Development (DED) Dubai.
3. Choose a Company Name
Select a company name that complies with regulations in the Emirates. Avoid using offensive or blasphemous language, as well as names of well-known organizations or abbreviations. Ensure the chosen name hasn’t been previously registered to prevent any inconvenience.
4. Apply for a License
Obtain a business license to legally operate your car rental business in Dubai. Various types of business licenses are available, depending on the nature of your business. Additionally, you’ll need approval from the Road and Transport Authority (RTA) and may need to undergo RTA Dubai training for your business staff.
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Documents Required To Start a Car Rental Business
Below is a revised list of documents required to establish a rent-a-car business in Dubai:
- Emirates ID Copy
- Copy of Passport
- Copy of Visa page
- No Objection Certificate (NOC) from the current sponsor
- Copy of Ejari Dubai contract
- Undertaking from the Road and Transport Authority (RTA)
For the RTA undertaking, ensure that the vehicle registration dates fall within the same year or do not exceed 24 months from the date of the registration application. Additionally, you must provide a minimum of 10 vehicles in the first year, along with allocated parking space. All rental vehicles must also be adequately insured.
Why Should you Set up a Car Rental Business in Dubai?
Setting up a rent-a-car business in Dubai can be a smart choice for several reasons:
- Large Non-Citizen Population: Dubai has a substantial non-citizen population, making up 85% of the total residents in 2023. These individuals often prefer to rent cars for various reasons.
- Time Efficiency: While Dubai has a well-developed public transportation system, it may not always align with people’s specific schedules, especially during rush hours or when traveling to other Emirates. Renting a car offers greater control over travel times.
- Fewer Formalities: Foreigners in Dubai may find it more convenient to rent a car than deal with the paperwork, maintenance, and spare part sourcing associated with owning a vehicle. Renting eliminates these hassles.
- Cost-Effective: Owning a car comes with expenses like insurance renewals and maintenance. For many, renting a car in Dubai is a cost-effective alternative to ownership.
How does Renting a Car in Dubai Work?
Renting a car in Dubai is easy. Car rental companies let people borrow cars for short periods, but they don’t provide drivers. You need a driver’s license to rent a car. This is useful for tourists, residents without cars, and people waiting for their cars to get fixed.
You can also find hourly car rentals in Dubai. These are available through websites and mobile apps. Cars are placed around the city for easy pickup and return, so you can book a car for just the hours you need.
If you want to start a car rental business in Dubai, make sure renters follow your rules, return the cars on time, and keep them in good condition. Offering pre-paid deals can attract more customers.
What is the Cost of Starting a Car Rental Business in Dubai?
The cost of starting a car rental business in Dubai is determined by a large number of factors. However, most of these factors will depend on your business decisions. Factors like the size of the business operations, the rent of the office space, and the cost of acquiring a business license will determine the cost of starting a car rental business. You might be required to acquire additional approvals from the Road Traffic Authority (RTA), which will increase the overall cost of your business operation.
You will also need to consider the number of cars you will use in your business operations. It is better to have at least ten cars in your inventory, but you will need to decide if it is best to buy the cars or lease them.
Here is the list of the cost you will incur:
- Acquiring business license – 8000 AED to 10,000 AED
- Ejari contract – can vary depending on the size and value of the property
- Cost of name approval – 600 AED
- RTA car rental service fee – 1000 AED
The rest of the cost will depend on your business decisions.
Also Read: How to Open a Travel Agency in Dubai, UAE ?
How Does a Car Rental Business Operate in Dubai, UAE?
The car rental business in Dubai operates on a contractual basis, where you can rent a car for a fixed period of time. However, you will need to be an experienced driver to rent a car, as a car rental business does not provide any drivers. So, after renting a car, you will need to drive around yourself. However, to rent a car, you will need to provide some documents. You will need to provide a driver’s license and a passport and be over 21 years old to rent a car in Dubai, UAE.
How many cars do you need to start a car rental company in Dubai?
You will provide at least 10 vehicles in the first year with allocated parking space.
Can I start car rental business in Dubai?
To start a car rental business in Dubai, you’ll need a commercial license. This involves submitting a completed application form along with passport copies of the owner or owners.
How to open a car rental in Dubai?
To establish a car rental business in Dubai, follow these steps:
- Provide a copy of your passport.
- Include a copy of your Emirates ID (EID).
- Submit a copy of your visa page.
- Obtain a No Objection Certificate (NoC) from your current sponsor.
- Furnish a copy of your Ejari (commercial space rental contract).
- Provide an undertaking from Dubai’s Road and Transport Authority (RTA).
Also Read: How to Get Tourism License in Dubai
Do You Need a License to Rent a Car in Dubai?
Residents of the UAE need a valid UAE license for car rental, while tourists from GCC countries can use their home country’s license to drive.
Can anyone rent a car in Dubai?
To rent a car in Dubai, individuals must be at least 21 years old and possess a valid driver’s license with a minimum of 6 months of driving experience without any significant incidents. Keep in mind that certain vehicle categories, like luxury cars, may have age restrictions, limiting them to older customers.
How can we help you?
If you want to set up a car rental business in Dubai, but you do not know where to get started, then you are in the right place. This is because Company Setup Consultants have helped more than 20,000 companies make a name for their brands in various economic jurisdictions in the UAE. Our experienced business consultants will answer all your business-related queries. Contact us today and hit the ground running.
Check our website to book a free consultation with our experts and learn more about how to register a car rental business in Dubai; call +971582595164. You can also send a WhatsApp message at +971582595164. For email assistance, mail your query at info@companysetup.ae
