The car rental business in Dubai is thriving as the demand for rental cars has increased from residents and tourists. A recent study shows that the car rental market in Dubai is expected to grow to USD 2.2 billion by 2025. Due to Dubai’s attractive travel and tourism industry, luxury lifestyles, and business-friendly environment, the rental car business is among the best sectors for ambitious entrepreneurs and investors.
With the increased demand for the car rental market, entrepreneurs can benefit from this opportunity and enter the booming and lucrative market. This guide will help you open a car rental business in Dubai and the laws and regulations.
Car Rental Market’s Demand in Dubai
Dubai is known for its booming tourism and business sector, which attracts millions of visitors and entrepreneurs annually. Tourists often utilize the convenience of rental cars to visit the city and tourist attractions, while business owners and travelers need trustworthy transport for business meetings and other appointments. The citizens of Dubai also use car rental services for different purposes, such as special occasions, short-term needs, or trying different car models.
With the strong demand and growth of the car rental sector, Dubai is one of the suitable places for investors to start their car rental business. Also, Dubai’s modern infrastructure, including an impressive road network and well-kept roads, makes it ideal for car business.
Car Renting System in Dubai – Car Rental Business in Dubai
The age requirement for starting a car business in Dubai is 21 years for most car rental companies. The requirement is acquiring a valid driver’s license from your country and an International Driving Permit (IDP) according to your nationality.
The function of a car rental company is to rent out their cars to their clients for a short period. However, car rental companies only provide cars, not drivers. Someone with a valid license but does not own a car or someone with a damaged vehicle is waiting for their car to be repaired, and foreign visitors can rent a car from a vehicle renting enterprise in Dubai.
Companies that rent cars in Dubai place their cars in locations across the city where they are easily accessible to clients. The clients can easily pick up their rented cars and drop them off at designated locations. As a result, the clients can easily pick and reserve a vehicle of their choice for the time they desire.
Another option is renting out vehicles hourly from car rental enterprises. The clients can book these cars through online websites or smart apps on mobile phones.
However, if you run a rental car business in Dubai, you must have a contract before lending the car. This pre-deal will help ensure that the renter drives the vehicle according to the instructions and returns the car without any damage.
Process to Start a Rent-A-Car in Dubai – Step-by-Step
Starting a car rental business in Dubai is like starting any other company, requiring careful planning. Here’s how you can get started,
Market Research & Business Plan – Car Rental Business in Dubai
Market research includes understanding the existing competition and customer needs and identifying market gaps. Also, develop an extensive and compelling business plan that outlines your company’s vision, future missions, and target market.
Select a Business Structure – Car Rental Business in Dubai
Select a suitable business structure for your company, like a sole proprietorship, branch of a foreign company, or a limited liability company (LLC). Each business structure has its significance and needs.
Select a Location – Car Rental Business in Dubai
You can run your business on the mainland of Dubai or in a free zone. Please select the appropriate one for your business, as each has laws and benefits.
Select a Name for Your Car Rental Company
Select a catchy name that reflects your rental car company in Dubai. Make sure the selected name complies with Dubai’s naming regulations.
Registering your Company
Register your company and apply for a professional license from the Dubai Department of Economic Development (DED) to start your rent-a-car business in Dubai or any free zone. Gather all necessary documents from your current sponsor, if required, such as your passport, visa, Ejari (home rental contract), and No Objection Certificate (NOC). These documents are necessary for company registration and business license in Dubai.
Register with the Road & Transport Authority (RTA)
Get approval and registration from the Road and Transport Authority (RTA) for your car rental company in Dubai. The registration process may include training your company staff.
Set up an Office
Select an easily accessible and convenient location for your office and car storage facility. Selecting an area near tourist attractions, airports, and business hubs can benefit your company.
Purchase of Lease Cars
Decide whether you want to purchase new or used cars or lease a fleet for your company. Make sure to keep in mind initial investment, reduction in value, and maintenance costs for your vehicles.
Legal Compliance & Insurance
Getting business insurance to protect your business from liabilities is vital. To avoid any inconvenience, keep up with the local laws and regulations related to the car rental market, including RTA and traffic laws.
Documents Required for Car Rental Business in Dubai
If you are starting your ran-a-car business in Dubai, you need to provide the following documents,
- Photocopy of your passport
- Photocopy of Emirates ID
- Proof of visa
- NOC from your current sponsor
- Photocopy of Ejari (lease contract)
- Agreement from the Road and Transport Authority (RTA) of Dubai
Cost of Starting a Rental Car Business in Dubai
The general cost of a car rental business license ranges from AED 15,000 to 20,000 and includes getting permits from the DED and RTA. However, the overall price depends on different factors, such as,
- The legal structure of the business (mainland or free zone)
- Ejari contract
- Business operations
- Car rental service fee (RTA)
- Vehicle purchase
- Vehicle insurance and maintenance
The documentation process can become easy if you consult an expert business consultant in the car rental industry who can help you set up your business, get approvals, assist with regulations, and minimize setup costs.
Benefits of Starting a Car Rental Business in Dubai
Due to Dubai’s promising car rental market and the city’s attributes, this business can benefit you in many ways. Here are some reasons to start a car rental business in Dubai.
Full Business Ownership
Dubai allows foreign investors to 100% own their business for most business activities. It is a significant benefit compared to other countries where foreign ownership is often limited.
Tourist Destination
Dubai is known as one of the biggest tourism hubs and attracts millions of foreign tourists yearly. Travelers often prefer a rental car company to explore tourist attractions independently.
Government Assistance
The government of UAE introduced new initiatives from time to time to support business growth, such as simplifying procedures and easy regulations within mainland and free zones.
Tax Benefits
The UAE is known for its favorable tax conditions and policies, which include no personal income tax, which helps with the profitability of the car rental market.
High Disposable Income
Dubai’s population has high disposable income to afford rental services, including luxury and premium vehicles.
Significant Profitability
Due to the high demand and competitive prices of the car rental business, the sector has high-profit potential.
Endnotes
Ultimately, starting a car rental business in Dubai means leading your company in the dynamic marketplace with tremendous growth potential. Setting up a business always requires professional assistance and understanding of the market. With the proper guidance from business consultants, you can undoubtedly make your business successful in no time.
Al-Riyady is here to provide expert Accounting Services, Auditing Services, Tax Consultancy, and more. Our experienced team of consultants can help you through the whole process of setting up your car rental business in Dubai. We are here to make the process stress-free so that you can focus on your business plans and grow your business.
