Are you looking to start a car dealership in the UAE? Here is a detailed breakdown of all the costs to start a car dealership in Dubai, Abu Dhabi, or any other state of the UAE in 2024-25:

A. Fixed Costs

A1. Company Registration (AED 12,500-14,500)

The first cost you have to bear when starting a car dealership in the UAE is the company registration. Now, here you have the choice between a mainland, a free zone, or an offshore company. Depending upon the type of company, be ready to pay somewhere between AED 12,500 and 14,500. You might have to pay extra for VAT and other regulatory compliance.

A2. Commercial and Import License (AED 12,500-24,000)

The next step is to obtain a commercial trade license and an import license if you’re planning on importing the inventory from another country. For this, again, you’ll need to pay somewhere between AED 12,500-25,000 depending upon the license type and the state you’re applying in.

A3. Warehouse and Showroom Deposit (AED 25,000-200,000)

Next, if you’re going for a physical location, be ready to pay deposits for a warehouse and a showroom. The deposits for premium locations can go up to AED 200,000, but you can find a decent place with a deposit of AED 25,000 in the UAE. Normally, the deposit is 5% of the monthly rent, and you have to pay an additional 5% in agency fees. You can save this cost and many other costs on this list by opting to start an online car dealership in the UAE.

A4. Warehouse and Showroom Setup (AED 50,000-500,000)

This cost is totally subjective and really depends on your own budget. To turn a regular location into a car showroom, you will need to spend somewhere between AED 50,000-100,000. However, if you have the budget, you can spend up to AED 500,000 on the setup and renovations.

A5. Website Domain, POS, and Inventory Management Software (AED 1,000-5,000)

You will need to invest in dealer management software (DMS), point-of-sale software, and website domain while starting out. The cost of all these technology-related items will be somewhere between AED 1,000 and 5,000.

A6. Sourcing Inventory (AED 500,000-5,000,000)

The cost of sourcing inventory is, again, subjective and depends on things like the quantity and method of sourcing inventory. However, any decent car dealership should have at least five cars on sale. The average cost of a used car in the UAE is between AED 16,000 and AED 335,000. At an average of AED 100,000 per car, you will be looking at an expense of up to AED 500,000. You can look to get car finance for this particular expense if you are looking to buy more vehicles. As much variety as you can give it will be better for attracting more customers.

B. Recurring Costs (Monthly)

B1. Staff Salaries (AED 25,000-100,000)

You need many people to operate a successful car dealership, but the most important one is a car salesman. You can hire a car salesman for somewhere between AED 8,000-15,000 per month in the UAE. Plus, the support staff, like cleaners, mechanics, and helpers, will cost you up to AED 5,000 per month each. The number of people you hire depends on the size of your car dealership. At the least, you need a good salesman and a couple of support staff.

B2. Inventory Maintenance (AED 2,500-25,000)

The inventory of a car dealership needs to be regularly maintained and cleaned in order to entice buyers. For that, you can hire a professional mechanic and car cleaner, or you can hire a maintenance company. Both will cost you about AED 500 per month for every car. With five minimum cars, you’re looking at an expense of about AED 2,500 per month.

B3. Restocking (AED 100,000-500,000)

Constantly growing inventory is the key to success for any car dealership. You should really consider adding at least one car to your inventory every month to ensure growth. You can obviously add more if sales are coming through more rapidly.

B4. Software Licensing (AED 2,000-5,000)

The dealer management software, website domain, and POS licenses have to be renewed yearly or monthly. Annually, you’re looking at an expense of up to AED 25,000 for this.

B5. Security Systems and Staff (AED 5,000-10,000)

To secure physical premises, you will need proper 24/7 security surveillance. Security companies will charge up to AED 3,000 per month for this service.

B6. Utilities Payments (AED 25,000-50,000)

Electricity is the main utility you will need to pay for in a car dealership. The commercial electricity rates in the UAE are significantly higher than residential. So, you’re looking at an expense of AED 25,000-50,000 for electricity, water, internet, and other utilities.

B7. Insurance Premiums (AED 3,000-30,000)

It is imperative to get insurance to deal with accidents, employee dishonesty, and electronic equipment breakdown. Plus, insurance also covers you against any claims from the customers. The cost of insurance will vary with the size of your dealerships and the extent of coverage in your specific plan. But you’re looking at a minimum monthly expense of AED 30,000 for this.

B8. Legal Compliance Fees (AED 1,000-2,000)

Commercial, trade, and import licenses need to be renewed annually. For that, you will need to pay up to AED 12,000 per annum.

B9. Staff Training (AED 5,000-10,000)

As a car dealership, you will regularly need to invest in staff growth and training. But this is a totally subjective cost and depends on the mediums of training you are using. A one-on-one monthly training session by an expert salesperson will cost you up to AED 5,000.

B10. Marketing and Promotions (AED 5,000-50,000)

Another significant recurring cost for a car dealership is the cost of marketing and promotions. You will need to run ads on social media and Google in order to generate leads. Plus, you can tap into offline marketing channels such as flyers or billboards. But this cost is totally dependent on your budget and is somewhat flexible.

Final Word: How Much Does it Cost to Start a Car Dealership in the UAE?

Minimum fixed one-time costs: (A1+A2+A3+A4+A5+A6) = 12,500 + 12,500 + 25,000 + 50,000 + 1,000 + 500,000 = AED 601,000

Minimum monthly recurring costs: (B1+B2+B3+B4+B5+B6+B7+B8+B9+B10) = 25,000 + 2,500 + 100,000 + 2,000 + 5,000 + 25,000 + 3,000 + 1,000 + 5,000 + 5,000 = AED 173,500

So, there you have it. It’ll cost you AED 601,000 to start a physical car dealership in the UAE. Additionally, the monthly recurring expense is AED 173,500, and you must have a backup for at least three months. So, you’re really looking at a contingency fund of AED 520,500.

It is important to remember that only two costs are absolutely essential: one is the company registration cost, and the other is the cost to obtain licenses. All other costs are subjective, and you can manage or lower them according to your specific business plan.

The most amount of money can be saved, if you choose to buy cheap inventory. If you’re looking to buy cheap inventory for your car dealership in the UAE, we can help. GuangcaiAuto is a trusted and reliable B2B and B2C provider of 60+ car brands.

All you need to do is find the best-selling cars and press order. Our efficient shipping, streamlined import, and after-sale support make sourcing an imported car inventory easier than ever.

Contact our sales team for more information, and don’t forget to explore our blog for the latest news and business tips on starting a car dealership.