Commercial license in DAZ

Setup a Used Car Business in Dubai

by Zaara 24, Aug 2021

Dubai is a popular destination because of its rich lifestyle and expanding economy, which offers a profitable market for the used car business. There is always a demand for dependable and budget-friendly transportation mainly due to its various range of population and business-minded policies. 

A used car business can be a favourable entity if formed with the right ways of planning and following the said rules. 

In this article, let’s understand the market and steps of a used car business formation in Dubai.

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Important Factors of the Market in Dubai 

Before diving into the steps of setting up a used car business in Dubai, it is essential to understand the market and demand for the business. 

There are various factors to consider, and they are as follows –

  1. Market Study:

It is important to understand the local market forces first because it will help in getting a clear picture of the market dynamics and factors. This will also help in further steps of the used car business in Dubai. 

  1. Variety of Customers:

Dubai is a place with a wide population which consists of both locals and foreigners. This means various types of choices in car models and brands.

  1. Growing Economy:

Dubai is one of the best locations for business owners because it continues to be a place with a thriving economy. This ensures continuous immigration of foreigners who need transportation solutions, leading to high demands for used cars.

  1. Environment Regulations:

The government policies and legal regulations of Dubai are strong, and they mandate a strict inspection and evaluation process for used cars to ensure top quality and safety measures.

  1. Competitive Landscape:

There is competition in the used car business in Dubai with many successful dealerships and sellers. A thorough market research and a good business plan are beneficial for the growth of used car sales in Dubai.

  1. Consumer Trust:

For a successful used car business in Dubai, it is important to win customer trust because this is beneficial in increasing the sales and profits of the business. Make sure to provide transparency, quality assurance and after-sales services because this will set your business to new heights.

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Steps of Setting Up a Used Car Business in Dubai 

A business formation of a used car business can easily be completed by following the steps involved and with assistance from professionals. The content below includes detailed information on the procedure of setting up a used car business in Dubai –

1) Business Planning:

The first step must be creating a business plan. The business plan must include business goals, target audience, budget, location, and marketing techniques. It is highly beneficial to research about the competitors and learn about the required specialisation in the car types, brands, price variations, etc.

2) Inventory Acquisition:

The stocks of a business, whether it is any kind, are an essential element. For building your inventory in a used car business in Dubai, you need to source the products through the means mentioned below –

   a) Private Sellers:

Look for individuals who are willing to buy their vehicles. 

   b) Auctions:

Attend both local and global auto auctions to purchase used cars at competitive prices.

   c) Importing:

Try importing used cars from different countries at reasonable prices for continuous growth in used car sales in Dubai.

   d) Trade-Ins:

Another way of sourcing the cars is by partnership agreements with new car dealerships for potential trade-ins.

3) Legal and Statutory Regulations:

The UAE has specific governmental and legal regulations for setting up a used car business in Dubai, and they are explained below –

   i) Business Registration:

Choose a business model (sole proprietorship, partnership, LLC) and register with the Department of Economic Development (DED).

   ii) Permissions and Licenses:

You’re required to trade licenses, commercial permissions, and other approvals.

   iii) Lease an Office Space:

It is essential to find a location that complies with the legal regulations and enables business activities in that space. Make sure that it complies with RTA (Road and Transport Authority) guidelines for a used car business in Dubai.

   iv) Insurance: 

Taking appropriate insurance for financial security and protecting business interests. 

4) Finances:

Plan and prepare a rational budget so that the business can cover the cost of purchasing, repairing, operational expenses, etc. Finances are a helping hand in handling business activities, so make sure to utilise them effectively and efficiently.

5) Paper Work and Records:

Maintain records of all transactions and accounts. Prepare necessary financial statements and comply with tax regulations. This is beneficial because it helps in identifying financial positions and making calculations. 

6) Inspection and Certification:

This business requires a strict inspection and evaluation process before the formation of a used car business in Dubai. Necessary tests through RTAs must be conducted to examine the safety and quality measures.

7) Pricing Strategies:

Business formations involve 4Ps, and one of them is pricing, which is an important factor. Set competitive but profitable prices for used cars and think of offering discounts and other offers from time to time.

8) Staffing:

Another important factor during business formation from the 4Ps is people because they help in facilitating and running business activities. Make sure to hire experienced and qualified employees like salespersons, administrative personnel and mechanics who are knowledgeable in car models and legal regulations.

9) Marketing and Branding:

Marketing and Branding is another crucial step in the setting up process. This helps the business stand out and increases popularity. Make sure to establish a strong brand presence, create an attractive website and use social media platforms, digital marketing, etc, for advertising and promoting your business.

10) After-Sales Services:

Make sure that after a business setup in Dubai, it provides excellent customer services and after-sales support. It can include warranty services, further guidance, package maintenance, etc.

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License to Execute a Business for Used Car Sales in Dubai

You should keep in mind that the registration procedure of your company should be subject to an exclusive license granted by the authorities that supervise the activities of the Dubai Car and Automotive City Free Zone (DAZ). The commercial license is available for one year and must be restored before it expires within a couple of days.

When you are applying for a commercial license in DAZ, your company documents should be enough. For a successful business and an increase in used car sales in Dubai, we suggest you create a website and present your company and car collection for sale.

In conclusion, the formation of a used car business in Dubai offers various opportunities due to the diverse population and growing economy. 

However, a successful business requires planning, compliance with local laws, top-quality cars and excellent customer service. With an understanding of the market research following the legalities, the business can go to great heights in the fantastic city of Dubai. It can be beneficial both financially and personally with the right strategies and can continue to grow and develop in the market. 

With the right kind of consultancy firm like Commitbiz, your business can easily be formed because we have been one of the business consultant players in the UAE region. We provide services for companies and business people interested in establishing their progress in the UAE. 

If you need any further assistance, contact us. We will be glad to help you.

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Which license is required for vehicle reselling business in Dubai?

You require a commercial license.

Which is the best freezone to start an automotive business?

Dubai Auto Zone (DAZ), Dubai Cars and Automotive Zone (DUCAMS) are a few best freezones for automotive businesses.

How to file VAT online?

You can use FTA’s e-tax portal for VAT returns.

How to start a used car dealership in Dubai?

Register yourself as an authorised dealer with the Road and Transport Authority (RTA) of Dubai.

Is the used car selling business profitable in Dubai?

Yes, having a car has become mandatory in Dubai and the used car business clearly targets a group audience and thus becomes so profitable.