How to Start Used Car Business In UAE?

If you have a passion for cars and a desire to start your own business, then the used car business in UAE might just be the perfect opportunity for you. The used car market in the UAE is booming, with sales expected to reach over USD 32 billion by 2027.

With a population that includes a mix of locals, expatriates, and tourists, there is a vast potential customer base for a successful used car business.

Therefore, we are here to provide you with an overview of the used car market in the UAE, opportunities and challenges that comes with it, and process of setting up a used car business in Dubai or UAE.

Demand for Used Cars in the UAE

The demand for pre-owned vehicles in the UAE is driven by several factors, making it a promising market for entrepreneurs. This includes –

·        UAE’s diverse expat population often opts for used cars due to their transient stay, favoring practicality over new vehicles.

·        The UAE is a popular tourist destination, attracting millions of visitors annually. Tourists often seek rental and used cars to explore the country during their stay.

·        The cost of living in the UAE can be relatively high, which encourages budget-conscious consumers to opt for used cars as an economical alternative.

·        The UAE has a high per capita income, which means that people have more money to spend on consumer goods, including cars.

Not only this, but the UAE’s population is also expected to reach 11.5 million by 2025, up from 9.9 million in 2022. This growing population will lead to an increase in the demand for transportation, and many people will opt for used cars over new cars due to their affordability.

Process of Starting a Used Car Business in UAE

Starting a used car business in the UAE involves several steps and considerations. Here’s a step-by-step process to guide you through the journey: 

Step 1: Market Research and Analysis

Begin by conducting market research to understand the demand for used cars in the UAE, including factors like consumer preferences, trends, and pricing. Identify your competitors and assess their strengths and weaknesses. This will help you position your business effectively. 

Step 2: Business Planning

Decide on the specific business model you want to adopt, such as operating a dealership, an online platform, or a combination of both.

Step 3: Choose a business structure

The next step is to choose the right business structure for your business. The most common business structures in the UAE are:

1.   Mainland: An LLC mainland is the most common business structure in the UAE. Mainland companies have the right to trade anywhere in the UAE and are subject to UAE law.

2.   Free zone: A free zone company is a company that is incorporated in a free zone. Free zones are special economic zones that offer tax and other benefits to businesses. To start a used car business in a UAE free zone, you will need to obtain a trade license from the free zone authority.

3.   Offshore: An offshore company is a company that is incorporated in a different country from the country where its owners reside. Offshore companies are often used for tax planning and asset protection purposes. To start a used car business with an offshore company, you will need to incorporate your company in an offshore jurisdiction.

Step 4: Location and Facilities

Select a prime location for your dealership or online business, considering factors like visibility, accessibility, and target market proximity. If you’re running a physical dealership, create an attractive and functional showroom to display your used cars. 

Step 5: Registration & Obtaining Trade License

Once you have chosen a business structure, you need to register your business and obtain a trade license from the Department of Economic Development (DED). The DED is responsible for issuing trade licenses to all businesses in the UAE.

Besides, you may also require obtaining additional license & permits from the concerned authorities to operate your business legally and without any interruptions. 

To know all the requirements, we highly recommend getting in touch with a business setup consultant in UAE such as Bizgate. 

Step 6: Opening a corporate bank account

Once you have registered your business and obtained a trade license, you will need to open a corporate bank account. This is important because it will allow you to receive and make payments on behalf of your business.

Step 7: Source used cars

There are a number of different ways to source used cars in the UAE. One option is to buy cars from individuals. Another option is to buy cars from auctions. You can also buy cars from other used car dealerships. 

Step 8: Inspect and recondition used cars

Before you sell a used car, it is important to have it inspected and reconditioned by a qualified mechanic. This will help to ensure that the car is in good condition and that it meets all the safety standards. 

Step 9: Market and sell used cars

There are a number of different ways to market and sell used cars in the UAE. One option is to advertise in newspapers and magazines. Another option is to list your cars on online classified websites. You can also open a physical dealership to sell your cars. 

If you’re still concerned on how to start used car business in Dubai, it is always a good idea to get in touch with business setup consultants like Bizgate.

Cost of Starting a Used Car Business in UAE

The cost of starting a used car business in the UAE can vary significantly depending on various factors, including the location, scale of operations, business model, and specific market conditions.

However, the license cost of starting used car in business in UAE is generally starts from AED 25,500. Despite there are other costs involved such as registration fees, lease of showroom space, purchasing used car, employee salary, and other specific needs & requirements.

We recommend getting in touch with UAE business setup advisor to get the updated information and cost for the informed decision.

Accelerate Your UAE Used Car Business with Bizgate

Company formation in UAE can be challenging, but it can also be very rewarding. If you are passionate about the second hand car business in Dubai and you are willing to work hard, you have a good chance of success. 

One valuable tip for overcoming obstacles and ensuring a smooth business setup process is to seek assistance from experienced professionals. A business setup consultant can help you with all aspects of starting your business, from obtaining the necessary licenses and permits to developing a business plan and marketing strategy. 

If you are interested in getting assistance from a business setup consultant, we recommend Bizgate. Bizgate is a leading business setup company in the UAE with over 10+ years of experience.

Reach out to Bizgate by phone at +971 4 456 0732, via WhatsApp at +971 56 220 1709, or you can also reach out to us by sending an email to startups@bizgatebss.com.

Don’t hesitate to take that first step toward your entrepreneurial goals, and remember that with the right support, you can turn your business dream into reality.