Are you planning to start a car rental business Dubai? Great choice! To start a car rental business, you simply need to arrange a fleet of vehicles, list them on RTA-approved platforms, and begin renting them out after obtaining the required legal permits.
The cost of a car rental business license in Dubai starts from as low as AED 14,000*, making it an attractive option for both budding entrepreneurs and high-budget companies. Notably, there is a strong profit potential in Dubai’s car rental market due to the city’s thriving tourism, strong infrastructure, low tax rates, and demand from local commuters.
Quick facts:
- Car rental business needs a DET/free zone business license plus RTA’s permit.
- Cars you plan to rent should not be older than 2 years.
- The whole setup process may take 3-4 weeks (faster with expert help).
- Having an office space is a mandatory requirement.
This blog has been designed to answer all your questions related to the car renting business in UAE. Dubiz will guide you through a step-by-step process that will help you start your entrepreneurial journey with confidence and 100% accuracy.
What is a Car Rental Business in Dubai?
A car rental business in Dubai is a company that provides automobiles to people for a specific period on lease. Cars can be rented for a few hours, a few days, or a few weeks, depending on the company’s policy and the customer’s need.
Here is how the business model usually works: Car rental companies list their cars on websites and online platforms. Customers can easily check available cars, compare prices, and make bookings online. They pick up the car from a location which can be the company’s office, a hotel, or an airport. Once the rental period ends, customers return the car to the company.
Now, here is the most asked question we get: ‘is car rental business profitable in Dubai?” The answer is a loud yes, explained below.
Rapidly Growing Demand for Car Rentals in UAE
Did you know? The demand for car rental services is growing exceptionally in Dubai and the broader UAE. The market is valued at a whopping USD 0.69 billion. In fact, Dubai has one of the highest car rental usage rates in the Middle East. There are four main reasons behind this:
- First, tourists visiting Dubai (more than 16 million expected this year) prefer to have a car so they can drive around freely and explore the grandeur of Dubai.
- Second, most of the people prefer driving themselves instead of using public transport because of convenience and relief from confusing transport schedules.
- Next, officegoers and business executives enjoy the freedom to travel anytime and anywhere by car.
- Finally, people who cannot afford to buy cars also choose rentals to enjoy the comfort of private vehicles and drive their dream cars.
Whether it is tourists, locals, students, families, or business travellers, renting a car gives them flexibility for short and long trips. And for businesses? It means a vast client base and a great profit potential. Now, let us find out how to start a profitable car rental firm.
What are the Initial Legal Steps to Open a Car Rental Business Dubai?
Any business looking to offer car rental services in Dubai must hold a valid business license as well as the RTA’s approval. These two are the main legal authorisations that would be required to operate lawfully.
Approval from the RTA-Dubai:
Roads and Transport Authority (RTA) of Dubai regulates all cars, automobiles, and transportation businesses in Dubai. Therefore, for a car rental business license, you need to first obtain RTA’s permission.
Steps to get RTA approval for a car rental business:
- Get initial approval from the trade licensing authority. This is required first.
- Visit the official RTA website and log in to your RTA account.
- Under Services, search for “NOC for New Trade License.”
- Fill in the required application form and submit the documents, such as an Emirates ID copy, passport copy, visa copy, and initial approval certificate.
- Pay the required fees.
- Receive the NOC from RTA via email.
Once you receive RTA approval, you can complete your trade license application and start renting out cars.
Car rental business license:
To legally establish a car rental business in Dubai, you must get a professional business license from either the Department of Economy and Tourism (DET) or a desirable free zone authority such as IFZA.
License type: Professional license
Car rental license activity code: The car rental business falls under Activity Code 7710001, which covers renting vehicles for a minimum period of one day. Additionally, if you plan to offer online bookings, e-payments, or customer support through websites or apps, you can also add Activity Code 7710014 to your license.
License issuing authority:
- Mainland: Department of Economy and Tourism (DET)
- Free Zone: The respective free zone authority, like the IFZA authority, DWTC authority.
To hasten the process, you can always ask our experts to handle the formalities.
The Cost of Starting a Car Rental Business in Dubai
The average cost of a car rental business license ranges from AED 14,000* to AED 20,000. Additionally, RTA approval includes a fee of AED 3,000.
Many other factors impact the car rental business setup in Dubai cost:
- Location of business (Mainland vs. Free Zone)
- Size and nature of business
- Ejari Contract fee
- Visa charges
- RTA car rental service fee
- Cost of your fleet of cars
- Rent/lease of your office premises
- Vehicle maintenance and insurance
- Visa sponsorship charges (if applied)
Need the accurate rent a car license cost in Dubai? Use our free cost calculator to get instant answers.
Monthly Profits to Expect from Renting Cars – Common Example
Take this example: a car rental business in Dubai rents SUVS. SUVs can earn around AED 6,950* per month per vehicle. With 5 such vehicles, the total monthly earnings would be AED 34,750*. Even after deducting expenses such as maintenance, insurance, and operational costs, the business can still generate healthy margins.
Documents Required to Start a Car Rental Company in Dubai
The following documents will be required during the process of starting a Dubai car rental business:
- Passport copy of the owners
- Copy of Emirates ID
- Visa page copy
- A copy of your Ejari (commercial space rental contract)
- A no-objection certificate (NOC) from the current sponsor
- An undertaking from Dubai’s RTA
Authorities may request additional documents based on specific circumstances. It is recommended to let experts prepare accurate and complete documents.
Step-by-step Process for Setting Up a Car Rental Business in Dubai
Setting up a car rental business Dubai is one of the most straightforward business opportunities in Dubai.
Here is a complete breakdown of the setup process (step-wise):
Step1: Set out business direction
Before getting started, you must have a basic understanding of the Dubai car rental market, your competitors, customer demand, and a clear business strategy.
For example, you must know:
- Who are you going to target
- What type of vehicles will you include in your fleet
If your target customers are tourists or business executives, your fleet can include luxury and premium vehicles. On the other hand, if you are targeting daily commuters or office workers, basic and budget-friendly car models will be more suitable.
Step 2: Choose a business location
Next, you must decide whether to set up your business in the mainland or a free zone. Many entrepreneurs often get confused between the two. A mainland setup allows you to trade across the entire UAE market, whereas a free zone setup may limit your operations to a specific area. However, free zones often offer more affordable setups and flexible business options.
Here is a guide that can help you further: Mainland vs Free Zone for Business
Step 3: Choose a legal structure
It is essential to choose a suitable legal structure for your car rental business, such as sole proprietorship, general partnership, limited liability company (LLC), or a branch of a foreign company.
Each legal structure has its own benefits and implications. Your choice of company structure in Dubai depends on your business needs and the economic zone in which it will operate.
Step 4: Register a suitable trade name
Registration of a trade name (with DET or free zone) is an essential step of company formation in Dubai. Remember, the proposed trade name must be compliant with the UAE’s naming rules. Avoid using names that hurt public morals or include religious, governmental, or existing organisation names.
Step 5: Secure initial approval
The initial approval issued by the licensing authority allows you to apply for the RTA permit, lease office, and complete the business licensing for the car rental business. This is the first permission you will need to get from the DET or the relevant freezone authority (FZA).
Step 6: Get an office space (mandatory)
After getting the initial approval, your next job would be finding a suitable office space for your business. You may lease physical premises that can serve as both an office and a garage for your vehicles. The space rental agreement must be registered with Ejari.
When looking for business centres in Dubai, try to choose a location near an airport or a busy transportation hub cause that is an easy car pick-up point for clients. Some popular areas include Deira, Business Bay, and Downtown Dubai.
Step 7: Get Road and Transport Authority (RTA) approval
Before obtaining the business license, you will need approval from the Road and Transport Authority (RTA) for your rental car business in Dubai.
Step 8: Apply for the car rental business license
After getting RTA’s permit, you will need to apply for a professional license with the mainland or free zone authority. The required documents to be submitted include copies of the business owners’ passports, office lease agreement, passport-sized photographs, among others. Once the authority approves, you can collect your car rental business license.
Step 9: Open a bank account and apply for a visa
Consider opening a UAE corporate bank account to facilitate payments and transactions for your car rental business Dubai. Additionally, you will need to apply for visas to legally reside in Dubai for yourself, your family, and any employees.
To simplify the entire process, please get in touch with our company formation experts.
Running a Dubai Rent a Car Business – Real Examples
Once your car rental business is registered and you have your license, focus should shift to the real groundwork:
Online car rental platform setup
Invest in a platform through which you can manage the bookings of cars, customer information, car pickups and delivery, efficiently. You can develop your own software or app or invest in one.
- Best software solutions for managing car rentals in UAE include Uneecops, Caryaati, FleetMaster, MyRent, and Tranzios.
- Alternatively, platforms like OneClickDrive, Thrifty car rental, and renty.ae are the top online platforms to book a rental car in Dubai. You can list your cars there.
There may be certain eligibility to operate on these, so seeking personalised consultation is recommended.
Choosing a fleet for your business
The vehicles you rent highly impact your car rental business’s profitability. Therefore, conduct thorough market research to understand which types of cars are in high demand. Planning a fleet for your business includes:
- Choosing the type of vehicles, such as economy cars, SUVs, hatchbacks, sedans, luxury cars, or sports cars.
- Deciding whether to purchase new or used vehicles (not more than 2 years old). DubaiCars and Cars24 are reliable platforms to get great deals.
- Considering leasing vehicles to reduce upfront costs
- Every vehicle, new or used, must be registered with the RTA
Factors like initial investment, depreciation, and maintenance costs will help you make a vehicle choice. Maintaining excellent technical conditions for your fleet is crucial for ensuring customer safety and satisfaction.
Ongoing RTA compliance
You already know you must always comply with RTA rules. It is essential to keep your car rental business running. Keep an eye on the following:
- You can only carry out car rental activities mentioned on your RTA permit. Anything beyond that is considered illegal.
- There are set standards for offices, vehicles, and passenger safety established by the RTA, and these must always be respected.
- No promotional stickers on cars without RTA permission! Sounds Rigid? Believe it, that is what keeps Dubai’s roads clean and regulated.
- Rental cars must have an RTA/SIRA-approved tracking system installed and kept up to date.
- Renting out unregistered cars under any circumstance can land both you and the customer in trouble.
- All the vehicles must be insured. Safety should never be compromised.
Stay informed and follow all local laws and regulations concerning car rentals, corporate tax registration, RTA, and traffic laws. That is how you succeed.
How Dubiz Helps?
Dubai’s flourishing tourism and business-friendly ecosystem offers promising opportunities for car rental businesses in Dubai. Our specialists at Dubiz ensure your entire business setup in Dubai as well as paperwork is hassle-free and prompt.
If you want to start your car rental business journey in Dubai, call us. We will handle everything for you the way you want. From company registration, business license, to opening a corporate bank account and handling corporate tax compliance – we have got you covered.
- 8+ years of experience in company formation across the UAE
- Consult legal experts, PROs, marketers, and advisors in one place
- Direct access to government authorities via our ties
- Transparent processes with no hidden fees
Contact us on the following:
📞 Call: +971 56 369 5485
💬 WhatsApp: +971563695485
📧 Email: info@dubiz.co
Frequently Aksed Questions (FAQs)
1. What is the car rental license cost in Dubai?
The cost of a car rental business license usually ranges from AED 14,000 to AED 20,000*. However, the overall business setup cost depends on various other factors, including the nature and size of the business, Ejari contract fee, visa charges, RTA car rental service fee, cost of your fleet of cars, etc.
2. Can I rent a car in Dubai?
Yes, you can rent a car in Dubai. You must be at least 21 years old (25 years old for some supercar rental companies) and have a valid driver’s license from your home country. Depending on your nationality, you might also require an International Driving Permit (IDP).
3. Is car rental business profitable in Dubai?
Yes, the car rental business can be quite profitable in Dubai, given its thriving tourism, luxury lifestyle, and rising demands from expats and locals. However, the market can be highly competitive. Thus, a robust marketing strategy, customer focus, and service quality maintenance are imperative to success.
4. Can I start car rental business in Dubai?
Yes, you can start a Dubai car rental business, both as a local and a foreign entrepreneur. However, you must get the required permits and licenses.
5. How is luxury car rental business in Dubai?
Luxury car rental business in Dubai is a rapidly growing and highly profitable sector. High class people, businessmen, and influencers, demand for supercars like Lamborghinis and premium SUVs like the Mercedes.
