Are you thinking about starting a car dealership in the UAE? When it comes to starting any businesses you often read or hear things that you should do to be successful.
What about on the flipside? Do you ever hear about the things not to do?
EasyCars has put together 5 things not to do before opening a Car Dealership in the UAE.
Let’s get into it!
1. Not Researching
As the saying goes, “If you fail to plan, you plan to fail”. The worst thing that you can do when it comes to starting any business is not researching and understand the market that you are looking to enter. How will you know what cars to sell? How will you know what prices to sell your cars for? How will you know what it costs to start a dealership? You wouldn’t.
Before you consider opening a car dealership it is essential that you take the time to research and understand everything about the UAE automotive industry. Having the most amount of knowledge about the UAE automotive industry will set you up to make informed decisions that heighten your chance of success.
Related Article: 10 Ways UAE Car Dealers Can Set Themselves Up for Success in 2023.
2. Not Understanding Upfront Costs
Opening a Car Dealership isn’t as cheap or as easy as you may think. The second worst thing that you can do prior to opening a car dealership is not understanding how much it costs to open a car dealership in the UAE.
There are many significant upfront costs that your dealership will need to pay for. Some of the essential expenses associated with opening a car dealership in the UAE include location costs, rent, vehicle sourcing costs, staff costs, advertising costs and IT costs.
Studies have shown the average cost of opening a Car Dealership in the UAE is AED 900,000.
3. Not Understanding Dealership VAT
This point is super important. Many Motor Dealers in the UAE make the mistake of thinking general VAT applies for Motor Sales. In reality Motor Dealership VAT differs greatly to general everyday VAT laws.
The reason why this point is super important to understand dealer specific VAT is because making a mistake on your dealerships VAT compliance can carry significant financial and even criminal penalties. VAT penalties start from AED 5,000 all the way up to AED 15,000.
4. Not Gaining a Commercial License
To buy and sell cars in the UAE you will need to gain and hold a current Commercial License. To gain a Commercial License to sell motor vehicles you will need to visit and register via the RTA website.
It is important that you understand how you are going to sell cars as licenses do differ. For example, wholesale sellers will require a different license than import sellers.
To learn more or to register for a commercial License in the UAE click here.
5. Selling Any Car
To be successful in the UAE Automotive Industry you need to sell the cars that customers want. One of the worst things that you could do when opening a car dealership is not researching what cars Emiratis want to buy and the prices that they want to buy them for.
If you don’t understand your target market, you could face having cars remain in stock for many months. Before you open a car dealership it is important to understand what cars Emiratis want and how you are going to source them to sell for a profit.
When it comes to starting any business, it is important to plan. The last thing that you want to do is enter an industry unprepared. You will lose money and risk insolvency. The 5 points presented are a few examples of what you should not do before opening a car dealership in the UAE.
We hope you enjoyed reading this article. To read more articles like this, please visit the EasyCars latest news page here.
EasyCars by Jeal is a UAE Motor Industry Specific, Dealer Management Software that automates the daily tasks of running a motor dealership. Using the latest technologies, EasyCars removes frustrations experienced at the dealership - opening the doors to future growth.
EasyCars features include Simple Stock Management, Automated Advertising, Automatic VAT Calculations, Xero Accounting Integration, Facebook Automotive Inventory Ads, Dealer Websites and Business Reporting in the one central management software.
To learn more about EasyCars or to arrange a no-obligation free demo of the software, please submit the form below.