Are you thinking about starting a Car Dealership in Dubai? Before you consider starting a Car Dealership business, you’ll first need to know and understand the required costs.
EasyCars has put together 6 common expenses associated with starting a Car Dealership in Dubai.
Let’s get started.
One the largest expenses of opening a Car Dealership in Dubai is the location build and rent. To open a car dealership in Dubai the first thing that you will need to do is find an appropriate location that will allow you to display and sell cars.
The price of a location will vary depending on the size and what area it is in. It is important that you consider your plans for the future before choosing a location. You will need a location to be big enough to allow you to grow in the future. You do not want to frequently move location, as moving location will cost you substantially.
It has been found the average location rent for a car dealership in Dubai is between AED 42,000 up to AED 14,000,000 per year depending on size and area.
2. Vehicle Stock
To open a Car Dealership in Dubai you will need to source vehicles to sell. As such, you will need to purchase vehicles from sellers. It is important that your dealership understands prior to opening how many cars you want to sell and have in your yard.
The average used car dealership in Dubai will stock between 10 – 20 vehicles at any one time. The average used car price in the UAE in 2022 is AED 135,000, so if you are wanting to stock 10 vehicles you will need at least AED 1,200,000 in upfront funds.
3. Commercial License
To buy and sell Cars in the UAE you will need to gain a Commercial License. It is a Government Requirement that all car sellers in the UAE are authorized and have a valid Commercial License.
Before you apply for a commercial license it is important that you understand how you are going to sell vehicles. Licenses do vary depending on what type of seller you are. For example, if you are importing vehicles, you will need to gain a different license than just general used car sales.
The estimated cost of gaining a Commercial License in the UAE is AED 10,000.
Staff are another large ongoing expense that your dealership needs to know and consider prior to launch.
Before you consider opening a Car Dealership in Dubai it is important that you understand how many staff you need and what you are looking to pay them. Research has found that the average salesman salary in the UAE is AED 7,599 per month which equals to AED 91,188 per year. If you are looking to hire 2 salesman this will cost you AED 182,236 annually.
5. Marketing Costs
To gain customers you will need to market your dealership and the vehicles that you are selling. Marketing is not cheap and will vary depending on the medium that you choose to use.
It is important that you plan how you want to market your dealership prior to launching. Will you use Advertising? Are you going to hire someone to do your marketing? Will you use Vehicle Advertising Websites?
Research has found the average marketing cost for a business in the UAE is currently between AED 1000 – 2000 per month. Your marketing costs will vary depending on the strategy that you choose to use.
You will need to have the right technology to buy and sell cars in the UAE. For example, you will need a computer system, an accounting system and a Dealer Management Software to manage all the key areas of your dealership.
Technology costs will vary depending on the quantity and the types of technology that you are looking to use. The average upfront technology costs of starting a business in the UAE is between AED 5000 – 25,000.
To start a Car Dealership in Dubai you will need to have access to at least AED 900,000. The 6 expenses presented are common when starting a Car Dealership in the UAE. Costs will vary depending on individual circumstances and economical factors.
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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.
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