Understanding the Cost Structure of Setting Up a Car Dealership in the UAE

24 Jun 2024 Helpful Tips


Starting a car dealership in the UAE is an exciting adventure but it does come at a cost. EasyCars has put together a complete guide that breaks down the various costs involved with starting a car dealership in the UAE.

Initial Setup Costs

Licensing and Registration

Trade License: To legally operate a car dealership in the UAE you will need to hold a current trade license issued by the Department of Economic Development (DED). The cost of gaining a trade license varies based on the location of your car dealership in UAE and the type of dealership that you are looking to operate. Fees generally range from AED 15,000 TO AED 50,000 for the initial license.

Company Registration: The second license and fee that you will need to pay to trade compliantly in the UAE is company registration. The cost to register your car showroom in the UAE as a company is around AED 10,000 to AED 20,000.

Location and Premises

Showroom Lease: One of the largest expenses of starting a car dealership in the UAE is leasing a showroom space. Prime locations in cities like Dubai or Abu Dhabi can cost between AED 200,000 and AED 1,000,000 per year, depending on the size and location of your showroom.

Security Deposit: Most locations in the UAE will charge a security deposit, generally refundable it is typically equivalent to three to six months' rent. This can range from AED 50,000 to AED 500,000.

Fit-Out and Renovation: Fit out and renovation costs in the UAE can range between AED 100,000 to AED 1,000,000, depending on the scale and quality of the work.

Inventory and Stock

Initial Vehicle Purchase: Your dealership will need to source vehicles to sell. The cost of purchasing your initial vehicle inventory will depend on the type and the number of vehicles that you are looking to sell. For a medium-sized car showroom in the UAE, you might spend between AED 5,000,000 and AED 20,000,000 on car inventory.

Transportation and Logistics: If you’re purchasing cars from overseas, shipping vehicles to the UAE will involve transportation costs, customs duties, and logistics fees. The cost of importing a car in the UAE is around 5% of the vehicle's cost for customs duties.

Staffing and Training

Salaries and Wages: Another large and ongoing cost that your car showroom will need to know and consider is staff costs. Salaries in the UAE are amongst the best in the world, with monthly wages ranging from AED 5,000 for administrative roles to AED 20,000 for senior sales staff.

Recurring Operational Costs

Rent and Utilities

Monthly Rent: The largest recurring cost for any car dealership in the UAE is monthly rent. As mentioned earlier, this can range from AED 200,000 to AED 1,000,000 per year.

Utilities: Another recurring cost is utilities, including electricity, water, and internet. Average utility costs for a small business in the UAE is between AED 5,000 to AED 15,000 per month.

Marketing and Advertising

Advertising Campaigns: To attract customers to your car showroom in the UAE, you'll need to implement different advertising campaigns. This can include digital marketing on channels like Facebook advertising, print ads in newspapers and even radio ads. Marketing and advertising costs in the UAE range between AED 50,000 and AED 500,000 annually depending on the strategy that you are looking to use.

Website and Digital Presence: Your showroom will need its own Car Dealership Website and digital presence. Initial setup costs for a website can range from AED 20,000 to AED 50,000. Ongoing management and maintenance fees can range between AED 5,000 to AED 10,000 per month.


Vehicle Financing: Many showrooms in the UAE use floor plan financing options to manage their inventory costs. Interest on floor plan loans will add to your dealerships expenses. Floor Plan finance interest rates are often around 5% to 10% of the inventory value annually.


Legal and Compliance Fees

Annual Renewals: Trade licenses are not set and forget. Your car showroom will need to factor in license renewal fees. Annual fees typically range from AED 10,000 to AED 30,000.

Compliance Costs: To ensure that your car showroom is compliant with UAE local laws, you may need to hire legal consultants and auditors. These costs can typically range between AED 20,000 and AED 100,000 annually.


Property Insurance: You need to protect your dealership and everything in it if an unexpected event occurs like theft or damage. Insurance premiums in the UAE can range from AED 20,000 to AED 100,000 annually.

Liability Insurance: Another insurance that all businesses in the UAE need is Liability Insurance. General liability insurance will protect your car showroom against claims of injury or damage caused by your business operations. Liability insurance in the UAE can cost around AED 10,000 to AED 50,000 per year.

Technology and Systems

Dealer Management System (DMS): Implementing a comprehensive and UAE Automotive Industry Specific DMS will set your dealership up for sustained success. A DMS like EasyCars, will completely automate the running of a motor dealership, streamlining tasks like sales, inventory management, advertising, reporting, VAT compliance and more. Monthly costs for a DMS ranges between AED 1,000 to AED 50,000.

IT Infrastructure: Setting up IT infrastructure, including computers, software, and security systems, will cost your car showroom on average around AED 50,000 to AED 200,000.

Final Word,

Setting up a car dealership in the UAE does come with multiple upfront and recurring costs. The costs presented in this piece are common in the UAE and should be thoroughly researched and understood before starting your journey.

We hope you enjoyed reading this article. To read more articles like this, please visit the EasyCars latest news page here.

DISCLAIMER – The content within this blog does not constitute professional advice and is intended to be general in nature. Please consult with all relevant parties prior to making any decision.

About EasyCars,

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.

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