Starting a Car Dealership in the UAE is an exciting but challenging experience. Before you set off on your journey of starting a car dealership, there are a few things that you need to know and consider.
EasyCars has put together 5 things you need to know before opening a car dealership in the UAE.
Let’s get into it!
1. You Need a Commercial License
To buy and sell cars in the UAE you need to have a commercial license issued by the RTA. This license is required for all companies, individual sellers, manufacturers, vehicle importers and vehicle exporters.
It is important that you know how you are going to sell cars prior to applying because license differ based on what type of vehicle sales you are looking to conduct. To apply for a Commercial License in UAE, please visit the RTA website here.
2. VAT Laws Differ for Car Dealerships
A mistake that so many vehicle sellers in the UAE make is applying regular VAT. Dealership VAT differs greatly from everyday VAT. It is important that you know and understand the key VAT differences prior to beginning your Motor Dealership.
Making a mistake on VAT can be costly. Compliance fines can range from AED 10,000 to AED 50,000. Additionally, your dealership can lose your commercial license completely for significant compliance errors.
3. Upfront Costs are Significant
This may hurt you to hear but starting a Car Dealership in the UAE is expensive. To open a car dealership in the UAE you will need to have or have access to significant funds to cover opening alone.
Some of the upfront expenses that your dealership will need to pay for before you can even start selling include Location rent, location build (if necessary), initial vehicle stock, staff costs, technology costs, and marketing costs.
Studies have shown that to start a Car Dealership in the UAE you will need to have access to at least AED 900,000. Costs do vary depending on dealership size, vehicle stock quantity and location.
4. Selling Cars is Competitive
It’s no secret that selling cars is extremely competitive. Think about it, in every area of the UAE there are multiple dealerships selling vehicles for sale. On top of this individuals sell their cars directly to customers.
The key to selling in a competitive industry is offering something customers cannot get elsewhere. Before you start a Motor Dealership in the UAE it is important that you research the automotive industry and familiarize yourself with the competition to see how they are selling cars and the prices that they are selling vehicles for. This way you can identify ways that your dealership can offer customers something better.
Offering the best vehicles and most competitive pricing is the only way that your dealership is going to be successful in such a competitive industry.
5. Technology Can Make Or Break Success
This may surprise you to hear but the technology that your dealership uses can and will determine how successful your dealership is. A mistake that so many dealerships in the UAE make is completing management tasks manually. The problem with doing this is it limits your focus and takes you away from your primary role of buying and selling vehicles.
The best way to gain a competitive advantage is to implement a Dealer Management Software. The benefit of using a dealer management software like EasyCars is dealers can automate many daily management tasks like Vehicle Stock Management, Vehicle Advertising, VAT Calculations, Accounting, Reporting and more.
Automating daily dealership tasks using a dealer management software will give you more time to focus on building leads and maximizing sales opportunities.
Starting a Car Dealership in the UAE is a whirlwind experience. To set your dealership up for success it is important that you research and understand the industry prior to launching. The 5 things presented should be considered prior to opening a car dealership in the UAE in 2023.
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.