In a country where luxury is woven into everyday life, owning a high-end car is not just a status symbol but a reflection of the UAE’s automotive culture. Therefore, it’s safe to say that the automobile market in the UAE is a high-energy arena with immense potential for the enterprising spirit. With the used car market, alone, poised to reach an astonishing $32 billion by 2027, the opportunities for growth and innovation are undeniable. Meanwhile, the UAE’s vibrant mix of locals, expatriates, and a steady stream of tourists fuels an insatiable appetite for vehicles, transforming car dealerships into not just businesses but lucrative investments.
The financial landscape is equally enticing. Car dealerships in the UAE typically reap profit margins of 5% to 10% on new vehicles, soaring to an impressive 20% to 30% on pre-owned gems. With the market valued at a staggering $6.4 billion in 2024 and a projected demand for 400,000 new cars on the horizon, the road ahead is paved with promise.
This article will help you navigate the exhilarating world of car dealerships, peeling back the layers on what it truly takes to thrive in this industry through a range of business activities you might like to consider. Success in this industry extends beyond mere vehicle sales; it hinges on the ability to build a brand that exudes trust and reliability amidst a bustling marketplace. So, whether you’re contemplating launching a dealership or simply intrigued by the industry, here are the business activities that you can select under your license:
4510.01 – Wholesale And Retail Sale of New and Used Vehicles
This business activity encompasses a dynamic segment of the automobile industry that operates at both wholesale and retail levels. This sector is defined by its extensive array of offerings, which includes not only passenger cars but also specialised vehicles such as ambulances, minibuses, and various types of commercial vehicles, including lorries, trailers, and semi-trailers. Additionally, the market has seen a rising interest in recreational vehicles (RVs), such as caravans and motorhomes, driven by a growing consumer inclination towards outdoor activities and travel.
In the wholesale domain, businesses engage in the bulk procurement of vehicles from manufacturers or authorised distributors. This approach allows wholesalers to achieve significant cost savings, which can be passed on to retailers or consumers. Wholesalers often play a vital role in maintaining inventory levels across retail dealerships, ensuring a steady supply of vehicles that meet market demand. They also offer competitive pricing and attractive financing options, enhancing the overall appeal of the vehicle purchasing process.
The retail sale of vehicles involves direct transactions with end consumers, providing them access to both new and pre-owned vehicles. Retailers serve as critical intermediaries in this process, facilitating the sale of vehicles while offering an assortment of brands, models, and price points. This diversity allows consumers to choose vehicles that best fit their individual needs, whether they seek the latest models with advanced technology or budget-friendly used options.
On the contrary, most are drawn to the UAE for short-term assignments—business projects, consulting roles, or diplomatic missions—often leading to a transient lifestyle. For expatriates navigating this vibrant region, having a personal vehicle becomes essential. While the allure of a brand-new car is hard to resist, the used vehicle market offers a cost-effective alternative that doesn’t compromise on quality or performance. Nonetheless, an increasing number of people are choosing to settle in the UAE, prompting them to consider that gleaming new vehicle as part of their lifestyle.
As the automotive landscape in the UAE continues to evolve, several prominent players have emerged, each capitalising on the region’s unique blend of luxury, innovation, and a diverse consumer base. These brands not only exemplify the immense potential of the car dealership sector but also set the standard for excellence in both wholesale and retail vehicle sales. Their success stories offer valuable insights for aspiring entrepreneurs looking to establish a foothold in this dynamic industry.
Prime examples include:
- Arabian Automobiles
Arabian Automobiles, part of the AW Rostamani Group, is the exclusive dealer for Nissan, Infiniti, and Renault in Dubai and the Northern Emirates. With a network of 12 showrooms and 4 service centres, they serve thousands of customers annually. The company sold over 30,000 vehicles in 2022, solidifying its reputation for exceptional customer service and diverse offerings, including both new and used vehicles.
- Al-Futtaim Automotive
Al-Futtaim Automotive is one of the largest automotive groups in the UAE, representing renowned brands such as Toyota, Lexus, Honda, and Ford. With over 50 dealerships across the UAE, they provide a wide selection of new and certified pre-owned vehicles. In 2023, Al-Futtaim Automotive reported revenues exceeding AED 11 billion ($3 billion), reflecting their robust market presence and the strong demand for their diverse vehicle offerings.
Excluded from this class are activities directly related to:
- Wholesale and retail sale of parts and accessories for motor vehicles
- Renting of motor vehicles with driver
- Renting of trucks with driver
- Renting of motor vehicles and trucks without driver
These exclusions are distinct from the vehicle dealership services provided within this class.
Third-party Approval: This business activity requires third-party approval from the Ministry of Economy (MOE) prior to the issuance of the license.
Filing of Economic Substance Return: Business activity 4510.01 is exempt from this requirement.
Anti-Money Laundering Compliance: Business activity 4510.01 is exempt from this requirement.
4510.02 – Wholesale and Retail Sale of Off-road Motor Vehicles
This business activity refers to the trade of vehicles specifically designed for off-road use, such as jeeps and all-terrain vehicles (ATVs). It encompasses both wholesale and retail operations, where wholesalers purchase vehicles in bulk from manufacturers and sell them to retailers or dealerships. Retailers, in turn, engage directly with consumers, offering a variety of off-road vehicles and related products.
Exclusions from this class include wholesale and retail sale of parts and accessories for motor vehicles, renting of motor vehicles with driver, renting of trucks with driver and renting of motor vehicles and trucks without driver. These exclusions are distinct from the vehicle dealership services provided within this class.
Third-party Approval: No third-party approvals are required for this business activity
Filing of Economic Substance Return: Business activity 4510.02 is exempt from this requirement.
Anti-Money Laundering Compliance: Business activity 4510.02 is exempt from this requirement.
4510.03 – Wholesale and Retail Sale by Commission Agents
Wholesale and retail sale by commission agents refers to the business activity where commission agents facilitate the sale of goods on behalf of manufacturers or wholesalers without taking ownership of the products. These agents earn a commission based on the sales they generate, effectively acting as intermediaries between sellers and buyers. This model enables businesses to extend their market reach by leveraging the agents’ expertise and established networks while avoiding the overhead costs of maintaining a direct sales force.
In practice, commission agents promote and market the products to potential customers, negotiate sales terms, and coordinate transactions. Once a sale is made, they process orders and assist with logistics, ensuring a seamless sales experience. This approach is particularly valuable for manufacturers and wholesalers looking to penetrate new markets or increase sales volume, as it allows them to tap into the commission agents’ local knowledge and relationships.
Excluded from this class are activities directly related to wholesale and retail sale of parts and accessories for motor vehicles, renting of motor vehicles with driver, renting of trucks with driver and renting of motor vehicles and trucks without driver. These exclusions are distinct from the vehicle dealership services provided within this class.
Third-party Approval: No third-party approvals are required for this business activity
Filing of Economic Substance Return: Business activity 4510.02 is exempt from this requirement.
Anti-Money Laundering Compliance: Business activity 4510.02 is exempt from this requirement.
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