The UAE provides all the conditions for extremely pleasant driving namely smooth roads, attractive fuel prices and polite drivers, road order and safety, intuitively clear traffic rules, low parking cost and lack of crime. Those who have recently come to the Emirates and had no time to acquire their own car, usually use a taxi or a rental car. It is considered that the UAE rental car prices are quite affordable, so it is often more reasonable to rent a car than to use taxi driver services.
The UAE car rental market
The UAE rental market is quite densely filled up. There exist international giants such as Hertz, Sixt, Avis, Europcar, Budget, etc. controlling 15% of the market, as well as hundreds of local companies operating in different price ranges.
In general, in 2014 rental cars income totaled more than 238 million dollars, of which more than 200 million dollars account for small and medium-sized companies.
As a rule, companies try not to work in one place geographically, but immediately cover the key cities and emirates such as Dubai, Sharjah, Abu Dhabi, Ras Al Khaimah and others. Concerning the segmentation, some distributors choose a specific market segment (Economy, Comfort, Business, Luxury, Premium Sport) and work only within it, the others, often-larger ones, try to be presented in all segments of the market. Standard rental price depends on the chosen class of a car, so in the "Economy" class a car can be taken for 40 USD per day, while analysts say that the average check in the "business" is 135 USD, and in "Premium-sport" class it may be close to 800 USD.
Both private individuals and legal entities rent cars. The private individuals are foreign tourists, businessmen, periodically visiting the country, or those whose car is being repaired, who sometimes need a car of a different class than their own one, or when transport is needed only for a few hours. Legal entities especially start-up companies or foreign missions, also tend to use rental services. For these purpose renting is more favorable than the creation and maintenance of their own fleet. In addition, dealing with corporate clients is more preferable, as it promises higher income.
Starting your own car rental company in Dubai
Opening a car rental business, a company should start with its registration,drawing-up of the necessary documentation, licensing and activities coordination in the RTA (Road Traffic Authority). Further staff training is carried out (directly engaged in providing lease services) in the Road Traffic Authority.
A novice car rental company needs at least 10 cars in its fleet. Otherwise, the business will not be profitable. Cars can be one-time purchased or taken on lease. Of course, the second option at the initial stage is less expensive, but in the end it will increase costs of the equipment purchase by 15-20%. As a rule, one-time purchase of cars of the same brand can give an entrepreneur a substantial discount. Experts inform that in the first months of work parking spaces will be needed for approximately 70% of the units of the fleet. While some vehicles are working, there should be some place where the others can be washed or minor repaired, etc.
For a car rental company an office is not a mandatory attribute, a car can be delivered to a specified address. However, its presence is welcome; from the client's perspective the availability of the office is a sign of reliability of the car rental company. Concerning the staff, a small project requires the following staff members: a Project Coordinator (administration, control, communication with management and staff, conducting advertising strategy), a manager -dispatcher to work with clients, drivers (1-2 people), an accountant and a lawyer (possibly outsourcing).
According to the experts’ advice, the advertising campaign should be launched at the very beginning of enterprise registration, and a company should pay great attention to this aspect while the market is really competitive. Firstly, a company should create a recognizable corporate style, as well as conduct the Internet promotion. In addition, partnership with the places of target audience deployment play an important role in the marketing strategies, those may be airports, business centers, hotels, popular places. The ability to locate the information stands or flyers in such places can give tangible results.
Taking into account financial indicators, the UAE car rental business looks quite attractive. There’s no sense to fear market competition but it makes sense to use the highly effective demand and favorable work conditions together with proper management and creativity in order to get your own market share.