Want to start an auto garage in a UAE Free Zone? There are places in many cities of the UAE, like Dubai, Sharjah, and Abu Dhabi, etc., where you can start it. Complete information about costs and requirements for opening an auto mechanic garage in a UAE Free Zone is given here. You want to open a garage in Dubai South or JAFZA. Here, you can find an industrial warehouse. Usually its rate is AED 325 to AED 350 per square meter.
For this work, you will need to rent a warehouse, the annual rent of which can be up to AED 150,000 to AED 200,000. This largely depends on the location and the type of space you are selecting.
License and Government Fees (Estimated)
- Business License (Annual): AED 12,500 – AED 15,000.
- Registration Fee (One-time): AED 9,000 – AED 10,000.
- Establishment Card: AED 1,825 (Annual).
- Visa Cost: Approximately AED 4,000 – AED 5,000 per worker (for 2-3 years).
- MoA & Documentation: AED 2,000.
If we talk about these initial expenses, then about AED 30,000 is the cost of a year, which includes annual fees and one worker. If you hire more labor or staff, you may have to pay a cost of AED 4,000 to 5,000, which is the visa cost.
Companies that are registered: their labor visas come from the labor itself. As an example, if you have set up your own garage, you can take the visa fee advance from the labor, i.e., the company worker, and put him to work in your company.
Some companies add their own fees as well, which makes them profit, but I would advise you not to do that. You will also have to arrange for his salary, which could be around AED 2,500 to AED 3,500.
Similarly, when we include the worker’s salary, we can pay a salary of AED 22,000 to AED 36,000 annually. Similarly, this total basic expense will have to be paid at AED 60,000 per year. We discuss the remaining expenses below.
Warehouse & Facility Rent
In Free Zones, you must rent a warehouse designated for “Light Industrial” use.
- Standard Rate: AED 325 to AED 350 per square meter.
- Total Annual Rent: For a medium-sized garage (approx. 500 sqm), expect to pay AED 150,000 to AED 200,000 depending on the location.
Note: Most Free Zones require rent to be paid in 1 to 4 cheques upfront.
Now, if we add up the Setup & Licensing Costs and Warehouse & Facility Rent, the cost of both can be around AED 210,000 or more. If you are a resident there, you may see further reductions in spending. You can check on which location the car Auto Garage mechanics are there in UAE. You can explore the Car mechanics in Dubai and can find the best place that make good profit.
Essential Machinery & Equipment Costs
To pass RTA and Municipality inspections, your workshop must have high-quality equipment:
- Diagnostic Scanners: Autel or Launch Scanners cost between AED 2,500 and AED 4,100.
- Hydraulic Lifts: Two-post or jacking beams cost AED 1,600 to AED 3,500 per unit.
- Air Compressor (Heavy Duty): Essential for air tools, costing roughly AED 4,365.
- Professional Toolsets: Comprehensive mechanical sets (wrenches, sockets, etc.) cost AED 3,000 to AED 8,000.
- AC Recovery Machine: For refrigerant charging, costs around AED 5,000.
The total cost of the machinery can start from AED 17,000 to 25,000. Remember that these are your assets, so their cast is considered separate from the rest of the cast. The more you spend here, the better the facilities you will get. Based on the facilities, customers are more attracted, which doubles the profit.
Insurance
Insurance is mandatory in the UAE for doing any kind of business or job. Without it, you do not get any kind of approval, and there are many problems in the job as well.
For an auto mechanic workshop, you must take both Public Liability Insurance and Workmen’s Compensation Insurance. I will provide you with the details of both here.
Public Liability Insurance
If any kind of damage is done to your customer in the workshop, it covers it. This can save you from a big loss because you will not have to spend money on insurance.
Its fee is usually AED 2,000 – 5,000 per year. Which depends on the workshop, whether it is big or small.
Workmen’s Compensation Insurance
If there is any kind of injury during work, it is covered by insurance. This insurance is only for employees. A worker costs AED 1,500 – 3,500 per worker per year, which is often paid by the worker himself. But most companies adjust their salary and make it free depending on it.
Finally, the total cost of opening an auto workshop can be AED 235,000 to AED 290,000. Here is a quick overview of the total Initial Investment:
| Category | Estimated Cost |
|---|---|
| Setup & Licensing | ~30,000 |
| Worker Salary (1 year) | 30,000 – 42,000 |
| Insurance | ~5000 – 7000 |
| Warehouse Rent | 150,000 – 200,000 |
| Machinery | 17,000 – 25,000 |
| Grand Total Estimated Investment | 235,000 – 297,000 AED |
Key Requirements Checklist for Opening a Garage in UAE
Legal approval and compliance are the most important steps for opening a Garage in the UAE.
1. Trade License
The first step to operating an auto workshop is to obtain a trade license. Here you are being given information about it, after reading which you can start your work.
- If you are setting up in a free zone (such as Dubai South), the license is applied for through the same free zone authority.
- The license for mainland setup is issued by the Dubai Department of Economy and Tourism (in Dubai).
- Activities should be clearly minuted: “auto mechanical repair”, “car maintenance”, or specific garage activities.
Remember that without a license, you cannot legally issue invoices.
2. Environmental Approval
Garage businesses handle oil changes, filters, and waste materials, so environmental clearance is required. These things are taken special care of in the UAE, so you may face a lot of problems without it. If there is no proper disposal system, heavy fines may be imposed.
- There should be an approved management system for the disposal of used oil.
- Oil drainage, storage drums, and spill control systems are inspected.
- In Dubai, this approval is obtained from the Dubai Municipality.
3. Civil Defence Certificate
Fire safety compliance is mandatory. The inspection is done by Dubai Civil Defence.
- Fire extinguishers
- Smoke detectors
- Emergency exits
- Fire alarm system
Remember that without the certificate, your warehouse operational approval will not be passed.
Insurance (Mandatory)
There are two types of insurance generally required to open a car workshop in the UAE:
- Public Liability Insurance: If a customer’s car or a third party’s car gets damaged in the workshop.
- Workmen’s Compensation Insurance: If the worker gets injured during work.
All major companies that provide auto mechanic services require these insurances. This not only benefits you, but also your customer. This saves you from a big loss. Public Liability Insurance in the UAE ranges from AED 2,000 – 5,000 per year for a small-medium garage. If you are setting up a large business, this cost can go up to AED 8,000 – 10,000 because the risk increases in a large business.
Similarly, another insurance, Workmen’s Compensation Insurance, is also mandatory, which is AED 1,500 – 3,500 per worker per year.
Mainland vs Free Zone
| Option | Best For |
|---|---|
| Mainland (Al Quoz, Sharjah Industrial) | Walk-in individual car owners |
| Free Zone | Corporate fleet contracts, international exports |
Choose based on your target customers and business model.
Final Advice:
Opening a garage in the UAE can be profitable if you complete all approvals, follow safety standards, maintain insurance, and properly manage costs. Initial investment for a small-medium garage is 235,000 – 297,000 AED for the first year.
