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Setting up a car rental company: Legal requirements and everything you need to know

12.05.2025

The decision to start a car rental business is the first step into a potentially profitable business area. Car rental companies offer flexibility and mobility for customers who need a vehicle at short notice, making them an attractive option for many people. In 2023, car rental companies in Germany generated sales of over 18 billion euros, according to Statista. The impressive level of turnover shows the economic potential of the industry – which is also reflected in the large number of car rental companies in Germany.

But before you get started, it’s important to understand the legal and business aspects. In this article, you will find out what requirements and steps are necessary to successfully enter the world of car rental.

First steps - founding a company

Before you can launch your car rental business, you need to familiarize yourself with the legal and tax framework in addition to the financial aspects. We recommend that you seek qualified advice from lawyers and tax consultants specializing in business start-ups.

Choice of legal form

A crucial first step is deciding on the legal form in which you want to operate your company. The choice of the right legal form has long-term effects on the start-up costs, (personal) liability, taxes and the administrative work involved in running the company. Whether the business is to be run by a sole proprietorship, a partnership (GbR, OHG; KG) or a corporation (GmbH, UG, AG) will depend above all on the financial resources and tax issues, so this decision should be made after consulting a qualified tax advisor. For the formation of some companies (e.g. GmbH or a UG), the law provides for mandatory notarization, others “only” have to be registered in the commercial register of the local court responsible for you. In any case, this incurs additional costs for the notarial work, including the costs for registration with the commercial register.

Notification obligations of all kinds

Once you have chosen the right legal form for you and founded a company, you must notify the competent authority (usually the city or municipality in whose district the activity is to be carried out) of the commencement of commercial activity. The authority in turn informs a number of other institutions about the commencement of the activity, including the relevant Chamber of Industry and Commerce (IHK) and the tax office. Despite this information, however, you must also notify the tax office of the commencement of business activities yourself.

If you wish to employ staff, you must contact the relevant Berufsgenossenschaft Verkehr (Employer’s Liability Insurance Association for Transport) as the statutory accident insurance institution within one week. As a solo self-employed person, you should consider the possibility of voluntary membership of the BG.

Protecting your brand

Recognition is crucial in the highly competitive car rental industry. A trademark registration protects you from imitators and strengthens your position on the market. If you operate internationally, an EU-wide trademark registration may make sense. You should also seek qualified advice on this from a law firm specializing in trademark law or a patent law firm.

Voluntary memberships

Involvement in industry associations such as the Bundesverband der
Autovermieter Deutschlands e. V. (BAV) or the Verband Deutscher Autovermieter e. V. (VDAEV) can offer advantages in terms of exchange, further training or political representation of interests – but is voluntary.

Insurance obligations for car rental companies

The right insurance cover is essential – for you, your vehicles and your customers.

Important insurances at a glance:

  • Motor vehicle liability and comprehensive insurance for your rental vehicles
  • Public liability insurance to protect yourself against third-party claims for damages
  • Building insurance for your business premises and furnishings
  • Legal expenses insurance to cover financial risks arising from legal disputes.

Our tip for you: Always consult an independent insurance broker with experience in the motor vehicle sector. This will ensure that you are optimally insured in line with your needs.

Financing options

Financing your car rental can be a challenge, but there are numerous options you can consider.

Traditional bank loans offer fixed interest rates and repayment schedules, while leasing can reduce initial costs and offer flexibility in fleet management. Investors or venture capitalists may be willing to invest in your business in exchange for an equity stake. There is also government funding and grants available specifically for small and medium sized businesses. Crowdfunding platforms make it possible to raise funds from a wide range of supporters. Finally, you can also use your own capital or that of partners to finance the company. It is crucial to carefully consider the pros and cons of each option and choose the one that best suits your business model and financial goals.

In order to operate cost-efficiently, it is worth looking at providers such as Choice, which offer car rental companies attractive purchasing conditions – especially when purchasing vehicles.
About our Mobility Partnership you not only secure the best conditions, but also flexible solutions for fleet expansion: this allows you to efficiently cover peak demand and renew or expand your vehicle fleet in a targeted manner.

Vehicle fleet and fleet management

The selection and management of your vehicle fleet is crucial to the success of your car rental business.

With our Mobility Partnership we offer you exactly the right solutions for this: from fleet optimization and temporary vehicle additions to support for fleet growth. This allows you to keep an eye on your costs – and remain agile at the same time.

Business strategy: a must for your car rental company

A professionally prepared business plan is essential for setting up your car rental company. It not only serves as a roadmap for your business, but is also crucial in convincing potential lenders or franchise partners of your business idea. Your business plan should be comprehensive and cover the following key points:

  • Market analysis: Analyze the competition and examine what your competitors are doing. What strategies are they using and how can you differentiate yourself in the market?
  • Location: Carry out a thorough location analysis. Consider whether the market in the desired region may already be saturated or whether there is potential for growth.
  • Marketing: Plan your advertising measures and set a budget. Which advertising media do you want to use to reach your target group effectively?

A well thought-out business plan is the key to successfully launching and running your car rental business in the long term.

The right location for your car rental

Choosing the right location is crucial to the success of your car rental business. Start with a comprehensive location analysis to evaluate the potential of different regions. Consider factors such as population density, the local economy and the presence of competitors. An ideal location should have a high demand for rental vehicles, whether from tourism, business travelers or locals. Also look for proximity to transportation hubs such as airports, train stations or large hotels, as this facilitates access to potential customers. Finally, consider the cost of renting or buying property and the availability of parking. A careful choice of location can lay the foundation for the success of your business.

Marketing for your car rental company

An effective marketing concept is crucial for successfully positioning your car rental company on the market. Start by precisely defining your target group and tailoring your advertising measures accordingly. Use both traditional and digital marketing channels to achieve a broad reach. Online advertising, social media, a clear website and search engine optimization can help to increase your visibility and appeal to potential customers. At the same time, you should consider local advertising measures, such as partnerships with hotels or travel agencies. Customer reviews and recommendations also play an important role in marketing. Encourage satisfied customers to leave positive reviews to gain the trust of new customers. A well-thought-out marketing concept can make all the difference and set your car rental company apart from the competition.

Conclusion

Setting up a car rental company requires not only entrepreneurial thinking, but also sound knowledge of the legal, financial and organizational framework. Those who deal with the decisive factors at an early stage create a stable basis for sustainable success.

Whether financing, setting up a fleet or choosing a location – the more careful the preparation, the stronger the positioning on the market. Take advantage of the potential of this dynamic sector and start your self-employment in the mobility sector with a clear plan.