Daimler's financial division has created a joint venture with importers of Mercedes-Benz automobiles in Abu Dhabi and Dubai to offer loans and leasing for new and used vehicles, "including a shari'a compliant Islamic finance product," a statement said.
A principle of Islamic law is that borrowing and lending should take place without the payment of fixed interest.
Daimler said it aimed for a medium-term contract volume of €300 million ($440 million).
"Our presence in the United Arab Emirates is of high strategic importance for Daimler Financial Services," Daimler Financial Services chief executive Jürgen Walker said in a statement. He said Daimler would be the first automaker to have its own finance and leasing company in the UAE.
The UAE represent Mercedes-Benz' primary Middle Eastern market, with sales of 7,800 cars and 3,100 commercial vehicles last year in Abu Dhabi, Dubai, Sharjah and the Northern Emirates.
Daimler also has two major Middle Eastern shareholders, state-owned funds based in Abu Dhabi and Kuwait.