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UAE’s used car market logs in rapid recovery

Dubai - Car dealers need to quickly restructure their business models to be consumer focused and more used car oriented, experts said

The UAE’s used car segment has logged in a steady recovery and is now well on its way to achieving sizable growth, experts said.

Craig Stevens, CEO of Dubi Cars International, an online car marketplace, said that the auto market in the UAE is transforming and will continue to do so for the foreseeable future.

“We experienced a slight decline in visitors on the Dubi Cars website and mobile application between the months of March and May 2020, especially during the government sanitisation disinfection programmes, since the onset of the Covid-19 pandemic,” he said. “However, as the markets reopened, we have experienced a rapid recovery, followed by growth, as consumers’ purchasing trends have adapted through digital solutions. Coming out of the Covid-19 lockdown we witnessed a rapid increase in demand from customers looking to purchase and sell UAE spec cars. Our leads increased to over 100,000 a month, with 50 per cent of leads coming from outside the UAE – an all-time record-high for Dubi Cars.”

Stevens added that the new car market is in steep decline by 40 per cent to 60 per cent year-on-year and that this is unlikely to change quickly “unless we see some attractive leasing deals which allow customers to drive a vehicle without paying large down-payments and large monthly repayments, hence why the used car market is rapidly growing.”

The used car market, he said, will dominate the UAE car market and car dealers need to quickly restructure their business models to be consumer focused, used car oriented and most importantly optimising digital solution opportunities.

“The used car market is prominently structured to cater both - the local and export market,” Stevens said. “However, due to the Covid-19 pandemic there is excess stock in the market and dealers will have to work hard to expand their reach, by optimising digital solutions and venturing into the export market.”

Dubi Cars recently conducted a consumer survey titled, ‘Dubi Cars Online Car Buying’ and of the 1,000 respondents, 65 per cent said they would prefer to buy a used car. Over 75 per cent of buyers said they wouldn’t mind completing the car purchase online with the key reasons being ease, trust, convenience, saving time and money. However, one of the biggest challenges consumers face when purchasing online is the inspection of the used car, lack of information about the car, and trading in their existing car.

Like Stevens, Miguel Llorente, head of the Classic Car Division at Tomini Group, explained that consumers in the UAE look for competitive prices and the best value for money when looking for a used car. “In the luxury segment, it is very much the same; as cars get rarer or more exclusive, people look for special options, unique features, or distinct serial numbers. In essence, they are looking for something that nobody else has. A client looking for a rare car is not as concerned about price as much as they are about the exclusivity of the car.”

Asked about how discerning customers in the UAE are when it comes to classic cars, he said: “Our customers are well qualified in what they are looking for. They know exactly what they want when they come to our showroom; and immediately ask for the condition, provenance and history of the car”.

“I think that over the past five years, the classic car segment has experienced a tremendous rise in the UAE,” he added. “There are more quality classic car events, and the community around these cars has grown significantly; people are doing their research, brushing up on their history, and they are importing some very unique cars to the country. The spare parts network is also improving, and some dealerships are now offering dedicated spaces for classic cars.”

Looking ahead, Stevens noted that the demand for environment friendly cars is increasing significantly and that the overall demand for hybrid cars has grown by 50 per cent year-on-year.

“Electric vehicles are also showing a very positive outlook, for example, Tesla is at 76 per cent demand increase year-on-year,” he said. “We expect this trend to continue, for various reasons such as manufacturers developing more affordable models. The demand for used hybrid cars is growing, as pioneers upgrade to newer models or different brands, resulting in a diverse range of options for car models and specs.”

rohma@khaleejtimes.com