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Why is so much money being spent on number plates?

Dubai - Millions of dirhams have been spent by UAE businessmen purchasing licence plates in auctions

The UAE has become one of the ultimate destinations to buy, sell or simply enjoy looking at luxury items of all sorts. It's not unusual to spot a Ferrari or a Lamborghini on UAE roads, driving around with some of the most 'impressive' license plate numbers.
The latest trend that has been making headlines across the country is the auction of plate numbers -the smaller the number, the better and pricier - for example, '1', '2' or '3' are the most coveted ones. Millions of dirhams have been spent by UAE businessmen purchasing these licence plates in auctions, as reported by Khaleej Times before.
So far, the costliest plate was purchased in 2008 by an Emirati businessman, Said Al Khoury, who bought the No.1 licence plate in Abu Dhabi for a whopping Dh52.2 million. More recently, in June 2016, another Emirati businessman, Arif Al Zarouni, put down a cool Dh18 million for the No 1 plate in Sharjah.

In October last year, Indian businessman Baldwinder Sahni, spent Dh33 million for the No.5 plate in Dubai.
But what is it about exclusive number plates that makes them so attractive to wealthy bidders in the UAE?
Abdullah Al Hammadi, one of the most known bidders and buyers of some of the top notch licence plate numbers, said people are trying to "earn respect" through these costly expenses. Al Hammadi said he has Dh60 to Dh70 million worth of license plates and 7,000 different kinds of numbers. He has made a business, and large amounts of profits, from buying and selling plates. "The people who are buying license plates want to be different from others. They think people will respect them if they have a good number. It's usually the young people who are buying these plates.
"Some people are even taking loans from the bank to buy them. But they do it so they can make some kind of profit. They buy it for less, wait for the price to go up and then sell it again for a higher price," Al Hammadi said.
Growing, going numbers
Al Hammadi said that one pattern he has noticed is that buyers often pay the security deposit for these license plates, but are then unable to pay the rest. Such an instance was also reported by Khaleej Times before, where a man went on trial for issuing a dud cheque of Dh31 million at an auction, for the No 1 Abu Dhabi number plate.
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The Abu Dhabi Criminal Court had heard that the 32-year-old Emirati bought the plate in November last year at the auction at Emirates Palace Hotel. The auction, which generated Dh99 million, was hosted by the Emirates Auction in cooperation with Abu Dhabi Police on November 19 at Emirates Palace Hotel to commemorate the Abu Dhabi Government's Golden Jubilee.
Sharjah also hosted licence plate auctions before. The auction, organised by Sharjah Police in collaboration with Emirates Auction from November 20 to December 2, 2016, attracted the attention of bidders from across the UAE and beyond. A single-digit Sharjah number plate sold for Dh2.6 million in an online auction. The Sharjah electronic auction for vanity plate numbers got Dh16.48 million - an increase of 49 per cent in its first edition.
Al Hammadi pointed out that many people who have purchased these licence plates do not actively use them on their vehicles, as he believes the value of the numbers drop if they place it on the car. He, himself, uses the 440 licence plate number, even though he has smaller numbers.
"I have many licence plate numbers that I do not use. I think the value will go down, so I use other numbers. Many people do not want their license plate number revealed either, because they think it will affect the price," he said.
Al Hammadi said this is a growing business and can earn profit, revealing that he once purchased a plate for Dh12 million and sold it for Dh28 million later on.
The prestige behind plates
There is also social and psychological capital tied to these expensive number plates, as they are an indicator of wealth and status. An Emirati psychologist told Khaleej Times that the elevation of one's status, has a lot to do with social pressure.
"Spending on luxurious items, including licence plates, comes from a cultural or social pressure to elevate one's status," said Naser Al Riyami, Emirati psychologist and hypnotherapist. "When you are from a higher socioeconomic status, or at least appear to be, you are more desirable - whether it is for business relationships, or marital and social relationships."
The urge to acquire status also has an aspect of personal gratification, however, there is a counter pressure, as well as opposing belief systems that belittle the quest for immediate gratification. "At the end of the day, expensive number plates are all about appearance and social status." Al Riyami added that bidding for an exclusive number plate is not necessarily a negative or positive aspect in one's psychological behaviour - as long as it fits well in the budget. "If special number plates are well above your budget, then you may have a psychological behavioural problem in spending, especially when you are taking out loans to pay for your luxury items." reporters@khaleejtimes.com