Sun, Nov 24, 2024 | Jumada al-Awwal 22, 1446 | DXB ktweather icon0°C

UAE: Used car prices soar up to 20% due to shortage of new vehicles

70% are sold through auto loans

Published: Tue 28 Jun 2022, 2:52 PM

Updated: Tue 28 Jun 2022, 10:41 PM

Top Stories

The used car prices have soared by 20 per cent in the UAE in 2022 and this is likely to increase further due to the shortage of new cars, exponential growth in population and the need for personal mobility during the post-pandemic period.

Automobile industry executives noted that as a result of a shortage of cars, many car owners, therefore, keep their cars for a slightly extended period than what has been historically observed.

They also ruled out any major impact of high oil prices and an increase in the interest rates on the pre-owned vehicle sales in the country with 70 per cent of the cars being sold through auto loans.

Abhinav Gupta - Cars24

Abhinav Gupta - Cars24

“The UAE’s pre-owned car market, post-pandemic, has witnessed an exponential growth in demand, aided by Expo 2020 which has led to a huge influx of tourists and massive job creation. Furthermore, due to the impact of the pandemic, the need for personal mobility has triggered the growth in both first-time and second car buyers. The used car market has also remained buoyant as a result of the global chip shortage,” said Abhinav Gupta, CEO of Gulf Region at Cars24.

Despite an increase in prices, Gupta added the segment remains highly affordable as compared to new ones.

“The new expatriates want to be mobile as early as they can, therefore, that has also had a positive impact on the used car market,” said Gupta, whose company has rolled out around 7,000 cars since it started operations in UAE last year.

Iqbal Dawood

Iqbal Dawood

Iqbal Dawood, managing director of Abu Mousa Motors, prices of used as well as new cars prices are increasing due to exponentially high freight rates and the lingering effect of the pandemic.

“Since the outbreak of the pandemic, freight availability has become a major challenge for pre-owned car importers. For example, booking a container from Japan to Africa is almost impossible and even if we get it, the freight charges are exponentially high. And this has badly disturbed the supply chain.”

Dawood said prices of pre-owned cars in the UAE have increased around 15-20 per cent in the UAE this year and projected that this trend will continue for the remainder of the year. “We expect another 20 per cent further increase in pre-owned car prices this year,” he said.

Impact of rising oil price, interest rate

Abhinav Gupta said there has not been much of an impact of high oil prices and interest rates on pre-owned cars.

Oil prices in the UAE reached an all-time high in June, crossing Dh4 per litre for the first time since the country aligned fuel prices with international rates in 2015.

“We haven’t seen much of an impact of high oil prices on the used car market… We have definitely observed a lot of buyers switching their decision from buying a new car to buying a used car. This definitely points at the affordability of this segment, and inherently reflects the confidence of buyers in the quality and reliability of used cars in the organised players market,” added Gupta.

Concerning the impact of interest rates, Gupta added that around 70 per cent of the used cars are still sold with an auto loan in the pre-owned category.

“The pre-owned car industry is need-based, so if a customer wants to buy a car, then they would buy it irrespective of the interest rate. Having said that, the interest rates in UAE are still on the lower side as compared to the rates in other international markets. But here in the UAE, a personal car has become a necessity, and therefore, the industry will remain stable despite a marginal hike in interest rates,” he added.

ALSO READ:



Next Story