UAE car sales: Best time to buy new or upgrade as prices drop

Dubai: Now is the best time for UAE consumers to buy a car, whether brand new or pre-owned. In many cases, prices are lower than at any point in the last 5 years.

Apart from the pressure on new car prices, at the same time, banks are rushing out with some of the most favourable car financing options available. This includes multi-year car loans at 0% - and 0.99% in the case of pricier models.

What seems different now is that more models are available at 3-5-year 0% interest rate, a clear sign that dealers and banks are working overtime to ensure high interest rates do not put off buyers.

The only cost that's still on the higher side is motor insurance - but new car buyers needn't worry about that with dealers absorbing that. (Some offers are now even offering multi-year insurance on new models.)

The main reason that there’s been pressure on car prices is because of the ‘flood’ of models that had earlier been meant for the US market getting diverted to the UAE and other Gulf markets. It doesn’t matter which brand or model, or where it’s getting made – in the UAE, their prices are dropping. (The exceptions remain the super-premium models, most of them coming direct from Europe.)

Trump's 25% tariffs lead to re-routing

This is the fallout from the 25% import duty on cars imposed by the US since April. “Everyone’s talking about whether the other tariffs the US plans to impose on trade partners,” said a car dealer in the UAE. “But the 25% tariffs on auto imports into the US has happened – and there is unlikely to be any exemptions.

“That’s why global carmakers are trying to shift those models to the UAE and Gulf.”

So, when 2025 models are available in the UAE at ‘reduced’ prices, it forces other dealers and manufacturers to do the same to remain competitive. And everyone has to take into account the fast market share gains Chinese brands are making, whether they are fuel based on EVs.

Chinese auto brands gobble up UAE market share

“Chinese brands, which have grown from 7%–8% market share in Q4-2024 to around 15% in Q2-2025, is forcing established brands to revise their pricing strategies,” said Sebastian Fuchs, Managing Director at AutoData Middle East.

"For instance, Jetour jumped 150% year-on-year, rising to 4th place in overall rankings.

“Overall new car prices in the UAE are expected to decline slightly with US-made models showing the most significant decrease.”

As has been clear for some time, Chinese brands are willing to 'buy up' market share, even if that means never-before-seen warranties and after-sales options. (Chinese EV makers are also working to come up with some solutions to offer 'competitive' insurance options after owners saw their renewal premiums spike after April 2024's rains in the UAE.)

Price drop is 'natural'

Dealers and retail industry sources say that after 4-5 years of steady price increases, a drop was natural. It’s just that Trump’s 25% duty on US car imports accelerated the price drops in the UAE.

Which all adds up to one of the best phases for UAE consumers to go car shopping.  

“This is the most buyer-friendly car market in many years with 0% interest, bundled comprehensive insurance, favorable re-sale prices with the dollar weakening,” said Sandeep Ganediwalla, Partner at Redseer Consulting. “Plus, dealers are offering more generous service packages.”

UAE car sales in H1-2025

In the first six months, new car sales had another strong start, continuing from 2023 and 2024 patterns.

"The UAE vehicle market grew by 13.8% in Q1, with January and February both posting double-digit growth," said Sebastian Fuchs of AutoData.

"The EV market is booming, growing by 62.2% in Q1-25 alone, fueled by national incentives and stronger charging infrastructure. Tesla currently leads with a 43% share, while BYD and MG are climbing fast.

"So while pricing dynamics are shifting due to global supply factors, the UAE market itself remains active and healthy, with rising consumer demand and evolving brand competition shaping the landscape - not slowing it."