Dubai: UAE’s car dealerships are by and large avoiding the heavy promotions and discounts this Ramadan to better manage buyer expectations when it comes to a new car purchase. Instead, dealers are running Ramadan schemes where the focus is on the ‘extended’ – whether that means longer warranty periods, after-sales service and with free registrations thrown in.
This means that free warranty limits now stretch to 5 years ‘unlimited’ as against the 3-year standard of past years. But it would be on the service packages that new car buyers can really hope to gain with the ongoing promotions, with some dealers even offering up to 8 years free service.
Depending on the model and brand, these savings could typically extend from Dh4,000 to Dh20,000. The only difference is that this time it will not be upfront discounts but through the first few years of ownership.
Plus, dealers want to take the sting of the higher motor insurance premiums, with some not passing on these costs to the buyers for the first year.
Car owners want to see ‘real’ benefits rather than just straight one-off discounts, say officials at top dealerships in Dubai and Abu Dhabi. “In all categories other than luxury cars and SUVs, today’s buyers prefer to take up deals that give them clear sight of what their cost of ownership will be over 3-, 5 or 7 years,” said the CEO at one multi-brand dealer. “This is why extended warranties and free service periods are so much more important than ever before.”
Another big year for car sales, but...
The UAE auto market is in line for a third straight year of rapid growth. But as was the case in 2021 and 2022, the numbers could be even better if there were sufficient units available to meet all the demand. A recent survey by a dealer for a German carmaker found that six in 10 UAE residents were thinking about buying a car or upgrading this Ramadan.
Enquiries are running strong – but this is where the problem begins. “There are more shipments coming compared to last year, but the majority of these have been pre-sold and will immediately be handed over to their buyers,” said the marketing manager at a Dubai dealer. “Someone coming to the showroom without a purchase might have to wait another 6-8 weeks before he gets the chosen model.
“On luxury and super-luxury models, the waiting period will stretch to five months, even longer.”
Same problems with chip availability
The reason? Lack of enough chips needed in the production of cars, a global problem that continues to persist from the Covid times. Carmakers and their local partners had been hoping to resolve this problem by the start of the second quarter. By the looks of it, this issue will likely persist right until Q4-2023.
Shipping costs are way down
New car owners in the UAE are getting one favourable break, though. They will not have to pay an additional mark up because of the higher shipping costs from production plants to showrooms in the UAE. Thankfully, these logistics costs are down 30-35 per cent from their late 2020-22 peaks.
“Every dealer has held the line on ex-showroom prices for MY (model year) 2023 cars,” said an industry source. “The best part is that consumer demand is still very much there – only the delivery aspect needs to be carefully managed.”
This Ramadan promotion, dealers are doing that.
