Dubai: First, the good news for the UAE car market.
New car buyers are finally starting to see sharp reductions in waiting times on deliveries of the models they have bought. On many popular models, these wait times have reduced to a ‘couple of weeks’ rather than months as has been the case for the better part of two years and more.
What’s proving another big help for these buyers is banks in the UAE offering flexible finance schemes even with all the interest rate hikes seen since March of ’22. The current flat rate on car financing is 3-5 per cent on average, while that on reducing income, it works out to 5-10 per cent. Even then, nearly all of the big banks in the UAE reported higher auto loan demand in their first quarter financials, and which shows every chance of going higher in the current one.
To counter rate increases, banks have been sweetening their deals with cashback schemes and other incentives thrown in for good measure. All that is paying off with in increased car buying in the UAE either side of last month’s Eid holidays.
While pricing of new model year launches have remained more or less stable in recent weeks, dealerships are also back with offering bigger add-ons. Extended warranty is standard these days, but there is more being offered with free insurance and the like.
Keep cost of owning a new vehicle within a range – and buyers will keep showing up.
This is where the news gets even better for the local auto industry. “We had been projecting about a 5 per cent increase in new car sales for the market – but it turned out to be a 15 per cent growth (in year-to-date),” said Jacques Brent, Managing Director at Al-Futtaim Toyota & Lexus.
Not all delivery slowness has gone away
Demand for hybrid models in the UAE is climbing nicely – and dealerships could have booked higher sales in the year so far if they had more stock to sell. “Hybrid continues to be a category where it will still take longer for the handovers to happen,” said Brent. “Any model that’s been launched recently and comes up against strong demand from other global markets is taking longer.
“That’s the situation we see happening now – a two month or so waiting list on hybrids.
“Through the rest of the year, we still believe delivery situation will improve on most other models.”
Between EVs and hybrids, their share of the UAE new car sales is around the 10 per cent mark. On hybrids, in particular, industry sources reckon that growth will likely show up higher as more brands offer these options alongside their standard fuel-driven ones. Toyota is building up towards a wider range of hybrid choices, while more niche brands such as a Maserati, for instance, have the option available on all their models.
"When EVs and hybrid models start offering more pricing ranges, that's the big moment waiting to happen in their UAE sales," said the CEO at a leading dealership. "We will be adding more to our hybrid line up in the second-half 2023. There is also increased interest from fleet operators, and that will be another factor."