Used car sales in the UAE may finally be getting ready to overtake that of new cars. And without even trying too hard either.
Weak retail sentiments are convincing more dealerships they had better get their certified pre-owned programmes in top order. If consumers are not willing to spend on new vehicles, dealerships hope they can persuade them to seek options in second-hand options. And while they are at it, try certified pre-owned, where the cars would have done less than three years or 80,000 kilometres.
“New car sales have always been in the front — the ration used to be 1:4 or 1:5 at one time, now it’s more 1:2,” said Michel Ayat, CEO of AWR Automotive. “But with VAT as a factor, we reckon that used cars should soon get past new car demand in the near future. That means turn it 2:1 in favour of used cars.” His company has just launched AutoTrust, a retail network that will sell pre-owned cars (of 5 years or 100,000 kilometres) cutting across all makes. There will also be a parallel service and maintenance facility under the same branding.
Certainly, VAT can be an influence on where used car sales are headed. As per the current tax regime, it will be 5 per cent on the full value of a new car, while it would be 5 per cent on the difference between the buying and selling price on a pre-owned. Cost-conscious buyers will then have every reason to check out the used car options after January 1.
Online used car portals are also getting into the thick of action. SellAnyCar.com is adding on new options for those selling their car through it, while others are willing to drop in at the seller’s doorstep to give free valuation services before a deal is struck.
“The rule of the game is simple — any used car dealer who has access to sufficient inventory of late model-year cars will be well-placed,” said a market source. “There is considerable demand even now for late model year versions, where buyers believe the model has got a service and maintenance history and enough of warranty backup.
“With VAT, this demand can only get bigger.”
According to Saygin Yalcin of SellAnyCar.com, “New car sales dipped double-digit in 2017 and 2016 … but used car sales were still in positive territory, at least based on our volumes. I think a lot of used-car dealers would voice similar sentiments.”