It’s not just new cars that are being driven away from dealerships across the nation — buyers are happily putting their money on used cars as well.
Carmudi Middle East, an online classifieds portal for new and pre-owned cars, states that the used cars market in the UAE is worth almost $2.5 billion (Dh9.1 billion) and growing at 15 per cent annually.
Earlier this year, Al Wataneya Auctions, a subsidiary of Emirates Transport, said sales of used vehicles surged by 20 per cent in 2014, during which time it sold 1,900 units worth Dh61 million. Also last year, Al Futtaim Automall, a leading pre-owned car dealership, reported a 30 per cent increase in sales over 2013, while classifieds website Dubizzle says its automotive section registers nearly 2.18 million visits a month from the UAE alone.
Riding the growth wave
The rise in demand for used cars comes as the UAE’s automotive sector witnesses steady growth. Figures by Jebel Ali Free Zone show that the value of its automotive trade increased by more than fourfold from $1.1 billion in 2004 to $4.7 billion in 2013. Total sales in the GCC are expected to touch 2.27 million units by 2020, driven by the UAE and Saudi Arabia, says consultancy Frost & Sullivan. It estimates that 350,000 cars were sold in the UAE last year and expects this number to rise to 550,000 by 2020.
“Higher employment, economic growth and increase [in] per capita income [are] driving vehicle sales,” says Subhash Joshi, Associate Director and Regional Head — Automotive and Transportation Practice, Middle East, North Africa and South Asia at Frost & Sullivan.
The UAE has witnessed three years of strong economic growth, averaging just above 4 per cent a year. “The auto industry is on an upward trajectory, reporting double-digit year-on-year growth in 2013 and 2014,” says Waleed Barhaji, Business Head for Consumer Finance at Noor Bank. “We expect the trend to continue as the UAE further consolidates its position as a regional economic hub.”
In a bid to take advantage of the growing market for used cars, all major dealerships in the UAE have certified pre-owned programmes. According to The Nielsen Global Survey of Automotive Demand conducted last year, auto sales in the UAE and Middle East, Africa and Pakistan will get a boost in the next two years with eight out of ten people expected to buy a new or pre-owned vehicle.
Demand is also being driven by faster loan approvals and easier access to financing offered by banks and dealers. “Used car finance depends on the model of the car,” says Preeti Harrison Bhambri, Managing Director of MoneyCamel, a UAE-based personal finance website. “Mostly banks finance cars that are up to three to four years old. Salary requirement for both new and used car loans is Dh3,000-Dh5,000 depending on the bank.” Essential documents for a loan application are identity and income proofs, salary letter from the employer and bank statements.