As a result of an increase in the number of new cars being delivered to the market and the entry of new players, particularly from China, the prices of pre-owned automobiles in the United Arab Emirates (UAE) dropped by over 15 percent the previous year.
According to those involved in the industry, prices may fall even more this year, but they are expected to stabilize later on because demand is anticipated to build up even more as a result of continued population increase. When auto dealers announce large discounts and campaigns during the month of Ramadan in 2024, there is a possibility that sales may increase significantly.
Reasons for low car prices
According to the automotive digital platform AlgoDriven, prices decreased by 14.8% in the previous year as a result of an increase in new car inventories following the influence that COVID-19 had on the production levels of the automobile industry.
Used automobiles were selling almost twice as quickly at the end of 2023 as they were at the beginning of the year, with the average time it took for used cars to sell in December being 19 days. This indicates that the market picked up considerably during the second half of the year.
According to Abhinav Gupta, the Chief Executive Officer of the Gulf Region at Cars24, the market for used cars was relatively unchanged in the year 2023.
High demand for cars
However, he anticipated that Ramadan would be a period of high demand for automobiles in the region, and they are forecasting a ten percent increase in sales overall compared to the previous year.
In contrast to the general trend, Gupta disclosed that Cars24 experienced a 15 percent increase in inquiries and a 10 percent spike in the number of units sold. After entering the United Arab Emirates in 2021, Cars24 has already sold more than 15,000 cars.
Because Dubai is such a significant market for the export and re-export of automobiles to both Asia and Africa, the United Arab Emirates (UAE) is home to one of the most extensive used car markets in the immediate vicinity. In recent times, Chinese automobile manufacturers have also been successful in expanding their market share by introducing new models to the domestic market.
Perspective for the year 2024
According to Glenn Harwood, co-founder of AlgoDriven, it is anticipated that the UAE market will witness an additional 15 percent drop in used car costs over the course of 2024. This is because the number of new automobile options is growing and as a result, consumers are receiving discounts. In spite of this, he said that the market should continue to be buoyant because of the robust macro environment in the United Arab Emirates, the expanding expat community, and the increased competition among used automobile merchants.
The United Arab Emirates' automotive industry appears to be poised to gain from rising immigration and the country's image as a booming digital business and financial hub, according to AlgoDriven's prediction that prices will not decrease any further to levels that existed before to the implementation of COVID.
On the other hand, the regional leader of Cars24 observes a surge, particularly in the realm of premium automobiles. According to Gupta, "We are anticipating a spike for the first few months of the year due to demand, followed by an eventual plateau in the rates," which is what we are expecting to happen.
The majority of the inquiries
Cars24 reports that a significant number of purchasers have a preference for purchasing automobiles that are between four and six years old and have been driven between ninety thousand and twelve thousand kilometers. When consumers inquire about pre-owned automobiles, the most common questions they ask are about the length of the warranty, the history of any accidents, and the mileage.
It was stated by Gupta, who was highlighting new trends, that seventy percent of the more than three million cars that are currently on the roads in the United Arab Emirates are owned by millennials, while GenZ is quickly going to surpass this figure.
Because there are so many options available for pre-owned automobiles, he stated that clients are now looking to test-drive various automobiles before deciding on a particular model by themselves.
This year, sport utility vehicles (SUVs) are also likely to be a trend that continues. As a result of their high level of dependability and safety, 55 percent of our consumers favored purchasing SUVs in the year 2023. The preference for SUV models appears to be the case all around the world, not only in the United Arab Emirates," he went on to say.
