While the holy month of Ramadan settles in with message of peace and joy among UAE residents, the nation makes the most with every top car brand offering best buying options.
The trend endorses the ever buoyant UAE’s automobile sector, which is now looking to rebound after having been under subtle pressure in 2016 and first half of this year.
The dealers have witnessed a spurt in pre-owned cars buying along with the new cars, which was not the case a couple of months ago. New passenger cars sales in the UAE are expected to increase from 214,000 in 2015 to over 267,000 by 2020 after hitting lows of 172,000 in 2016.
According to latest GCC automobile industry report by Alpen Capital, new car sales are likely to recover in second half of this year as consumers may line up to purchase vehicles before the value-added tax takes effect in January 2018. The industry players say the Ramadan offers on new models from leading brands will also help drive car sales in the UAE.
“Ramadan is the month of giving together in line with the Year of Giving. We have made sure we bring the best of the offers during this holy month to our customers. With Mazda 3 and CX5, we have selected two hero models that will provide unbeatable prices for a premium Japanese car. For example, we are offering the Mazda 3 inclusive of sunroof, navigation, alloy wheels, rear view camera and many more for only Dh59,900,” Axel Dreyer, general manager, Galadari Automobiles, said.
“On other selected models, we are offering special packages such as 3 years/60,000kms service, whichever comes first and 1 year insurance plus cash back. Complimentary premium Ziebart window tinting on all Mazda models is standard.
“We have also launched the new lease to own scheme, which is completely hassle free and do not require any bank approval, no down payment, zero service cost and zero insurance,” Dreyer said.
“The current sales momentum and traffic in the showrooms is much better and we are recognising that the customers very well appreciate our competitive offer and want to enjoy a premium Japanese product for an affordable price,” he added.
Mahesh Rohra, director at Arabian Automobiles Company, said: “Most dealerships are running great offers this Ramadan, which is one of the busiest months of the year for sales. Attractive finance options along with free insurance, service contracts and discounts are now available on most of the brands and models.”
New car sales in the UAE are projected to grow at an annualised rate of 4.5 per cent – highest in the Gulf region – to over 267,000 by 2020. However, the number of passenger cars in use in the UAE is expected to expand at a 5.3 per cent – again highest in the GCC – compound aggregate growth rate to reach 2.5 million in 2020 from an estimated 2 million in 2015. As car sales continue to expand in the UAE, several automobile aftermarket providers and ancillary manufacturers are looking to establish presence in the country.
Al Masaood Automobiles, the exclusive distributor of Nissan, Infiniti and Renault in Abu Dhabi and Al Ain, has also launched a major promotional campaign for a select range of cars that includes Nissan and Infiniti line-ups and select Renault models.
Irfan Tansel, chief executive of Al Masaood Automobiles, said: “The packages we are making available this Ramadan are of exceptional value. This is part of our commitment to our customers to always give them great quality and value, and it is particularly important for us to express it during the holy month.”
Rohra of Arabian Automobiles Company said many customers are now also evaluating the possibility of pre-owned vehicles as an alternative to buying new cars. The main reason for this is the emergence of ‘certified pre-owned’ programmes, which is being launched by companies to raise confidence in this sector by providing guarantees of quality, he said.
“So why the spurt in buying pre-owned cars? Service contracts for pre-owned cars were virtually unheard of in the past, but are now frequently introduced as an option for customers as most of the vehicles have improved in reliability,” he said.
Over the past couple of years, he said there is an increase in the average duration of ownership, which is now three to four years. “Trade-in options have matured and are now a key part of retail operations,” explains Rohra.
The industry players said a high disposable income, penchant for luxury cars, and availability of attractive financing options in the country would continue to drive demand for cars. The country conducts automotive trade on a large scale to meet its domestic demand
and re-export to the Middle East and Africa region.
“The persistent economic slowdown and weakness in the re-export markets has led to piling up of inventory among automobile dealers in the country. In view of this, we expect demand for new cars to remain suppressed in the short-term. Nonetheless, the long-term outlook is promising driven by an anticipated increase in population and leisure as well as business travellers in light of the World Expo 2020,” according to Alpen Capital report.
Popular market brands
Also another trend on the rise in customers’ buying and doing their ground work through websites and popular blogs before making the actual deal to have their own car in the UAE.
“Interestingly, we see that certain car brands and models are more popular with certain segments of the UAE population. For instance, Kia Sportage is more popular amongst females than males,” said Emre Guclu, head of insurance at ServiceMarket.com.
Alpen Capital has ranked Toyota most popular brand in the UAE with 30 per cent market share followed by Nissan at 16 per cent and Mitsubishi at 11 per cent market share.
“Passenger car sales will remain under pressure in 2017, but are likely to rebound in 2018 and thereon grow at a stable pace in anticipation of a recovery in oil. Other factors fueling growth include increasing disposable income, growing population and availability of attractive financing options in the country,” says Sameena Ahmad, managing director, Alpen Capital.
Online marketplace JV
In another development to boost used cars sales in the UAE, ServiceMarket.com has teamed up with CarSwitch.com, an online marketplace that features used cars from individual sellers. This is the first time that two online marketplaces are working together to facilitate used cars sales through integrated services and promotions in the wake of slowdown in the market.
“We are extremely excited to work with ServiceMarket to transform the used car marketplace and car insurance industry and deliver an entirely new concept to the UAE residents. Startups and online marketplaces are changing the game, giving exceptional value to consumers in the process, and redefining the traditional business models,” said co-founder of CarSwitch.com, Imad Hammad.
The UAE’s share of the GCC passenger vehicle fleet is projected to reach 19.2 per cent by 2020 compared to 15.2 per cent in 2015. The number of passenger cars in use in the GCC is expected to grow at a five per cent CAGR from an estimated 10.3 million in 2015 to 13.2 million by 2020.
“Tourist arrivals in the GCC are anticipated to grow at an annualised rate of 5.7 per cent during 2015-2020. This is likely to stimulate demand for vehicles from car rental and travel companies,” according to Alpen Capital report.