The Ups and Downs in Dubai’s Auto Market

Just like many other areas, the fortunes of Dubai’s auto market had been hit by the slump in its property and construction sector. Since mid 2008, there have been many rises and falls seen in this sector of the economy. The market is being affected by the demand and supply situation, as well as the number of cars available in the market at any given time.

However it has been noticed that consumers have chosen to move to lower end, compact or family cars since these are typically low on maintenance and also have a higher resale value than the more expensive custom of sports vehicles that we are so used to seeing on the roads of Dubai.

At the height of the property sector crisis, many expatriates were forced to sell their cars or leave them at the airport with keys in the ignition and an apologetic note as they scrambled to get away from the emirate.

Many of these cars were either repossessed by the banks, given back to the companies if fully paid for, or sold in Dubai’s second hand car market. Many car dealers stood to make substantial gains as expatriates sold cars in a hurry at bargain prices as they wanted to get out of Dubai.

Today we see that Dubai's used car market has fewer high-end cars being sold for quick cash by owners. Everyone wants to buy cars that are cheaper and lower in maintenance costs. This feeling is also echoed by those in Dubai who have sales or commission based jobs. They want to change over to cheaper models as they cannot afford to maintain the expensive cars as opportunities to earn commissions dwindle.

There was a time when hundreds of distress sales used to appear on popular auto websites every week, but this has since reduced. People also had to get rid of their second or third cars and make do with a single car or use car pooling in an effort to cut costs till the worst of the crisis was over.

Sentiments are likely to improve once the banks begin lending for auto loans once again. The reduced sales also meant that car dealers had begun working with lenders to come up with initiatives to help clients secure easier terms in financing to buy a car.

The market for used cars is expected to pick up once again in June-July as there has traditionally been a rise in the number of people putting cars for sale in this season as some expatriates wait for the school year to end before leaving the country with their children.