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.

Can Car Makers Hope for Business as Usual in the UAE?

The world is in a flux at the moment, what with the recession having a worldwide impact on jobs, living and almost everything else. The world auto industry has been similarly affected, with the big four Detroit firms receiving a bailout boost from the US Government. This was desperately needed to keep them afloat. However, it appears that with the reduced spending by the public in the aftermath of the recession, sales are not picking up and the retail and commercial sectors of America’s economy are still in a slump. The unemployment level has reached a constant 10 percent, with no light at the end of the tunnel. It is hoped that by giving a tax holiday to small and medium businesses this year, employment would be stimulated.
Now that business in their home bases is stagnant, car manufacturers and sellers in the USA, Japan and Europe are looking to boost their sales and profits in foreign lands. China and India are two of the world’s fastest growing economies at present, and efforts are targeted towards these areas. But when it comes to comfort and luxury cars, the UAE is one of the auto manufacturers’ favorite markets. Arabs are impressed by extravagance, speed and finesse and money is no object if you can satisfy their cravings. Although Dubai has been humbled by the bad press it received over the mishandling of the property bust and Dubai World debt repayment fiasco, it has survived these crises although it is still in an economic limbo. The Government will have to revise policies and intervene to stimulate the markets. Meanwhile, the Dubai Auto Show scheduled for 17 December 2009 was one of the region’s most awaited events. Brisk business and order placements took place. Wealthy Arab families have a lot of money and would love to own the latest that technology can offer. A lot of hype had been created, however presentations remained important. Everybody it seems had their own opinion about what is the best, with some degree of brand loyalty already in the minds of the buyers. Still there remained hopes of some new conversions.
On the other hand, the car dumps of Dubai and Abu Dhabi are a testament to its opulence. Secondly, some of the cars owned by expatriates who left Dubai when the property bubble burst can still be seen in Government auctions if the car has been repossessed. It has become a favorite haunt for car dealers. The auto market in Dubai looks alive and well, with a number of UAE autos websites in vogue. As indicated, the market for used cars in both Dubai and Abu Dhabi is quite active. The latter market is also frequented by car dealers Dubai and in fact anyone who wants to buy cars online Dubai. All this makes it very easy to buy a car Dubai or Abu Dhabi these days. The outlook is positive, with sales expected to increase rather than decline.