Team UAE: the Recovery of the UAE Car Market
Due to the harsh economic times the world has faced lately, it’s fair to assume that car markets the world over are having problems.
In Europe they’ve fallen. In the US they have too but, thankfully, despite a low growth forecast for 2013, they’ve gradually increased again. The wide range of fuel-efficient vehicles available and the need to replace old vehicles — the average car on the US roads is more than 11 years old —have helped this recovery in progress.
There is, however, one country where the car market is definitely back on the up: the UAE.
The fact that the UAE is one of the cheapest places in the world to buy a car may be something to do with it. Combine these lower prices with the UAE’s increasing number of expats, and consider that many capitalize on these lower prices to buy more expensive cars, and you have at least one reason for the recovery. Fuel is cheaper there, which leaves them with more money for cars and costs such as car insurance.
Better finances are also a factor. Admittedly, UAE residents are lucky enough to not have to pay income tax, which expats can avoid too if they register there for tax purposes. However, there’s more to it than a simple surplus of income. More than one third of the UAE population has entered the working age group, which means a higher income per capita and car consumers with greater spending power.
The sales aren’t all down to more people finding a job, though. For instance, Audi cited strong core models, the launch of new models, and improvements to its sales infrastructure and post-sales service infrastructures as reasons for selling more in the Middle East in the first three quarters of 2012. These were up by 18.3%, with a 12.2% increase in UAE sales during this period.
Al Nabooda, an official dealer for Audi in Dubai and the Northern Emirates, observed a 25% increase in its sales in the first half of the year. In November the dealer opened the largest Audi showroom in the world. It has also invested Dh 900 million into expanding its operations throughout the region, and created new facilities for its links to Porsche and Volkswagen as part of this expansion.
Another reason has been the push to clear inventories. Car dealers this year have pushed twice to clear their inventories ready for 2013’s models. The push has included offers such as large discounts on 2012 models, cash back on them or even the chance to become a millionaire. Car buyers who don’t mind a 2012 BMW 3 series model instead of a 2013 have taken one away for Dh 50,000 less than the price of the new model (Dh 150,000).
Good times lie ahead for the UAE car market, it seems. Whereas fuel efficiency and the need to replace old cars are helping the recovery of the US one, in the UAE everyone seems to be in it together. Car consumers are enjoying healthier finances, while car dealers are implementing skillful marketing and operations management, making the UAE car market a better place for everyone.
Date posted: December 14, 2012