United Arab Emirates: The Hub of The Pre-owned Automotive Industry

  • 7th Aug 2020
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United Arab Emirates: The Hub of The Pre-owned Automotive Industry

Photo by Marvin Meyer on Unsplash

UAE, a name synonymous to neck-breaking skyscrapers, opulent hotels, and riches of all kinds imaginable to humans. There is however one more thing that the country is famous for - CARS. The fact that even the rarest and the most expensive of Automotives are driven around on the roads like it’s Tuesday, would leave you astounded. The scene is so glamorous that it is undoubtedly the most beautiful fantasy of any car fanatic located anywhere in the world. From crossovers to luxury SUVs to supercars and hypercars, there is something for everyone and this national inventory is constantly upgrading with newer and better cars every few months. If you follow some affluent personality living in Dubai, you will notice that it’s every 6 months that they post pictures with a different car. If in January they are rocking a Rolls Royce Ghost, by August they will be speeding in a Lamborghini Urus. But how does this happen? How many cars can one even own? Well, the answer is simple, the pre-owned industry that provides a platform to one of the most capitalist economies to buy and sell their expensive beasts. I have taken this upon myself to paint a canvas for you depicting exactly how big the pre-owned car industry of the United Arab Emirates is.

The Enormity of The Market
Photo by Spencer Davis on Unsplash

The pre-owned car industry has shown continuous growth for the past 5 years. With new and improved quality cars, increased demand and availability of luxury automobiles, and improving economic conditions of the residents, the used car market of the UAE has become one of the biggest businesses in the country. This is the reason why new and better dealers are entering the market to bring even better and more expensive cars to the table. The passion for luxurious wheels and ultra luxury cars among the UAE population is bizarre yet mesmerizing at the same time and thus, the spectrum of opportunity is massive. This has driven the market to its maturity phase. The market has recorded a single-digit growth of around 7% in the preceding 5 years with increasing volume and average of the cars bought and sold. What’s astonishing is that this is the outcome after there was a slowdown in car purchases in 2015 due to a fall in oil prices. Guess there is no slowdown for luxury, eh?

The Segmentation
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Now you might be wondering how is the lot of sales divided and what do they consist of, the kind of cars that are traded and the geographic concentration of these trades? The majority of the pre-owned cars are exported to the nearby African and GCC countries and of the remainder, domestically, B2B and B2C dealers contributed to the majority of sales. Direct customer to customer sales is also an important part of the pie. Though the cars of all kinds are traded, the award for the majority of the volume goes to crossovers followed by luxury SUVs and, premium and full-sized sedans. And the makers from Japan enjoy the seat at the throne with the Germans and Americans putting up a tough fight. Cars from other parts of the world are, however, not so popular.

Now here’s a quick question for you, among the seven emirates that form the country, which one do you think has the highest volume of pre-owned car sales? I bet you must have guessed it right, it’s Dubai! The most expensive of them all. The name itself is identical to wealth. After all, it’s tall buildings and expensive cars that come to our mind when we hear the name. Second and third in the race are Sharjah and Abu Dhabi

Competition – The Good, The Bad and The Ugly
Photo by Cam Bowers on Unsplash

So how is the competition scenario in the market? Two words - Cut Throat. The entire market consists of over 400 dealerships with Al-Futtaim, Al- Naboodah, Gargash motors, and Elite cars being some of the behemoths in the field. The companies compete with each other based on price, value-added service, and brand reputation. They are in a constant tussle to attract customers via sales promotion techniques and try to develop trust by making personal contact and publishing inspection reports of cars on board. Since today the larger chunk of the prospective audience is online, the majority of their promotion takes place through their classified online portals as well as the classic and the most efficient technique - word of mouth. However, the dealerships have started to shift their focus on expanding their physical retail outlets and assigning them a particular theme and aesthetic that emulates their brand. But why go through so much trouble you ask? Differentiation. The color theme and aesthetics of an outlet helps a company to grab the customer’s attention and set itself apart from the crowd of competitors.

What does the future hold?
Photo by Jerry Zhang on Unsplash

The future of the pre-owned car industry appears to be robust in the UAE. The size of the market is expected to pick up a double-digit growth by 2022 in terms of the value of transactions since the demand for high-value cars like Rolls Royce, Bentley and Aston Martin, and supercars like Buggati and Lamborghini is on the rise among the buyers. This coupled with improving the quality of cars, increased competition serving the customers to their maximum satisfaction and a fall in the average age of used cars depicting an increase in the frequency of car trades will propel the market growth to new highs. There is also expected a shift, a geographical shift. The industry according to experts is expected to grow at the fastest rate in Sharjah, leaving Dubai trailing in second place. Though some challenges face the market currently, like price discrepancies and lacking standardization, it is imminent that they will be dealt with. Furthermore, the Emirates government is also putting its best foot forward to provide a platform for the pre-owned car dealers to put themselves on the map. One such initiative was the Expo 2020 that was supposed to be held in Dubai but was canceled due to the pandemic. But it is a no brainer that more such events are lined up once it's business picks pace.

So, here it is. One of the biggest pre-owned car markets decoded in about 5 minutes. I hope that with this you will be able to paint a picture of this gigantic market that rules the broad and advanced streets of the United Arab Emirates with grace. This country, indeed, is a heaven for lovers of luxury cars and automobiles comprising of both, beauties and beasts.



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