New Car Sales UAE: Financing, Discounts, and Supply Shortage Concerns
New Car Sales UAE and Financing Trends
New car sales UAE are expected to grow by another 10% in 2023, however, buyers could use help with financing as interest rates on auto loans have increased to around 5% from 3% a year ago. To address this concern, car dealerships are talking to banks and other lenders to try and lessen the payment burden for buyers.
Suliman Al-Zaben, Director for Hyundai and Genesis brands at Dubai-based Juma Al Majid Est, said that they are negotiating with banks to reduce their indirect fees on car purchases and are trying to compensate car buyers in other ways, such as offering a grace period on payments of 2-3 months.
Industry sources confirm that key consumer-focussed sectors in the UAE have not seen any marked slowdown because of the rate hikes to date. But with no clarity on how far the US Federal Reserve will go in more rate hikes this year, there is a concern that at some point car buying could feel a dent in demand.
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This is why dealerships and used-car sellers are focusing on offsetting buyer concerns on their EMI, which is becoming a primary focus.
In 2022, new car sales in the UAE increased by over 10%. Buyers were willing to wait for weeks and months for their models due to high demand. Dealerships didn’t feel the need to offer discounts. Some buyers made purchases or bookings in Q4-22 to avoid paying higher interest rates.
New Car Sales UAE – Financing and Discounts
Unlike in the last two years, new car launches in the UAE have not seen major increase in ex-showroom price.Although buyers may be hoping for discounts, dealerships may not be able to offer them. Due to the limited stocks carried by nearly all the key brand distributors. Most of the upcoming arrivals have already been sold or will likely see a sale on touchdown at showrooms.
Al-Zaben does not see any immediate return of heavy discounting practices this year. Dealerships may offer added value discounts and different marketing activities, but they won’t bring back pre-Covid tactics like heavy discounts. Distributors are facing high running costs, so they need to maintain their prices to sustain their business.
While buyers may face some financing challenges, the overall growth in new car sales in the UAE remains positive. Dealerships are working to find solutions to ease the payment burden for buyers and are also offering extended warranties as part of their sales packages to offset concerns about EMI. As demand for new cars continues to increase, buyers may need to adjust their expectations for discounts and availability.
Information Courtesy: gulfnews.com
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Posted by Muhammad Fahad
on March 3, 2023. Filed under Car News.
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