As new car sales slow, motorists turn to the used market
Survey finds fewer transactions across the whole motoring sector, Ann Marie McQueen reports
We think a lot about our cars in the UAE and have also spent a lot of time weighing up whether it makes more sense to rent, buy, take taxis, or a Careem.
As is the case in any maturing market, the recent years have seen the used-car industry outpace the more sluggish market for new cars.
The trend is outlined in a new report on the secondary car market shared exclusively with
The National by SellAnyCar. com, a website which provides services regarding car sales.
The report’s figures, based on a year-on-year comparison of data collected from sellers on why people have sold their cars over the past three years, provides a snapshot of an important part of the economy.
In 2018, close to 15 per cent of consumers sold their cars for financial reasons, a number that grew by 63 per cent from 2016. In the same period, the number of people who were planning to purchase another car after selling dropped by 18 per cent, while the people who mentioned leaving the country as a reason increased by 25 per cent in the same period.
“We see that there have been less transactions in the car market overall,” says Saygin Yalcin, the company’s founder and chief executive.
“We also believe that during the ‘good’ times people had more cars than necessary and are disposing them off currently – a number which has grown by 16 per cent since 2016.”
According to SellAnyCar, the most popular cars on the market are Japanese, which have a market share of 41 per cent, up 25 per cent since 2014. In response to tougher UAE regulations, 91 per cent of the cars on the road now have GCC specs, which has led to a significant drop in chassis problems.
Interestingly, while white cars account for about 20 per cent of all vehicles in other parts of the world, in the GCC they account for almost 35 per cent, followed by black and silver, the research found.
This was something noticed by Imad Hammad, the founder and chief executive of Carswitch.ae, who tried to find different coloured cars in Dubai to film as part of a video for his company’s website. He couldn’t.
That is when he realised that when it comes to vehicles, the UAE is all about white, black and grey.
“I literally struggled,” says Mr Hammad.
“It’s even hard to rent coloured cars, the red, the orange the yellow. In the UAE it’s white, black and shades of grey, and if you just drive and look out your window at a parking lot, that is what you will see. If you drive a blue or a red car, you kind of stand out and turn heads more than others.”
Like SellAnyCar, CarSwitch specialises in used cars, serving as a bridge between buyers and sellers on the secondary market.
One development SellAnyCar’s research found was that the secondary car market has exploded in the UAE and shows no signs of stopping.
“That’s one major development and it’s nothing unexpected, this has to happen as a developed market,” says Mr Yalcin.
“This will happen. And within the next decade you are going to see that usedcar business is going to be double or triple the new-car business.”
Consumers are fleeing classified websites and using “car buying experts” to sell their cars to increase their profit, maintain their privacy and save time, he says.
SellAnyCar reports that 95 per cent of its customers have gone to them first, with a success rate of 50 per cent.
Mr Yalcin says so far in 2018, his company has received bids worth Dh1.5 billion.
It is a steep growth from five years ago, when he launched the business after having a “broken experience” unloading his own car.
“I was trying to sell my car in Dubai and realised how difficult, lengthy and risky it was,” he says. “I was not an automotive expert, did not know much more than the make, model and year of my car, let alone anything about the required legal secondhand car selling process.”
The situation could not have been different this summer for Stephanie Jones, a flight attendant from Australia who has just left the UAE for the United Kingdom.
She successfully sold the 2010 Audi TT 2.0 TFSI Quattro she bought from a friend three and a half years ago. Ms Jones advertised it for Dh35,000 on a Facebook page dedicated to Etihad employees buying and selling cars, and ended up selling it to another cabin crew for Dh32,000.
I actually know people who have sold their cars and exclusively relied on other transportation mechanisms IMAD HAMMAD Founder of CarSwitch
The sale was “also word of mouth from a friend,” says Ms Jones. “He mentioned it to the girl I sold it to. However she had seen it advertised on the Facebook page.”
After a test drive, the buyer paid Dh200 for a service check in Mussafdfah and then they took it to be registered.
Jon Boger is an American who moved to Dubai for a two-year stint with the US government.
“I need to find a car, because I’m not going to pay $500 (Dh1,836) in rental every month, so I got my apartment taken care of and the next thing is a car, because I have to drive while I’m here,” he says.
“$12,000 is my max, I have that and I can just pay cash. I don’t necessarily want to go above that. I sold my truck [back home]. I came over here to save money.”
While the US consulate lists cars for sale from Americans who are leaving the UAE, many were out of his price range. So on a recommendation, Mr Boger turned to the classifieds website Dubizzle.
He made a call about an Audi A6 for $5,000, but it had already sold. After looking around, he is considering picking up a 2014 or a 2015 Kia Sportage cars he saw on Dubizzle.
“Nothing expensive,” he says. “It just fits the bill.”
Mr Hammad says many are turning to smaller 4x4s such as the Sportage, for a variety of reasons, including their economic situation.
“The other thing we are seeing is a shift to more affordable cars, and what I mean by affordable is more economic, and I think that is largely the fuel [price] increases,” he says.
“We have a couple of folks, just anecdotally, who acquired another car for their daily
commutes, because of the petrol expenditure and a lot of them still keep a car for the family.”
Mr Boger is grateful he met people who could show him how to navigate the UAE’s still-tricky secondary car market before setting out to buy one.
“If I came here blind and didn’t have the people who have gone through the process, of getting cars and going through stuff, I wouldn’t even know where to start,” he says. “I’d be like: ‘Uhhh, OK, where’s the little car trader magazine that I see in 7-11?’”
Mr Boger is doing the right thing buying a car, even though he knows for sure that his stint in the UAE will be only two years, says Mr Hammad.
Using a Lexus ES300, and taking into account depreciation, service costs, fuel, Salik, cleaning and insurance, but not traffic fines or costs related to an accident, the company calculated the total price of renting as Dh60,000 to Dh65,000; taking an Uber or Careem, Dh45,000, and owning Dh35,000 to Dh40,000.
“Generally, buying is the best choice,” says Mr Hammad, who pointed out that his company also rents their staff fleet to avoid the “administrative pain” of servicing and insuring.
“There are certain circumstances where renting is better, that’s mostly if you are only in town for a short time. So if you don’t know how long you are going to be in the UAE … and everybody is only going to be here for six months, and everybody is still here 10 years later, the general rule of thumb is buy a car.”
However for some people who are cash-strapped, it makes sense to unload such a big asset. And increasingly there are those who just don’t want to deal with owning a car, whether it’s due to traffic, or problems finding parking.
“You have a relatively large movement on these car sharing economies, shifting to Uber, Careem, the metro,” says Mr Hammad.
“I actually know people who have sold their cars and exclusively relied on these other transportation mechanisms. That could be the other reason for selling your car.”