REPORT: New car sales down 20 percent in the UAE
A new report published by Autodata Middle East has found that the rate of new car sales in the UAE has decreased by as much as 20 percent in the first quarter of this year.
The report estimated that the region’s overall drop in new car sales was 30 percent. Bahrain experienced the biggest drop at 41 percent followed by Saudi Arabia at 38 percent.
Speaking on the report, the general manager of Autodata Middle East Ian Batey told reporters of Dubai Eye’s Business Breakfast show that the decline in new car sales is mainly due to the “drastic drop in oil prices in 2014.”
“There were a lot of redundancies in the region, companies that work with oil and gas cut their head count. So, this of course will have an impact on the automotive industry, a lot of people are leaving and not as many are coming back. So, the market has shrunk,” he said
The decline in new car sales, however, does not mean that people are not investing money in the automotive industry as a whole.
The rates of certified pre-owned have gradually increased over the last few years and, according to Batey, will continue to increase over the next 12 to 18 months.
The reason for this has to do with the fact that car manufacturers have invested more money into quality parts and warranties that last for up to five years, this gives those looking to both buy and sell cars more confidence.
Batey added that despite popular belief, VAT will not negatively affect the region’s automotive industry.
“Car distributors are squeezing price margins already. What I see happening is that the demand for pre-owned vehicles will greatly increase once VAT is introduced in January next year. This is because the element of VAT will be calculated differently.
“On new cars it will calculated on show room prices while VAT on used cars will be based on margin prices. As a result, you will be able to buy a car that’s roughly six to 12 months old for up to 20 percent less and pay much less for VAT,” Batey explained.