Used cars are a better option for drivers in the UAE as opposed to new vehicles
Used cars are offered at lower prices in the UAE when compared to other markets, according to research by Dubai-based marketplace CarSwitch.
Speaking to Arabian Business, co-founder Imad Hammad said data found that cars in the emirates lose 20-30% of their value in the first year of purchase, followed by 15-20% every year thereafter.
“This is quite high [in relation] to other markets… And it’s driven - in large part - by a transient population with higher disposable income, leading to shorter lifetimes of used cars,” he said.
For example, research by the firm found that a 2011 Porsche Cayenne would sell for AED106,000 in the UK compared to AED88,000 in the UAE, while a 2012 Nissan X-trail would sell for AED38,000 in the UK compared to AED28,500 in the UAE.
In Germany, a 2013 Ford Explorer is priced at AED110,000, as opposed to AED80,000 in the UAE.
The data by CarSwitch also found that a 2013 Honda Accord would sell for AED55,000 in India, compared to AED40,000 in the UAE.
Due to the considerable discount, drivers in the UAE can end up with a more valuable and luxurious car than they might have budgeted for, Hammad said, with many pre-owned vehicles boasting advantages of new cars, such as a valid warranty and service contract.
Jon Richards, the CEO of finance comparison website Yallacompare, agrees.
“Even without some of those advantages, the used car market is incredibly attractive for UAE buyers at the moment, with more supply than there is demand – when it comes to some car models, at least. It’s currently possible to find great deals on what would otherwise be luxury cars, and you won’t even have to haggle that much,” he said.
Richards explained that consumers would traditionally opt for new cars due to two advantages: ease of purchase and possibility of customisation. When buying a new car, the dealer would sort out processes ranging from finance to insurance and registration.
While some found that the lack of hassle was worth paying for, consumers are no longer required to go through the same difficulties, with many second-hand dealerships offering to help with paperwork ranging from insurance to finance.
“As a result of all this, the main reason you’d buy a new car now is simply that you want a new car that’s specced exactly how you want it. But many UAE residents look at the ‘good enough’ cars on the second-hand market that cost a lot less, and simply opt for those,” he said.
Though some second-hand dealerships offering 0% down payment terms, when buying privately, drivers will have to conduct an independent car valuation to ensure the bank is lending them the right amount.
Richards also explained that buyers might have a difficult time getting bank loans for cars that are older than 10 year, as some bank will have a cut-off age for cars they’ll lend on.
Both Richards and Hammad warned drivers against scammers and advised them to purchase cars – whether new or used - from official or used car showrooms.
Hammad also urged buyers to consider that used cars offer less guarantees and come with higher changes of maintenance and repair costs.
“When it comes to peace of mind, new cars trump used cars. If you get the car from the official agency, you have a reputable reference point you can always refer back to in the future. As the first owner, the car’s complete history is squarely under your control. Since the car comes with a few years of warranty, you do not have to worry about any defects down the road,” he said.
Richards added, “Always account for the additional risk that comes with buying a new car, so do a thorough check of the car’s history before parting with any money.”
In May, the annual 'Mapping the world's prices' report by Deutsche Bank showed Dubai is among the cheapest to buy a mid-sized car with an average cost of $21,854. The most expensive is Singapore at $86,412, while the cheapest is New Delhi at $12,066. The report highlights the cost of living in around 50 major cities.For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.