Is it a Good Idea to Enter the UAE Used Car Market?

The United Arab Emirates or UAE is a wealthy country that offers an interesting used car market both for local and foreign investors. It is predicted that UAE used car market will grow steadily compared to the new car market because of the economic slowdown brought by the covid-19 pandemic.

Overview of UAE Used Car Market

While the new car sales in UAE are estimated to decline due to the pandemic and the fall in oil price, the used car market is projected to stay resilient. The prices of the used cars are 35% more affordable than the new ones so that UAE citizens will be able to afford them

This projection, of course, brings new hope to investors who want to enter and grow in this market. However, before entering the used car market, investors need to understand some key points of the used car market of UAE.

  • Market Size

In 2019, the ratio between the number of new car sales and used car sales is 1:3.5. The people of UAE have a great passion for cars so that it is projected that the used car market will grow positively. Currently, the average growth of the market in UAE is only at a single digit. 

However, it is predicted that this industry will grow at two digits in 2025. The used cars in UAE are sold via various sales channels, e.g. C2C, and B2C/B2B dealerships. Moreover, the dealerships are not only selling the car domestically but also exporting them to African nations and GCC.

  • Key Drivers

There are some key drivers of the used car market in the UAE. One of them is the digitalization of used car sales. Online platforms help retailers and car dealers selling used cars easily and they offer a better purchasing experience for customers.

About 50% of the used cars sold in the sales channels are almost new cars, aged less than 5 years. However, it is predicted that this share will decline marginally and older used cars (aged 5-7 years) will have more share in the market.

  • Market Competition 

Currently, there are more than 400 dealerships and over 40 digital platforms across the seven emirates that sell used cars. They compete with each other on the basis of brand reputation, value-added service, prices, and others.

To attract customers, they usually offer discounts. Moreover, the car dealerships gain profits by purchasing used cars at lower prices, refurbishing the vehicles, and selling them at higher prices.

Opportunities in Entering the Used Car Market in UAE

Digitalization in the used car trading, UAE citizens’ passion for cars, and other key drivers offer opportunities for investors to enter the UAE used car market. For assistance, the investors need to contact UAE Market Entry, a market consultant company, beforehand.

The company offers market data and consultation for investors who want to enter and grow in the used car market of UAE. This data allows investors to have a better understanding of market trends, competition, and customer characteristics so that they are able to choose the best market strategy.

The used car market in UAE is a promising sector in the country. Investors will have better chances to succeed in entering the market if they apply the right market strategy.

 

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