- The onset of COVID-19 positively contributed to the revival of the used car market in UAE post an initial contraction because of supply chain disruption and falling per capita disposable income due to physical restrictions imposed. As consumers are more concerned about their health and hygiene, there exist an increased perception towards ownership of private vehicles.
- Weaker economic sentiment and financial constraints followed by the advent of COVID-19 is contributing to the growth of used car market in UAE as consumers are preferring affordable pre-owned vehicles rather than spending hefty sums on purchasing a new car.
- Large number of expatriate population in UAE will continue to act as a major growth driver of this market as these expats prefer an affordable private transportation medium for their short period of stay rather than committing in purchasing a new car for longer duration.
Increased Awareness on Health and Hygiene: With the advent of COVID-19, consumers were witnessed to be more concerned on maintaining personal health and hygiene. Therefore, they are preferring the option of private transportation rather than availing public transport system. The change in consumer’s behavior and preference is expected to act as an opportunity for the used car market in UAE. Due to weaker economic sentiment and financial constraint followed by the aftermath of COVID-19, consumers are not willing to spend a huge amount in buying new cars rather they are preferring to buy affordable used cars which helps them in maintaining their health by spending less. Therefore, the future prospect of the industry looks strong wherein used cars players in the market could utilize this opportunity to integrate the market.
Perception of Digital Medium: Consumers buying preference has significantly changed with the onset of COVID-19. From buying groceries to online shopping, consumers are much more adaptive in utilizing digital medium for buying and selling products. Coupled with that internet penetration rate in UAE has reasoned to contribute in increasing the visibility of online marketplace and classified ecosystem in UAE for providing better opportunities to the customer to conduct proper research before delving into buying an used car product. In recent times even the dealers which have brick and mortar presence rather than an online visibility, have started listing their used car fleet in classified websites and online marketplace for better reach to the customers. Strengthening the online ecosystem of the used car domain in UAE will be the key determinant for the growth of this market in coming years.
Large Number of Expatriate Population: As of July 2021, it is estimated that expat population in UAE constitutes 88.6% of the overall population. Mostly expats in UAE are living for a specific duration of time till their employment contract expires. Due to this nature, these expats prefer buying a pre-owned vehicle rather than spending huge sum of money in buying a brand-new car which has resulted in increased demand of used cars over the years. Affordability plays a deterministic role in choosing a used car over a new car. In coming years, the expat population in UAE is estimated to constitute 90% of the overall population which will keep the demand prospect of used cars at an all-time high.
Value Added Services: Used car market players in UAE, in an effort to differentiate its offerings are providing a number of value-added services along with the used cars which serve as one of the major competition parameter in UAE. These value-added services include warranty, financing options, accessories and others. Many dealerships have tie ups with loan providing financing companies. These value-added services have a placebo effect on the assuring quality of the car in the mind of customers. Thus, help in creating a positive brand perception in front of the customers. These value-added services also prompt the customers to pay a marginally more while buying through a dealership. This trend will help in consolidating the market share of players selling via B2B/B2C channel in the market as players selling via C2C sales channel does not offer a wide range of necessary value-added services such as transfer of ownership, tax registration and payment, quality check and assurance and others. Thus, in the future value-added service offerings would play a pivotal role in developing the demand ecosystem of used car market.
Expo 2020: In recent years, UAE has been initializing the process of shifting away from oil dependence and enhancing its economic capability to develop others sectors, such as tourism, IT, pharmaceuticals, automotive, real estate etc. Therefore Expo 2020 is seen as a platform which will contribute to major investment opportunities in diversified sector of UAE especially Dubai. Automotive sectors in UAE is a growing industry wherein most of the cars are imported from Japan, Germany, America, and South Korea among others. Therefore, expo 2020 will act as a platform to develop and attract investment in the automotive sectors coupled with efficient technological solution, which will change the ecosystem of the industry. With the structural change in automotive sector, there is a greater possibility to enhance the capability of used car market in Dubai wherein players in coming years would look forward to adapt to effective digital solutions to attract consumers and participate in growing the used car market in UAE.
The report titled “UAE Used Car and Auto Classified Market Outlook to 2025” by Ken Research suggested that the used car market in UAE is expected to grow further in the near future, with the increased awareness on health and hygiene followed by the onset of COVID-19, thus showcasing a change in consumer preference from availing public transport to private transportation medium. Large number of expatriate population along with export prospects of used car in UAE will be major growth drivers for the market in coming years. The market is expected to register a positive CAGR of 16.6% in terms of revenue during the forecast period of CY’20-CY’25.