UAE used car prices see sudden sharp increases – will buyers have to delay their plans?

But in general, the availability of these vehicles has come down from other sourcing points as well, they add.

What it means for potential buyers is that they will end up paying 10-30 per cent higher on their model choice than if a similar deal had been made in October or November. Throw in the higher insurance rates they need to pay on their vehicles – many used car vehicle sellers are not offering free insurance perks – and the cost of ownership has jacked up quite a bit.

For the UAE’s secondhand car dealerships, it all adds up to a most unfortunate set of circumstances. “It’s even tougher because we are still uncertain when the shipments will come in,” said Hamid Shah, CEO of The4x$.com dealership network. “When we have that uncertainty on top of the struggle to source vehicles, it makes for a big impact on the used car trade.”

In each of the last two years, sales of pre-owned vehicles in the UAE were on a tear, with many industry sources saying they have not seen a similar demand rush ever. So much so, during the peak phase of 2021-22, prices of used cars that were 6 months to 1 year old were running ‘near neck-to-neck’ with their brand new options.

When we have that uncertainty on top of the struggle to source vehicles, it makes for a big impact on the used car trade.

– Hamid Shah of The4x$.com

All that used car dealerships had to ensure were having models to sell. If they had the stock, it was a given those would sell – pronto. Now, dealers have to compete for every available model that’s out there.

According to an industry source, “The situation is such that for every used car model that’s available, there are 6-8 buyers lining up for it. That’s only because we don’t have enough inventory. When you have that situation, sticker prices of used cars can only rise, and that’s happening.”

Much the same had happened during the peak Covid years, when supply disruptions played havoc with the global automotive industry. That fed into the used car supplies as well, which explains why prices have shot up in the UAE, Saudi Arabia and other Gulf markets from mid-2021 to mid-2023.

Shah says that the current situation is ‘worse than that’, more so because no one in the industry had seen it coming.

Car buyers certainly didn’t, because through the last 6 months, used car prices had been dropping and they were reasonably assured of near-instant delivery once the deal was done.

What could cause more problems for the used car market is if prices of new vehicles (except, say, those brought in from Europe) continue to remain stable. Auto industry sources say that until now, any uncertainty they face has had more to do with confirmed delivery times than on the ex-showroom prices.

That could still change if the Red Sea situation plays on. Coming weeks are going to see a slew of new model year launches, and so far manufacturers are relatively confident of meeting shipment schedules, with ‘one or two week delays at best’.