ABU DHABI // Counting the number of Ferraris on sale at a used car showroom may not be everyone's idea of an economic weather vane. But soaring second-hand sales of prestige cars are the latest indicator that the global credit crunch has hit the UAE. The region's high-fliers are scrambling to downsize from Ferraris and Lamborghinis to humbler vehicles as global economic uncertainty spreads to the Arabian Gulf.
The wealthy are ditching the lavish trappings of wealth as they count the cost of running high performance wheels. "I have never seen anything like it," said Gary Peake, 34, from Reem Automobiles, a Dubai-based car dealership. "We are getting 100 times the amount of approaches from people trying to sell their premium cars. Instead of three or four people coming to us each day to sell their cars, we are getting up to 20 people; particularly premium cars like Bentleys, Ferraris and Porsches. It seems to be linked to the credit crunch. A lot of people say they are selling their cars quickly because they need the cash."
A victim of the credit squeeze who requested anonymity said he was forced to sell his Dh900,000 (US$245,000) Bentley GTC after being made redundant two weeks ago by property firm Better Homes. "I was paying around Dh25,000 a month. When I lost my job I had to get rid of it. It was heartbreaking. It was a sweet ride, but only if you can afford it." The jobless property consultant was one of around 200 Better Homes employees who lost their jobs due to the slump in property sales.
Internet trading website dubizzle.com said it had recorded a 115 per cent increase in the number of luxury cars offered for sale during the past month compared with June and July. Mohammed Ali, the owner of the Deals on Wheels showroom in Dubai, said he was staggered by the increase in business in the second-hand luxury cars sector. "People are keen to liquidate their assets because the economic climate is so tight. There is a lot of uncertainly out there about the future," he said.
JC Butler, the managing partner and co-founder of dubizzle.com, said the surge in luxury car sales was the latest sign that the credit crisis had hit the UAE. "The pattern of sales tells us that everyone is bracing for an economic downturn," he said. "Companies here are cutting back and laying off staff because it is clear the economic climate is now more shaky. A lot of people have overextended themselves and are suddenly worried about making big payments for expensive cars. They are looking to cut unnecessary overheads and a big flashy car on the driveway is the first thing to go."
Mr Butler said the sudden increase in availability of second-hand sports cars had led to sellers slashing prices to woo buyers. "More than ever we are seeing people keen to make quick sales. They want to get rid of their cars as soon as possible - before the next repayment," he added. "This means people are selling premium cars well below the apparent market value." Abbass Safadieh, the motors manager at souq.com another listing and sales website, echoed Mr Butler's views.
"We have seen a 48 per cent increase in trade in September and October in the luxury car market," compared to July to September, he said. "Some people have been spending around Dh10,000 a month on car payments, so if you are an estate agent or banker who is suffering because of the economic slowdown, the easiest way to reduce your overheads is by getting rid of your sports car. This means there are some real bargains out there for people who have the cash to buy."
Nabil Shennawi, the used car manager at Ali and Sons Audi and Porsche dealership in Abu Dhabi, said buyers should now haggle hard before to snap up bargains in the showrooms. "There are some great deals available now. Traders are prepared to negotiate to make the sale. You can find them prepared to drop their profit margins from 10 per cent to seven per cent." Andrew Hellyar, the Audi brand manager at the same dealership, said the slowdown in the luxury car market was more pronounced in Dubai, traditionally a more popular market for glitzy sports cars.
"The banks in Dubai have really cracked down on offering finance to people for car loans," he said. "It is much harder to secure finance for a car now and I have even heard of some banks stopping auto loans completely." email@example.com