With dealerships struggling to hit sales targets due to the effects of VAT, drivers can cash in this holy month
The best deals this Ramadan for buying a new car
This might be the Ramadan sales season to end all seasons when it comes to getting a deal on a new car.
Many UAE residents purchased vehicles in December, prior to the introduction of VAT, while others regularly defer buying a car to take advantage of the Ramadan sales. This created an unusual vacuum for dealerships in the first part of this year, said Imad Hammad, founder and chief executive of CarSwitch, which provides services to buyers and sellers on the secondary market.
With the introduction of VAT and sluggish sales overall, dealers are pulling out all the stops to move vehicles this Ramadan season, he says.
“The guys are struggling, so they’ve thrown the kitchen sink at this thing,” Mr Hammad says. “It’s no secret that the first quarter was difficult for all the new brands.”
Most of the dealerships are offering variations on the same elements: a percentage of the down payment - or in the case of Cadillac, the entire thing - a percentage of the car’s value in cash back, free registration and a year of free insurance. A few companies, including Ford, are throwing in a new iPhone.
“Almost all of the offers available are a combination of these things or all of them,” says Mr Hammad. “They are all trying to be different but look the same.”
Dealerships are also upping the game on extended warranty and service contracts, with Dodge and Jeep offering six years, Volkswagen offering seven years and Cadillac 10 years - the most extended warranty Mr Hammad has ever seen in the UAE.
Many of these offers have been available since the start of the year, but were not heavily advertised until the pre-Ramadan period. Almost all the dealerships have been quietly covering VAT as well, either inflating retail prices or just absorbing it, he says. “I have yet to see a new car where you have to pay VAT."
The whole industry was hit very hard by the introduction of VAT, says Bill Carter, chief systems and innovation officer for Autodata, a Dubai-based automotive data supplier.
Even if sales pick up over Ramadan and in the coming months, people are saying it’s unlikely 2018 will see any growth this year, over 2017’s estimated 12 to 15 per drop from the previous year, he says.
While there are always people who put off buying a car to take advantage of Ramadan deals, Mr Carter says it could take further into the year for the effects of VAT to “wash through”.
“We think by probably the third quarter of the year, people will have got used to the VAT,” he says. “They’ll know the impact of the VAT on their monthly spend and they’ll evaluate whether to change their car.”
Mr Carter says clients with cash to cover the entire purchase would be in the best position to negotiate. Another consideration is that the extra-extended warranties being seen this Ramadan season – six, seven and 10 years – are really only an advantage for people who plan to keep the car that long.
While it’s easier to sell a car if there is some warranty or service left over, that doesn’t necessarily increase the value, he says. And before opting for an extended warranty, customers must check whether the service contract is transferable to a new owner. Otherwise, it will be of no value at all in a sale, he adds.
Opting for a deal on financing might be the best route, says Mr Carter.
“My own view is, if I was going to buy a car I would personally go for as low a rate of interest as I can get,” he says. “In reality it’s a good time to buy a car, dealers are desperate to sell, so push as hard as you can.”
With this in mind, here is a selection of the best Ramadan car deals on offer this holy month:
The deal: Don’t worry about a down payment at Infiniti, they are covering it for all purchases. They are also paying one year of insurance and providing an extended warranty of five years.
Beware: Not much. If you want an Infiniti and can afford it, not paying the 20 per cent down payment stipulated by the Central Bank of the UAE is a great discount.
The deal: Cadillac will pay the first 12 installments for cars purchased through financing. The company is also offering an extended warranty of 10 years.
Beware: Extended warranties are only a great deal if you plan to keep the car for the full time; they might make it easier to sell but they don’t add value on the secondary market, advises Mr Carter. Also check whether the warranty can be transferred to new owners.
The deal: Dodge is another company upping the extended service and warranty game, to six years. They will also provide one year of free insurance on select models and contribute up to 20 per cent of the down payment on new models.
Beware: The down payment assistance is helpful, but the six-year extended service and warranty might not help you sell your car later if the warranties and service contracts are non transferable to a new owner.
The deal: BMW will cover 15 per cent of the vehicle price toward the down payment, along with providing free insurance for a year and five-year extended service and repair. Those who are financing can also get 2.5 per cent cash back on select models.
Beware: Save the cash back to make future payments to get the most out of this deal.
The deal: At Chevrolet, customers can get major cash discounts allowing them to save between Dh5,000 up to Dh30,000, depending on the model. Cash savings include Dh30,000 for a Tahoe, Dh20,000 for a Silverado, Dh15,000 for an Impala, Dh10,000 for a Malibu, Dh7,500 for a Traverse and Dh5,000 for an Equinox.
Beware: Make sure to negotiate for what other dealerships are also offering, such as extended service and warranty packages and a year of free insurance.
The deal: Savings extend up to Dh73,000 for top-line vehicles, extended warranty and roadside assistance for five years, extended service and maintenance for three years – plus an iPhone X or iPhone 8 on select models.
Beware: New iPhones are a fun gift, but as Mr Hammad, from CarSwitch, puts it: “When you throw in an iPhone, I don’t think that helps you sell a car.”
The deal: GMC is offering savings up to Dh35,000 on new car purchases for its Terrain, Acadia, Yukon and Sierra models.
Beware: Make sure to negotiate for extras.
The deal: It’s buy now, pay next year for select purchases at Hyundai, as well as one year of free insurance and an extended warranty to four years.
Beware: Deferring payments might seem like a good idea now, but remember you’ll just be paying longer plus you do not know what your financial situation will be like in a year's time.
Jaguar and Land Rover
The deal: Jaguar and Land Rover are offering cash back of up to 10 per cent and offering an extended warranty, roadside assistance and maintenance and service contract for five years.
Beware: Cash back is only a bonus if you spend it wisely and funnel it back into the purchase of the car for true savings.
The deal: Jeep will cover 20 per cent of the down payment and offers a six year/120 kilometre extended service and warranty plus a year's free insurance on select models.
Beware: The extended service and warranty package is only a great incentive if you plan to hang onto the car for the long term.
The deal: Nissan is keeping it simple, offering 0 per cent interest for four years on the purchase of any new Nissan 2018 passenger cars, crossovers and SUVs.
Beware: Negotiate for extras too, but according to Mr Carter at Autodata, free financing is actually one of the best and most cost-conscious ways to buy a car.