The global recession has had its up sides. For buyers of second-hand cars, prices have rarely been lower.
Never a better time to buy a used car
DUBAI // The global recession has had its up sides. For buyers of second-hand cars, prices have rarely been lower. But for sellers, times are tough. Some local dealers say they have never known the market to be this bad. David Hunt, from House of Cars in Dubai, which trades in upmarket cars, said there had been "a lot of price corrections".
"We've dropped a lot of prices," he said. "Everybody has. We're trying to kick-start a market in a slump." Mr Hunt recently sold a 2002 model new-shape Range Rover for Dh55,000 (US$15,000). Six months ago, the vehicle had been up for sale for Dh89,000. The good news for the country's middle-income earners is that it is not just premium brands that have seen their second-hand values plummet. Dealers say popular cars such as Nissans, Toyotas and Mitsubishis are also worth less second-hand than they used to be as buyers stay away.
"All sales are down," said Philip Thomas, a salesman at one dealership in the automarket, where signs promising "Buy now, pay later," and "0% deposit," do not seem to be enough to attract buyers as before. A 2006 Nissan Altima with 70,000km on the clock that Mr Thomas said would have been worth Dh52,000 a few months ago is now offered for Dh47,000. It is the same story with slightly smaller cars. For example, a 2005 Toyota Corolla that has done 77,000km can now be bought from a dealer for Dh31,000.
"When the market is good this car is around Dh36,000," said Ali, who works at Al Attar Used Cars. The 4x4 market has also taken a hit, with second-hand full-sized SUVs such as the Mitsubishi Pajero selling for much keener prices. Qaiser Khan, a salesman in the auto market, said a three-year-old Pajero was now about Dh10,000 cheaper than before the slump. "Before we used to sell this car for Dh65,000 plus, but in the recession it's come down," Mr Khan said, pointing at a Pajero now on sale for Dh52,000.
Even these keener prices have failed to draw in buyers in large numbers, however, with Mr Khan reporting that his monthly sales had dropped from more than 30 to as few as eight to 10. In the UAE, used cars once held their value relatively well compared with some other countries, said Mr Hunt at the House of Cars. He said increases in new-car prices would prop up second-hand values. "You could buy a Porsche and sell it after two years for almost what you paid for it," he said.
"That's not happening now. Cars are depreciating, as is the housing market." Over the past 10 years, Mr Hunt said, there had been a "steady climb" in the amount of business - until the slump hit. Shashi Nair, who works at a dealership in Dubai's auto market that specialises in new-car exports, said sales in surrounding dealerships had fallen away "drastically". Where previously he had been selling 100 to 150 vehicles per month, "now it's only 45 to 50. It's bad. It's very bad. This is a recession."
He said expatriates looking to sell their vehicles before leaving the country had become increasingly common. Even motorists who had only recently spent Dh90,000 to buy a car new, he said, would sell it for as little as Dh60,000. "They have two months and in that time they have to liquidate whatever they have," he said. "It's a good time to buy a car but not to sell." New car sales are also suffering, according to Simon Frith, managing director of Al Futtaim Motors, the UAE dealership for Toyota, which last year had a 27 per cent market share, the largest of any manufacturer.
While declining to give exact figures, Mr Frith said sales were lower than last year, although he said that in the circumstances the company was "very happy" by how much they had held up. New car prices, he said, had not dropped, although dealerships were trying to entice buyers with offers such as free insurance or servicing and finance deals. The problems are not confined to dealers who sell primarily in the UAE market.
Companies whose main business is export vehicles have also seen sales - and prices - slump. Dubai's second-hand car market has many such dealers that buy second-hand cars, SUVs and vans from Japan, and sell them to overseas buyers, many from Africa. "Six months ago, we'd sell a Prado for Dh32,000. Now it's on the market for Dh22,000," said Hussain Khan from Quality Motors. Similarly, he said a 1997 Toyota Rav 4 that would have been Dh22,000 six months ago was now selling for Dh15,000 or Dh16,000.
Shabir Ahmed, the company's office manager, said there had been a dramatic drop in the number of cars sold. "Usually every day we're selling three cars," he said. "Now we're selling three cars per week." Dealers say the difficulty of getting a loan has been a major factor in depressing the market in the UAE. "We've got people who want finance but who cannot get finance," Mr Hunt said. "The banks come up with excuses not to lend them money, and they put interest rates up when they should be doing the opposite."
According to Mr Nair, however, there are signs of an easing of the restrictions that could mean the market starts to improve. "There are some banks opening up, although many people don't want to take the risk of buying a car," he said. email@example.com