Used cars are making up a greater proportion of vehicle sales in the UAE as drivers look for a cheaper alternative
On the road again in a used car
Car dealers across the Emirates are investing more time and money in the used-car market as drivers look for cheaper ways to get from A to B.
TAU, a Japanese importer of cars, boats and spare parts, is setting up a Dubai office to compete with local dealers.
"There's very good potential for us to increase our business if we have a presence in Dubai," said Reza Sheikhi, the assistant manager for TAU's emerging UAE business.
This year, Arabian Automobiles launched the UAE's largest used-car dealership and a programme for certifying used cars.
The company reports 54 per cent growth in sales of used Nissans and Renaults from its showroom in the first six months of the year over the same period last year.
"Almost every other customer that looks at our new vehicles also looks at our certified pre-owned cars," said Mahesh Rohra, the general manager for pre-owned cars at Arabian Automobiles.
"In other years, they would have tended to have been suspicious, but there are now some people that convert." Mr Rohra said the company sold 1,075 cars in its one used-car showroom on Sheikh Zayed Road this year at an average price of Dh55,000 (US$14,974).
Nissan's Altima, Tiida and Patrol models were selling strongly, along with the Renault Safrane, he said. With growing demand for used cars and an increased market presence, TAU expects to double the number of cars it imports and sells.
"We have many customers already in the Middle East in the UAE, Bahrain, Pakistan, and we realise there's good potential for Japanese brands here," Mr Sheikhi said.
"Establishing in Dubai also makes it much easier to market out to other countries in the Middle East and expand to Africa.".
TAU will import all brands of used cars from Japan and hopes to use Dubai as a base to buy and sell used cars throughout Africa, where demand is also increasing.
"Because the cars are from Japan, the maintenance is much better than other countries," Mr Sheikhi said. During the recent economic downturn, many banks reduced lending for car purchases as many buyers across the Emirates had taken on huge levels of debt in the boom years.
Subsequently, drivers also tightened their own belts and began downgrading to used cars.
In the UAE, car manufacturers and their local partners have been setting up certified pre-owned schemes, in which used cars are tested for roadworthiness.
Arabian Automobiles, the exclusive dealer for Nissan, Renault and Infiniti in Dubai and the Northern Emirates, recorded 40 per cent growth in its used-cars sales last year, prompting it to open a showroom and offer certified pre-owned cars. "People want something they can trust, so the certified scheme has helped drive people to the showroom," Mr Rohra said.
General Motors set up a pre-owned scheme in 2007, which has recorded sales growth of 5 per cent so far this year compared with the same period last year.
"The priority in the used-car business is evident by the growing number of manufacturers supporting their dealers in establishing a used-car programme," a GM spokesman said. "If the programme is well set up, it clearly has the potential in bringing additional profit to the dealer."
Rolls-Royce also plans to sell luxury used cars for the first time through its network of dealers in the Middle East.
Its used-car scheme, called Provenance, is being offered in showrooms across the UK and is due to be launched in the Middle East towards the end of the year before being rolled out globally.