x Abu Dhabi, UAESaturday 22 July 2017

More options in a mature car market

A striving car market is good news for the UAE economy.

Take a brand-new car out of the showroom and it has already lost a considerable chunk of its value. The nature of the car market is that the best deals are for those who buy second-hand - if they buy carefully, that is.

Second-hand car dealerships have reflected a growing consumer trend over the past year. As The National reported yesterday, the market has changed, with rising demand for used cars forcing dealerships to place buyers on long waiting lists - and buyers, apparently, are willing to wait.

Last year, sales through small independent garages and directly from individuals accounted for 75 per cent of the used car market, according to a survey by Arabian Automobiles. A segment of the expatriate population is relatively transient, and most prospective buyers must have dreamt about all of those "barely used" cars that are on sale for a song. The next thought, however, should be that some of those original drivers ran their cars into the ground in the trying desert heat. Buying from them can be a risk.

Dealerships have perhaps been slow to fill that niche. For buyers, purchasing second-hand cars from authorised dealerships can be a safer option. The cars may be more expensive but should come fully serviced and with a comprehensive maintenance history. Above all, a new warranty adds a certain shine no matter how old the vehicle.

That is not to say that the dealerships necessarily offer a better deal than the original owners. But it is nice to have the choice.

This is more than just a new owner's dream wheels, or his new lemon for that matter. A multi-tiered market for cars provides opportunities for a whole subset of associated businesses, from auto parts suppliers and mechanics to insurance providers and dealerships. Rental car companies, which can rotate their stock every 18 months, provide a steady supply. A well-functioning marketplace carries all passengers.

The argument could be made that new car dealerships might lose out. More choices in the second-hand market might indeed depress sales. It is, however, difficult to see the Lamborghini dealership feeling too threatened by a fleet of used Hondas. True, economy car dealerships may have to cut costs to pass on lower prices to consumers. That, too, is an advantage of a more sophisticated market.