As per Ken Research, a large number of UAEs expatriate population will be enduring to act as a core expansion driver of the used car market space. The expats would prefer an affordable private transportation medium for their short period of stay rather than committing to procuring the latest car for a longer duration.
Health and Hygiene sector to have an upsurge in awareness
With the advent of COVID-19, consumers were witnessed to be more concerned on maintaining personal health and hygiene. Therefore, they prefer the option of private transportation rather than availing public transport system.
The shift in the whole clientele behavior and preference is all anticipated to act as a prospect for the used car market in UAE. Due to fragile economic sentiment and financial constraints surveyed by the aftermath of COVID-19, clients are not willing to spend a huge amount in procuring the latest cars rather they are preferring to acquire affordable used cars which aids them in maintaining their health by spending less.
Therefore, the future prospect of the industry looks robust wherein used cars players in the market could utilize this prospect to integrate the market.
Perception of Digital Medium
Clients procuring preference has significantly shifted with the onset of Covid-19. Clients are procuring groceries, online shopping, and even sales of merchandise have gone digitalized with the consumers having adopted the medium in a comfortable manner.
Coupled with that internet penetration rate in UAE has been consistent to add in accumulation of the visibility of the online marketplace and classified ecosystem in UAE for offering better prospects to the client to conduct proper research before delving into the procurement of a used car product.
In recent times even the dealers which have brick and mortar presence rather than online visibility, have started listing their used car fleet in classified websites and online marketplace for better reach to the customers. Strengthening the online ecosystem of the used car domain in UAE will be the key determinant for the growth of this market in coming years.
A large Number of Expatriate Population
As per the Ken Research report, as of July 2021, it is appraised that expat population in UAE constitutes 88.6% of the overall population. Most expats in UAE are living for a specific duration of time till their employment contract expires. Due to this nature, these expats prefer procurement of a pre-owned vehicle rather than costing a huge sum of cash in the procurement of a brand-new car which has given rise to an increased demand for used cars over the years.
UAE’s Shipping Industry aid for Export/Import Sales
As per the Ken Research report, the Jebel Ali Port in UAE operated by DP world is the largest port in middle-east. An efficient shipping industry of UAE funds in maintaining a steady level of export and import of used cars with ease.
The export prospect of used cars in the UAE will act as a major determinant in the development of the used car market in the coming years. Dubai is the major export hub in the UAE in terms of used cars. Mostly, used cars from UAE are exported to the MENA region (the Middle East and Northern African Region).
Ken Research also added out further that, as long as the mandate of used cars in the MENA region stays relevant, used cars are subjected to record wonderful growth in coming years due to export prospects which contributes in generating revenue.
The report titled “UAE Used Car and Auto Classified Market Outlook to 2025” by Ken Research suggested that the used car market in UAE is expected to grow further in the near future, with the increased awareness on health and hygiene followed by the onset of COVID-19, thus showcasing a change in consumer preference from availing public transport to private transportation medium.
The market is estimated to register a positive CAGR of 16.6% in terms of revenue during the forecast period of CY’20-CY’25.
Value-Added Services
Used car market players in UAE, in an effort to distinguish its offerings, are providing a number of value-added services along with the used cars which serve as one of the major competition parameters in UAE.
These value-added services comprise of warranty, financing options, accessories, and others. Many dealerships have tie-ups with loan-providing financing companies. These value-added services have a placebo effect on the assuring quality of the car in the mind of customers.
These value-added services also prompt the customers to pay marginally more while buying through a dealership. This trend will help in consolidating the market share of players selling via B2B/B2C channel in the market as players selling via C2C sales channel does not offer a wide range of necessary value-added services such as transfer of ownership, tax registration and payment, quality check and assurance and others.
Expo 2020
In recent years, UAE has been initializing the process of shifting away from oil dependence and enhancing its economic capability to develop others sectors, such as tourism, IT, pharmaceuticals, automotive, real estate, etc.
Therefore Expo 2020 is seen as a platform that will contribute to major investment opportunities in the diversified sectors of UAE especially Dubai. The automotive sector in UAE is a growing industry wherein most of the cars are imported from Japan, Germany, America, and South Korea among others.
Therefore, expo 2020 will act as a platform to develop and attract investment in the automotive sectors coupled with an efficient technological solution, which will change the ecosystem of the industry. With the structural change in the automotive sector, there is a greater possibility to enhance the capability of the used car market in Dubai wherein players in coming years would look forward to adapting to effective digital solutions to attract consumers and participate in growing the used car market in UAE.
