Present Challenges Faced by the UAE Auto Market

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The UAE is one place that retains its strong appetite for cars despite the shakeup that the world recession and the local credit crunch that followed the Dubai World debt crisis has caused in the Middle East region.

For car dealers Dubai and car dealers Abu Dhabi, 2008 was marked as a particularly good year, as sales increased by 22 percent over 2007 figures. However, the forecast from 2009 onwards has shown a declining trend. With bank credit tightening up, the rate of vehicle loan rejections in November 2009 had risen from 5 percent to up to 30 percent in the UAE.

With 70% of new car purchases in the UAE made on credit, it is predicted that annual growth in the auto market will slow down to just 2.9% this year. Although sales are expected to remain sluggish this year, estimates for the UAE market in the long term are that it will rebound strongly with double-digit growth in sales likely to resume from 2011. Indeed, it is predicted that by 2013, the UAE auto market sales should reach around 570,000 vehicles per year.

The biggest challenge that car dealers Dubai face today is the lack of confidence among customers. While they are still getting a healthy level of enquiries across car brands; however people are slower in making the buying decision. When consumer confidence dips, people become more cautious and often slip into a considerably thoughtful holding pattern before making long term commitments.

Another challenge comes from the growing number of questionable offers that some car dealers Dubai and used cars Abu Dhabi dealers are making to attract customers. Newspapers & classified sites Dubai are filled with many advertisements offering special deals. Customers should make sure that they fully understand what the offer really is, and that it represents good value rather than just a discount in price.

One thing is certain that the UAE will never lose its appetite for fast or luxurious cars. Even in these comparatively difficult times, it has been seen that there is a high level of interest in buying the latest models presented at all the recent auto shows held across the UAE. In 2010 fastest car on planet is going to on track in Abu Dhabi.

With customers focused on price, many car dealers Dubai and used cars Abu Dhabi dealers are losing business because people have an unrealistic expectation that prices will keep falling. However prices cannot keep falling forever, as every seller has a certain reserve price below which he or she will not sell. They still have to be viable as a business.

Although sales have slowed, there are still some genuine buyers out there. People who do visit a car dealers Dubai showroom or used cars Abu Dhabi dealership these days are more serious about buying a car. At the moment, the majority of purchases are being made by the locals, whose buying habits have thankfully remained relatively unchanged. The challenge is to regain the expatriate market, both in terms of Arab and Western expats.

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