Sa. Jul 6th, 2024

There has been a 5-7 per cent increase in new car prices, mainly due to chip shortages and supply chain issues. The waiting period for new cars has increased and they are charging a premium for speeding up deliveries…” says Vishal Pandey, Director, Glasgow Research & Consulting.

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Dubai: Buying a new car in the UAE now comes with something owners have never experienced before – a long wait to actually get it. What used to be a month or two waiting period on the more popular models is stretching well beyond that. And when it comes to luxury models and SUVs, the waiting can last a few months.

At the start of the year, UAE dealerships had been optimistic that delivery times and stocks in hand would get better by summer. That, by the looks of it, is not happening, and which has prompted dealers to revise their expectations to year-end for the situation to improve.

All this when demand for new cars is hitting 15-20 per cent levels from a year ago – and double what it was during 2020, when COVID-19 and the lockdown phase dented demand. At the time, dealers felt the impact would take years to repair – but that’s not how it’s been playing out as buyers started to return from the second-half of 2021. Only to find there aren’t enough cars to buy.

All about ships and chips

Production cuts in 2020 by all carmakers meant that supply was always going to play catch up to demand. It was also the time that carmakers got hit with an acute computer chip shortage (this became a problem for just about every hi-tech industry). Now, when a car manufacturer had enough production to offer, they found buying space on ships was at astronomical levels.

Higher shipping costs have left their imprint on 2022-23 model year car prices. On average, “,” said . “The waiting period for new cars has increased and they are charging a premium” for speeding up deliveries.

Other industry sources say that new car prices – as well as of secondhand options – have risen by as much as 10-15 per cent in these 12 months. Prospective buyers can expect more increases when the 2023 MY vehicles hit showrooms from September, with the recent gains in dollar’s value adding another layer to car prices.

Buy secondhand?

That’s the other big trend the UAE’s auto market is witness to – the rise and rise in demand for pre-owned. New dealers are entering the market, including that operate only through as online platforms buying and selling used cars.

Because there are many who want to get a new set of wheels now rather than wait three- to six- months, demand for pre-owned has seen some heavy activity in the first-half of this year. Buyers are getting their chosen cars within “one week to 15 days depending on the loan approval/financing bit,” said Pandey. If it is “cash upfront, the process is faster in about three days.”

Even then, “as there is no stock in the market, even secondhand dealers are securing stock from the grey market and that is being sold at a premium.”

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