UAE car dealers will only have ‘limited price increases’ on 2023 models

“Everyone is talking about semiconductor chip shortages and transportation costs driving up car prices,” said Michel Ayat, chief executive of AWR Automotive, Nissan, Infiniti and Renault dealers. “What they don’t realize is that today’s buyers want sensors, cameras and lane-change warnings in even smaller cars. It’s much more expensive to add these smarts.

“For the next model year, the plan is to limit price increases for car buyers to a minimum. In our case, 1-3 percent.”

Other dealers tend to think in these areas too. “Minimum increase in ex-showroom prices and give as many freebies as possible – as we see more cost-conscious buyers turning to showrooms,” said one dealer. “Everyone is figuring out how to reduce their monthly installment.”

By early next year, global automakers should have resolved the chip shortage, Ayat said. Worsening problems with semiconductors mean that, on most models, car buyers in the UAE have to wait even months to receive their confirmed orders. “For the best-selling EVs, it’s even longer — six months on average,” said Ayat, who is also the head of the Dubai-based car dealership group.

“We will see a 28% increase in shipments from Q4 to Q22 and 100% next year. Delays in new model deliveries – an average of 1-3 months – have been hindering new car sales in the UAE growth – now is the time to address this issue once and for all.”

Despite showroom shortages and delivery delays, new vehicle sales performed well in the first six months. “Sales in the UAE market were 104,060 units, 12.3 percent higher than last year’s 92,600 units,” Ayat said. “Interestingly, the Japanese-made brand recorded an even bigger increase in its share – up 12.9% – with 78,252 vehicles sold.

“The share of European brands has shrunk, even though the euro has depreciated a lot, which means prices should also fall. American car brands fell 5.6% over the period.

“We need to go beyond these numbers – consumers are changing, who would have thought that sales of used cars would go hand in hand with new cars in the UAE? That’s exactly what’s happening right now.”