UAE new car buyers finally have less time to wait for deliveries these days – and dealers help with more incentives

DUBAI: First, good news for the UAE automotive market.

New car buyers are finally starting to see dramatic reductions in wait times for delivery of the models they buy. On many popular models, those wait times have been reduced to “a few weeks,” rather than two years or more in most cases.

Another huge help for these buyers has proven to be the flexible financing schemes offered by banks in the UAE, even with all the rate hikes since March ’22. Flat rates for auto financing currently average 3-5%, while flat rates for reduced income range from 5-10%. Even so, almost all of the big banks in the UAE reported higher demand for auto loans in their first-quarter financial reports, suggesting that the current bank is likely to head higher.

In response to rising interest rates, banks have been sweetening the deal with cash-back schemes and other incentives. It all paid off with increased car purchases in the UAE around last month’s Eid holidays.

While pricing for new model-year launches has remained more or less stable in recent weeks, dealers are also coming back to offer bigger add-ons. Extended warranties are standard these days, but there’s much more to offer like free insurance.

Keep the cost of owning a new car within bounds—buyers will keep coming.

That’s good news for the local auto industry. “We had been expecting new car sales in the market to grow by around 5%, but it turned out to be a 15% increase (year-to-date),” said Jacques Brent, managing director of Al-Futtaim Toyota and Lexus.

“Dealers have been able to get higher deliveries from their principals, all of which makes for a stronger market than expected at the start of the year.”

Demand for hybrid models is climbing strongly in the UAE – had dealers had more stock to sell, they would have achieved higher sales so far this year. “Hybrids are still a category that will take longer to complete the transition,” Brent said. “Any model that has recently launched and encountered strong demand in other global markets will take longer.

“That’s what we’re seeing right now — two months or so of waiting lists for hybrids.

“Over the remainder of the year, we continue to believe that deliveries of most other models will improve.”

Between EVs and HEVs, their share of new car sales in the UAE is around 10%. In terms of hybrids in particular, industry sources believe growth could be even higher as more brands offer those models alongside standard fuel-powered models. Toyota is building out a wider range of hybrid options, while more niche brands like Maserati have options on all of their models.

“When electric and hybrid models start offering more pricing ranges, that’s the big moment they’re waiting to happen in UAE sales,” said the chief executive of a leading dealership. “We will add more hybrid models in the second half of 2023. There is also growing interest from fleet operators, which will be another factor.”