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In the past, Dubai had lots of super expensive cars, but now many are left abandoned. Most folks used to prefer buying brand-new cars, but things have changed. The fancy cars are being ditched for various reasons. This surge in abandoned cars has made car prices drop to an all-time low in Dubai. People now opt for older cars because they’re way cheaper. Moosa Rent a Car, a website for rent a car Dubai, found all this out.
The reason why cars are so cheap in Dubai is pretty interesting. Let’s explore why this is happening.
Low Interest Rates:
Studies indicate that the majority of car purchases worldwide involve auto loans. Even though interest rates are typically high in most countries. However, in the UAE, the scenario is different. Cheap car rental here come with much lower interest rates, ranging from 2.29 to 4.42 percent. This significant reduction in borrowing costs makes car ownership more affordable for UAE residents. With readily available finance options, many buyers can now afford their dream cars more easily.
Higher Rate of Relocation:
Cities like Dubai and Abu Dhabi are known for their dynamic and vibrant culture, attracting people from around the globe to relocate. With over 200 nationalities represented, expatriates make up a significant portion of the population in the UAE. Many of these expats purchase cars during their stay. However, due to the transient nature of expat life, a considerable number leave the UAE after a few years or even decades. When they depart, they sell their vehicles. This frequent turnover of cars due to high rates of expatriation and repatriation contributes to lower overall car prices in the UAE.
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Minimal Taxes:
In many countries, cars face hefty taxes, sometimes reaching extreme rates. For example, in the US, the maximum tax rate on cars is 8.25 percent, while in the European Union, it can be as high as 27 percent. In places like India and Singapore, taxes can soar up to 28 percent and a staggering 320 percent, respectively, especially for high-end vehicles. Singapore, for instance, bases taxes on car value, making luxury cars even pricier.
However, in the UAE, things are different. Here, you only need to pay a 5 percent VAT on cars, regardless of whether it’s a basic model like a Nissan Tiida or a luxury vehicle like a Range Rover Autobiography. This significantly lowers the overall cost of buying a car.
Large Number of Abandoned Cars:
It’s not uncommon to see videos and pictures of cheap used cars UAE left to gather dust in various parts of the UAE. Many cars, both fancy and ordinary, were abandoned during the global financial crisis of 2008-2010. Despite the recovery of the UAE’s economy, some of these abandoned cars remain. However, many are being restored and resold in the used car market, often at auctions and for very affordable prices. If you’re lucky, you might find your dream car this way, but it’s essential to have a thorough inspection done before buying.
Relatively Higher Maintenance Costs:
The UAE’s scorching temperatures, typical of a desert nation, lead to increased wear and tear on vehicles, especially rubber parts like tires. This means more frequent replacements, which can add to maintenance costs. However, despite this, the excellent road infrastructure and quality servicing in the UAE ensure that cars have a long lifespan. It’s common to find cars here that have traveled hundreds of thousands of kilometers and are still in good shape.
Surplus Supply of Cars:
In 2003, the UAE had around 3.8 million residents. By mid-2023, this number had skyrocketed to 9.5 million. With such a massive increase in population came a corresponding surge in the number of people buying cars. Despite this huge increase in buyers, every car showroom in Dubai and Abu Dhabi is brimming with vehicles of all sizes.
The demand for cars is soaring, and so is the supply. Both private sellers and official dealerships are thriving, with sales on the upswing. However, despite the booming business, there remains an excess supply of cars. This surplus helps to keep car prices low.
Lower Fuel Prices:
While fuel prices themselves don’t directly impact car prices, they do have an indirect effect. Lower fuel costs translate to reduced expenses for owning and operating a car, making it a significant factor on this list. With fuel prices starting at AED 2.97 per liter, the UAE ranks as the 18th least expensive country in the world for fuel purchases.
People Leaving the Country and Leaving Their Cars:
The surge in abandoned cars on the market can be attributed to residents leaving Dubai. Once a beacon of wealth and opportunity, Dubai attracted people worldwide with promising career prospects. However, during the global financial crisis, circumstances changed.
Many were forced to depart Dubai due to a lack of sustainable work opportunities, shifting the dynamics. A significant portion of the international population, along with some Dubai residents, left the country. This left behind a considerable number of cars, contributing to the oversupply and subsequent decrease in car prices.
New-Car Prices are Coming Down:
With a plethora of used cars flooding the market and customers preferring them over new ones, the automotive industry faced pressure to reduce prices. To stay competitive, all automotive businesses in Dubai had to adjust their pricing strategies, leading to a notable drop in luxury car prices for the general public.
The abundance of cars in Dubai has prompted residents to seek assistance from Car Savvy Experts. These experts, well-versed in the automotive industry, help consumers understand the intricacies of available cars and negotiate better deals.
Conclusion
Several interconnected factors contribute to the cheap cars in Dubai. From minimal taxes and low interest rates to surplus supply due to population shifts and the preference for used cars over new ones, the landscape of car ownership in Dubai reflects a unique blend of economic, social, and cultural influences. Additionally, lower fuel prices and the presence of Car Savvy Experts further enhance consumers’ purchasing power and negotiating capabilities. As a result, Dubai stands out as a market where luxury and practicality converge, offering residents and visitors alike the opportunity to drive their dream cars at surprisingly accessible prices.
