It is one of the most commonly asked questions about Dubai, Abu Dhabi, and the UAE in general. It is a known fact that cars in the UAE are considered more inexpensive than most other parts of the world. But the real question is, why are cars so cheap in the UAE?
The sheer variety of cars on sale in the UAE makes it one of the most unique car markets in the world. But the pricing of these cars further adds to this uniqueness factor. A study revealed that in the UAE, buying a midsize car is possible for under AED 80,000 while in Singapore, a similar car would cost around AED 300,000. That is a massive difference.
So, what exactly are the reasons for cars to be considered so cheap in the UAE? Read on to find out.
Low Interest Rates
Studies have shown that around 80 percent of all new cars in the world and around 40 percent of all used cars in the world are bought with the help of an auto loan. This is despite most countries having higher rates of interest. In the UAE though, things are done a bit differently. It is possible to secure a car loan with interest rates between 2.29 and 4.42 percent.
This reduces the cost of owning a car by a significant margin and thereby makes it easier for residents of the UAE to buy a car. In fact, this lower interest rate and the ready availability of finance options brings most buyers closer to their dream car than they thought was possible.
Higher Rate Of Relocation
Emirates like Dubai & Abu Dhabi are dynamic and vibrant in nature and culture. As a result, people from all over the world desire to relocate to these cities. Expats from over 200 different countries live and work in the UAE, and many of them will end up buying a car during their time in the UAE.
Some of these expats leave the UAE after a couple of years and some others leave the UAE after a few decades. The fact is, when they do leave the country, they end up selling the car/cars they owned. This rate of expatriation and repatriation is very high in the UAE and as a result, the rate of buying and selling cars is also high. This leads to lower car prices overall.
Minimal Taxes
Cars are among the most taxed commodities in many parts of the world. The maximum tax rate on a car in the US is 8.25 percent, in the European Union, it can go up to 27 percent, in India, it is 28 percent, and in Singapore taxes on high-end cars can go up to 320 percent! Many countries like Singapore levy taxes based on the value of the car and it is always higher for luxury goods.
In the UAE though, one only has to pay 5 percent VAT on cars. So, irrespective of whether you’re buying a Nissan Tiida or a Range Rover Autobiography, you only have to pay 5 percent VAT. This significantly reduces the purchase cost of a car.
Large Number Of Abandoned Cars
One must have come across videos and images of abandoned cars gathering dust in various parts of the UAE. For various reasons, large numbers of cars both fancy and mainstream, were abandoned during the global financial crisis of 2008-2010. The financial crisis is long gone, and the UAE is now one of the most prosperous countries in the world.
However, there are a number of abandoned cars that are still being restored, and pushed back onto the used car market. Many of them even turn up at auctions at extremely affordable prices. If you’re lucky, you could get the car of your dreams. However, we would suggest that you get a thorough inspection of the car done before buying it.
Relatively Higher Maintenance Costs
It is no secret that temperatures in the UAE are extremely high, especially during the summer. After all, it is a desert nation. As a result, some parts of your vehicle are bound to have more wear and tear than usual. This is especially true of rubber parts. This means the replacement of tyres is a bit more frequent. This is the only aspect of car ownership in the UAE that is equal to, or slightly more expensive than a few other countries and can bring car prices down.
However, the impeccable road infrastructure and great serviceability ensure that cars last a long time. In fact, it is only in the UAE that one can easily find cars that have clocked hundreds of thousands of kilometres and are still going strong.
Surplus Supply Of Cars
In 2003, the UAE had 3.8 million residents. Now, halfway through 2023, the population stands at 9.5 million. With such a drastic rise in the number of residents came a drastic increase in the number of car buyers. Despite having an immense increase in buyers, every single car showroom in Dubai & Abu Dhabi is filled with cars both big and small.
Demand for cars is on the rise and so is the supply of cars. Both private and OEM dealerships have great business and sales are on the rise and yet, there is a surplus supply of cars. This surplus supply helps in keeping the prices of cars low.
Lower Fuel Prices
The prices of fuel do not directly affect the prices of a car. However, it does have an indirect effect. Lower fuel prices lead to lower ownership and running costs and that is exactly why it is one of the reasons on this list. With fuel prices starting at AED 2.97 per litre, the UAE is the 18th least expensive country in the world to buy fuel. Check out the current prices of petrol & diesel in the UAE.
If you’re on the lookout for your dream car at inexpensive prices, DubiCars has just what you need. Check out new cars for sale in the UAE and used cars for sale in the UAE at DubiCars.com.
Also Read:
– Top 10 SUVs In The UAE: The Definitive List
– Ford Mustang: All You Need To Know About The Generations & Models Of The Ford Mustang
– All You Need To Know About Exporting A Car From UAE
