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Buying a used car should not be based on price and hope alone

25 Sep 2012
Used cars in Abu Shagara, Sharjah. Over the last year more, local dealerships have been focusing a lot more attention on their used car operations, with some of them even going the distance by setting up dedicated showrooms and support facilities.
A cursory check under the hood, a couple of foot taps on the tyres, a few attempts at turning on and off the ignition keys and a lot of haggling over the price. This was the elaborate ritual that accompanied the buying and selling of secondhand cars in the UAE.
For buyers, only the price mattered and if the vehicle had a half decent paint job still on, then that was a bonus. Rarely would the details such as the service record of the vehicle or a limited after-sales warranty figure in such transactions, which were driven more by the buyer’s hopes than anything of a solid nature.
More often than not, a few months would pass by and what seemed like a “not to be missed” deal at the time would start giving off constant engine and carburettor problems. By then the air-conditioning vents would have nothing to offer but hot air. There are also the sizable bills being run up on maintenance and parts replacements.
It could all be changing. The business of secondhand cars in the UAE – said to account for anywhere between 100,000 to 125,000 units a year - is going through a transformation well away from the spotlight, but no less significant because of that.
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Over the last year and more, local dealerships have been focussing a lot more attention on their used car operations, with some of them even going the distance by setting up dedicated showrooms and support facilities. Their thinking is that there is a growing base of informed secondhand car buyers who want to know what they are signing up for.
What these dealerships want to do is have a greater say in the used car volumes. Currently, up to 80 per cent of such transactions are done through the “unorganised sector”, euphemism for the hundreds of small businesses which have dominated this category for decades.
And the weapon of choice for the dealerships in this war of attrition is the CPO, which stands for “certified pre-owned”. Cars bearing this certification have to go through a quite rigourous 145-point inspection before being put up for sale. Armed with the CPO, dealerships believe they have a handy marketing tool to get their point across to convince reluctant buyers.
“The growing demand for pre-owned cars in the first half of 2012 is attributed to the improvement in the quality standards of used cars sold by the dealerships,” said Mahesh Rohra, general manager for pre-owned cars at Arabian Automobiles Co. “Most dealerships now have a certified pre-owned programme which has warranty as a part of the offerings. This has given creditability and customers have an option instead of (buying) a new car.”
But convincing more potential buyers will take time. A sizeable percentage would still be swayed by the price factor and all other considerations being secondary. To get them to change they buy used cars is out of the question. But dealerships reckon that over time anywhere between 15 to 20 per cent of buyer prospects could be induced to come to dealerships and be convinced about CPO-mandated vehicles.
“Used car buyers currently check the offerings through classified ads or unspecialised websites that offer no judicious valuation of the cars, but are based purely on personal preferences,” said a spokesperson with Al Futtaim Motors. “We believe people need to be more educated on the importance of buying used cars from the dealer and to secure all the benefits that come with it such as transparent service.”
While educating the prospective buyer is a task for the near term, those involved in the secondhand car sales business in the UAE have a simple ratio in their long-term sights.
The accepted wisdom is that for each used car bought in the UAE, there are two brand new cars sold. In markets such as the UK and the US, the ratio is 2:1 and 4:1 respectively. If used car volumes in the local market can be brought on par with new cars, that, industry sources unanimously agree, would amount to something substantial.