It will be another two weeks before the full results for the holy month of Ramadan is declared by the various companies in our industry. Early reports from our contacts state that it has not been the usual buying frenzy that the holy month tends to bring.
The cause is the combination of finance regulations, annual holidays and the heat during the month of August all of which have conspired to make it a challenging month in the automotive industry.
That said we have seen a significant increase in business compared to the month of July, which is certainly encouraging.
There is a steady stream of new expats arriving weekly at this time of year as companies start to recruit in preparation for 2012.
This tends to build during the next month, and they will require transport. The usual pattern is that they hire a car for the first month or two until they find somewhere to live and get used to the location.
Then the great car hunts starts! Indeed, I was in conversation with some newcomers in Dubai this week
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and their priorities are: accommodation, school, and then car. Another positive note is the Japanese have recovered far more quickly that was initially expected after the devastating effects of the disaster earlier this year, which had an impact on the majority of the brands in the region.
Most of the major players in the automotive industry have found ways to ease the burden of the 20% deposit rule and with more and more companies offering PCP type schemes, we are forecasting that the coming months will see a great upturn in business. We envisage interesting times ahead.
Bill Carter
Head of Valuations
Autodata Middle East
Email: bcarter@autodata.ae
Bill Carter (1952) is head of the Valuations Department at Autodata Middle East.
Bill has been working in the automotive industry for 42 years, among which 16 years for Glass's Guide. The last three years Bill analyzed the new and used car market in the United Arab Emirates.
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Dear Reader,
Autodata is pleased to introduce its new General Sales Manager Ian Batey
“Our aim is to build long term strategic partnerships with Manufacturers, Retailers, Government agencies, Banks and Insurance companies.
To provide innovative IT vehicle valuation and stock management solutions which support our partners to reach their volume and financial objectives, while delivering world class customer service.
Autodata are Automotive people that provide Automotive data".
Ian Batey
General Sales Manager
Autodata Middle East
Email: ibatey@autodata.ae
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The Dealer Council
On September 19th, 2011 the first Dealer Council breakfast meeting will kick off. Themed “Building Bridges” these breakfast meetings will provide a platform facilitating open discussions and exchange of ideas that will benefit you on a day-2- day business, and ultimately the Automotive industry as a whole.
If you are a senior manager, new or pre-owned sales manager, we invite you to register and represent your Company.
Simply send your contact details to register@autodata.ae. We have already received a number of registrations and look forward to meeting you on the 19th of September. After registration will you receive a confirmation containing The Dealer Council meeting details. The Dealer Council is an initiative from Autodata Middle East LLC based on requests received from its stakeholders. With this initiative Autodata, as leading information provider, supports the development of partnership and the exchange of information, important for further professionalization of the Automotive industry
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The Trend
We are constantly being asked what the true effect of supply has on used car prices. To explain, we have used the achieved market prices in 2011 for one of the most popular one year old SUVs in the UAE. The Toyota Prado has long been the mainstay of the SUV market and examples can be seen in most used car retail showrooms. The year started as normal with slight depreciation occurring with there being a ready supply to the market. We then had the devastation in Japan and products was severely disrupted. This meant that existing stocks of new cars suddenly dwindled and the buyers turned to nearly new examples. The demand outstripped supply and the prices achieved started to rise during May and June and maintained that level until September when supply of new cars stared to improve.
Supply is expected to improve over the coming months and the price of used model will start to drop slowly but will still be higher than they would have been had the supply problem not been present. |
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In Numbers
One of the facts about how cars depreciate in value is this is not a perfect world! Ideally they would lose value by a set amount each month and produce a nice straight line.
However, in the real world, supply and demand drives the depreciation pattern along with the effect of seasonality.
The graph shows what happens to prices during the summer as dealers try to entice the few remaining expats into the showroom with every type of incentive available!
We can then see that at the end of the summer period the prices climb as the combination of people returning from their summer break and the influx of new residents drive the demand upwards.
We then see a near normal rate of depreciation return and a period of stability. Welcome to the real world of car value depreciation.
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