The recent introduction of a 5% VAT has had a negative impact on demand for big ticket items such as luxury cars, thus impacting demand in 2018. Price competition will remain intense as deals such as good finance options and free aftersales service increase the value of a package.
In addition, dealers have also started offering free insurance, extended warranties and longer service contracts to attract consumers. Dealer margins will therefore continue to be squeezed in the short term.
The shift towards greener energy and automobiles continues in the United Arab Emirates, with a growing number of consumers demanding cars that are eco-friendly, economical, have low pollutant emissions and a relatively low impact on the environment. Consequently, cars that run on alternative fuels such as Liquid Petroleum Gas (LPG) and Compressed Natural Gas (CNG) are becoming more available.
Luxury cars play a significant role in the United Arab Emirates’ driving culture, and are exclusively international brands. Mercedes-Benz has a long-established presence and remains the leading brand, although others are challenging its reputation as the number one dependable, high-status alternative – Jumeirah, for example, which has now edged in front of BMW and Lexus to rank second.
With competition intensifying and little scope for further growth, prices are being driven downwards, with many suppliers adjusting after sales package prices (regular maintenance and servicing, parts etc.) in line with competition.
As part of the government’s efforts to diversify away from reliance on oil, it is expected that the government in the United Arab Emirates will look to boost domestic manufacturing in areas like automotive parts manufacturing.
Oversupply remains a key concern within luxury cars in the United Arab Emirates, with dealers struggling to work out how much stock to maintain over the forecast period. In a bid to avoid price wars, companies will continue to look to better match supply with demand.
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Understand the latest market trends and future growth opportunities for the Luxury Cars industry in United Arab Emirates with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Luxury Cars research and analysis database.
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