Dubai: Now could be a good time for new car buyers in the UAE, with prices on many 2025 model year vehicles actually coming in lower than comparable prices between 2021-23.
Even when prices are at similar levels to those for 2024 model year vehicles, a car buyer now is actually getting more from what he or she is paying. (Some leading brands have actually raised sticker prices – even then, the increases are in a tight 5%-10% range.)
For one, car financing rates are at their most favourable levels since 2022, with dealers going the extra mile to keep EMI commitments as low and smooth a ride as possible.
Sure, motor insurance is higher in the UAE these days, but dealers are again willing to meet that half-way. While a one-year free insurance is standard, more dealers are now convinced they should provide multi-year free coverage. (Many insurers expect this to be a major trend in 2025 new car promotions.)
“This is probably the first time that ex-showroom prices on new models have not seen a major cost inflation,” said an official with a leading dealership. “Plus, shipping costs from factories in Asia have been coming down for us, and that’s being passed on to new car buyers.
“If dealerships aren’t going to keep strict control on prices, there are plenty of others who will – and they will take away market share.”
Strong dollar does a favour
If the trend towards a strong dollar continues well into the first quarter of 2025, that’s going to be another plus for car purchases. Suliman AlZaben is Managing Director at Hyundai UAE and he’s quite precise as to how the higher dollar will play out. “There is the US dollar peg with the UAE currency – so there will be no change in prices for Hyundai (models) next year,” said AlZaben. (What a strong dollar relative to other currencies mean is that the UAE dirham too firms up by the same margin. For importers in the UAE, that translates into lower costs on those imports.)
UAE new car sales – steady or accelerated sales?Since 2021, new car sales have been pointing only in one direction – forward and higher. At the start of 2024, many in the industry had been concerned that higher sticker prices might dampen demand. But sales through the year have more or less held up well. Now, their hope is that 2025 will offer more of the same.
Throw in the China factor
In the last 2 years, there is also the fast expanding presence of Chinese auto brands in the UAE. And these manufacturers are not about growing their market share organically over the years. If they can come up with a way to pick up buyer interest now, then they are doing it.
“We’ve observed several price decreases across nearly 600 new 2025 models in the UAE market,” said Sebastian Fuchs, Managing Director at AutoData Middle East. “Chinese brands like Changan are lowering prices to expand market share, pressuring competitors to follow suit.
“Entry-level and mid-level models, including the Citroën C5 Aircross, Chevrolet Groove, and Changan CS35 Plus, have dropped by 10%-30%, while even premium models like the Audi Q8 saw reductions of 5%-7%, driven by competition, lower shipping costs and favorable currency rates.”
The trends are even reshaping the UAE used car market, with lower new car prices end up putting pressure on residual values, benefiting buyers but challenging sellers
10 year warranty
If a brand can even offer 10-year or 1 million kilometre warranty on its high-end models, then that’s the new way to do it.
“The UAE market’s growing competitiveness – particularly with the rise of new players and brands, including those from China – has kept prices in check,” said Saj Jabbar, General Manager at Mahy Khoory Automotive, which is dealer for Dongfeng. “What that means is consumers get greater value for money.
“While the UAE auto market has certainly seen shifts influenced by factors like lower shipping costs and the strength of the dollar, the pricing of 2025 model year vehicles is influenced by a broader set of dynamics.
“We are seeing manufacturers focus on delivering advanced technology, improved safety features, and enhanced performance, which can sometimes balance out cost benefits from logistics or currency fluctuations.”
But if dealers are throwing in a whole lot more of freebies – extended warranty, extended insurance cover, etc. – their way, car buyers in the UAE might find they are just fine with that…
United Arab Emirates Dirham Exchange Rate
