GCC: New car sales fell 30% in 1Q
Source: Middle East Insurance Review | Oct 2017
New car sales in all GCC countries fell during the first quarter of 2017 by 30% compared to the corresponding period last year, according to Autodata Middle East, a provider of vehicle identification and pricing information. The firm does not forecast any car market growth until 2019 and then only a modest 5%.
The reduction in sales – with the heaviest declines seen in Bahrain (41%), Saudi Arabia (38%) and the UAE (28%) – followed a 27% dip across the GCC in new car sales last year, said Autodata.
The sales slowdown has resulted in dealers holding too much stock of new and used cars. To push this stock, firms increase their consumer offers such as free insurance, a five-year free warranty and free maintenance for 3-5 years. Manufacturers also increase financial support for the purchase of new cars, putting pressure on the certified pre-owned segment and making it uncompetitive, said Autodata.
Despite the declining market, Autodata said distributors might see increased interest in certified pre-owned cars due to the different treatment under value-added tax (VAT) when it is implemented next year.
But some analysts believe the impending introduction of VAT on 1 January will lead to a rush of new car sales as consumers seek to save money before the 5% tax takes effect. If car sales continue to be slow, some dealers may pay the 5% VAT on behalf of customers. M