Dubai: Demand for pre-owned electric vehicles in the UAE continues to lag by some distance in what is turning out to be quite a difficult phase for the wider second-hand car market here.
Leading used car dealers are now hoping that the interest rate cuts will soon lead to more affordable auto financing options, and thus help put some spark to their sales.
Some of them are also, in recent days, been advertising heavily about offering ‘flood-free’ used cars, trying to assuage any buyer concerns that these vehicles are being sold after getting hit by the April rains.
But when it comes to EVs specifically, “Many used car dealers don’t want to buy more stocks right now,” said Muhammad Akif, Sales Director at Ideal Cars. “They’re worried they won’t be able to sell them quickly - and these cars lose value fast.
“So, they’re being careful not to get stuck with too many used EVs. Demand for used electric cars has gone down a lot recently.”
The drop in used EV demand started even before the April flooding. However, floods made things worse since people are now worried about water damage to EVs, making them even less interested in buying used ones.
And when demand's down, prices will follow. That's an even bigger worry for dealers, that what they hold as stock will further depreciate the longer it stays in their showrooms or parking lots.
It leaves dealers with a lot of work to do to get demand back on stream. After April’s rains and flooding, the talk was about repairing EVs that got stuck in the water cost more than those running on petrol. The repair work also took longer on EVs because of unavailability of parts that needed changing.
The worry about costs is what’s been holding back demand as word soon gets around about repairs and what it took owners to pay for them.
Insurers hike premiums on (used) EVs
Insurers too have been tougher in their risk assessments of EVs in new/renewed motor policies. Across the board, motor insurance premiums for EVs have risen faster and higher since May last. "The cost of repairs for EVs, especially for batteries, contributes to higher insurance premiums," said Avinash Babur, CEO of InsuranceMarket.ae.
"Only when battery technology improves and more UAE car repair shops gain the expertise to service EVs, these costs are expected to reduce. On the plus side, insurers are increasingly focusing on EV-specific coverage, including roadside assistance and access to specialized repair networks.
"The residual value of preowned EVs is growing more predictable, which helps stabilize premiums in the long run."
Government incentives to boost EV ownership may also influence premiums by increasing the adoption rate and reducing perceived risks for insurers.
Uses EV sales run on two speeds
Sebastian Fuchs is Managing Director of AutoData Middle East, and he sees two patterns emerging when it comes to selling used EVs in the UAE.
“The offers in the market for brand new EVs are getting bigger, but on used cars, the big official dealerships for auto brands are not really used to selling used EVs,” said Fuchs. “That’s where you are feedback saying ‘We are having difficulty selling these cars’.
“But, you also have those niche sellers of luxury cars, and these guys are active sourcing more stocks of used EVs. And they are actively putting them back into the market, confident they will find buyers.”
UAE's niche secondhand dealerships are having no issues with selling premium EVs, many of which tend to be imported
He also makes a point that demand for imported EVs is running as smoothly as possible, with many of the models already having confirmed sales.
Yet to find their price levels
Dealership sources admit that pricing levels for used EVs are still in a fluid situation in the UAE market. “Selling brand new EVs is not an issue at all – there’s rising demand from UAE buyers because people find that these vehicles offer a definite cost advantage on petrol costs longer term,” said one dealer.
“What the car market needs to see is more of used EVs come to market. Only then will the market find a proper value for a pre-owned EV.
“There is no such problem in China or some of the European car markets with sizeable EV base. In the UAE, more time is needed for today’s new or slightly new EVs to get into the second-hand car market.
“Then, prices will get set on their own.”
For EV buyers and dealers alike, the question is: how long will they have to wait.
