Increasing number of expatriate population has infused an improved growth in the used car market, which is regarded as a driving force for the market’s growth in the coming years
Government initiatives to promote the use of electric cars as a step to reduce the fuel emissions is expected to raise the demand for car finance within the country
Rising value of used cars is expected to increase the amount of credit disbursed for used car finance
Though at a slow pace, the UAE car finance market is anticipated to recover during the forecast period 2017-2021, from the fall in the credit disbursement that has been observed towards the end of the review period. Real time deposit rates have been negative since 2013 and the major factor that discourages people from depositing in banks is the low interest rates. The banks are expected to focus more on consolidation rather than growth and be more cautious in consumer lending such as personal and car loans. Further, the credit worthiness of the applicant is assumed to be strictly assessed with the help of the credit bureau, before lending. Hence, the rate of rejections is expected to rise in near future. Car finance has become extremely competitive in recent years, to the point where it is almost a loss-leader for some financial institutions. With so low margins and the higher processing costs associated with car loans, interest rates are more likely to rise in the coming years. The introduction of value added tax in 2018 and the liquidity crunch in the country is expected to affect the car sales, reducing the demand for car finance.
However, UAE’s economic growth is expected to accelerate from the year 2017 by more than 4% a year until 2020, owing to the new projects underway driven by real estate, transport and power projects. The economic growth is expected to increase the household spending and improve the standard of living, increasing the demand for cars thereby increasing demand for car finance.
Ken Research in its latest study, UAE Car Finance Market Outlook to 2021 observed that the introduction of Al Etihad Credit Bureau by the Central Bank of UAE will enable the banks to assess the creditworthiness of their prospective customers and to prevent the risk of credit loss, provided that the measures are properly implemented. To withstand competition in the market, many players are in plans to introduce more bundling options in loans. For banks, car loans are a more attractive proposition when it is packaged with a suite of other products that cater to multiple customer requirements.
The UAE car finance market is estimated to register a positive CAGR during 2017-2021. Future growth in the expatriate population, rising demand for electric vehicles and standardization of Islamic financial products are expected to be key drivers for spiked demand for car loans in the country.
The report provides information on the number of new cars financed, new and used car penetration, tenure of new and used car loan and the emirates dominating the market in terms of credit disbursed and number of cars financed. It also covers the major players in the market such as Emirates NBD, Dubai Islamic Bank, Mashreq Bank, Emirates Islamic Bank, Al Hilal Bank, Al Wifaq Finance and Finance House.
Key Topics Covered in the Report:
UAE Auto Loan Market
Top UAE Car Loans Banks
Dubai Average Loan Rate
Competition UAE Car Loan
Car Financing Option in UAE
Car Loans UAE Top 5 Banks
Vehicle Financing in the UAE
Used Car Financing in the UAE
Finance the Car in UAE Process
Islamic Banks UAE Car Loan Market
New and Used Car Financing in UAE
Emirates NBD Market Share Auto Loan
Passenger and Commercial Vehicles Sales in the UAE
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Ankur Gupta, Head Marketing & Communications