CARS24 to invest AED367 million in UAE and wider GCC region
Filed on October 6, 2021
Abhinav Gupta, CEO, Gulf Region, CARS24
UAE is one of the most progressive nations in the world, and we are delighted to have established our footprint in the country earlier this year. UAE, home to 200 plus nationalities, presented us with a wide landscape of opportunities to explore.
Recently, the government shared its economic vision for the next 50 years. As part of this vision, the government has laid specific emphasis on its digital economy, which will pave the way for the country's future growth initiatives. Building such a strong IT infrastructure is bound to enhance the country's competitiveness at the global level.
Technology is at the heart of everything that we do at CARS24, and the country's vision resonates with us. The company aims to shoulder the government's vision of creating a state-of-the-art technology ecosystem, by taking the entire car buying process online. This is the future.
To achieve these goals, CARS24 has decided to invest close to AED367 million in the UAE and across GCC countries. A significant portion of these funds will be directed towards scaling up our technological framework.
We will be deploying these funds to create one of the largest and sophisticated, refurbishment hubs in the region, which will also translate in creating more job opportunities for people in the UAE and other markets.
UAE auto market is getting modernized and CARS24 is proud to say that it will continue to play a significant role in this transformation. The country also has one of the highest internet and smartphone penetration in the world. The smartphone penetration in the UAE is projected to touch 96 percent by 2025.
As a result, just within 5 months, we were able to sell close to 1000 plus cars and 100 percent of these transactions were conducted entirely online. This in other words means that these customers never stepped out of the house until the car was gift wrapped and delivered to their doorstep. We see this trend catching up especially with the millennials.
The demand for pre-owned cars increased during the pandemic as people were looking at alternate means to travel other than public transport. The good news is that the pre-owned cars market has sustained similar growth levels even after the situation has eased up in the UAE.
In the past, the idea of buying a luxury car for several expatriates within the affordable price point was still a distant dream in their home countries. Perhaps because of the high taxes and the rising fuel prices in their respective countries. However, this dream was well within their reach in the UAE, as most of the families here have more than one car, which opens-up the market for players like us.
UAE is a unique market for cars as most people change cars in around 3 to 4 years on an average as compared to the rest of the world, where people change cars every 8 to 9 years. Over the last few months, we have seen people replacing their cars with most customers looking for an upgrade through the pre-owned car market.
According to a recent report by Frost & Sullivan, around 832,500 used vehicles were sold in the UAE in 2019 with the market value estimated at AED 52.1 billion. It is expected to grow to AED 66.8 billion by 2025. Looking at the current market trends we believe that this number will cross the one million mark within the next couple of years.
Consumers were looking for high quality certified cars since the last year and cars between the AED30,000 to AED40,000 range enjoyed very high demand. Many of our vehicles within this bracket on our platform were reserved the moment it was listed.
As per reports, a major percentage of consumers in the UAE market still preferred Japanese and Korean brands followed by American and European cars. Sedan remains the preferred choice for a more affordable segment which is below AED 50,000.
On the other hand, the demand for SUVs has grown much higher than pre-pandemic levels. Close to 40 percent of the market remains under the AED 50,000 budget, while the AED 50,000 to AED 100,000 segment has grown and now accounts for 30 percent share and it is powered more by the SUV demand.
UAE population is set to grow after the Expo 2020 Dubai opens its doors to the world. Millions of visitors are expected to visit the city during these 6 months from October 2021 to March 2022, and many are likely to call UAE their home, which could translate into people buying more cars.
With technology at its core, we will continue to evolve and keep redefining the car buying experience in the UAE.