Motorists looking to upgrade vehicle, budget-conscious consumers opting for leasing rather than owning a car
Car leasing industry in the UAE is shifting gear slowly into recovery mode after a tough 2020 due to the outbreak of the pandemic with people increasingly opting for smaller vehicles.
Industry executives say that motorists are increasingly opting for leasing rather than owning a car as it suits customers looking to upgrade to the latest models and also for the budget-conscious consumers.
Kyle Gilliam, Sales and Marketing Director at Al Masaood Automobiles, says the auto leasing business has grown despite the unprecedented challenges this year and he is optimistic about the sector’s growth prospect in 2021.
“We expect sustained preference for leasing in both the corporate and individual markets as part of their better financial management strategies,” he said.
Gilliam noted that the car leasing is growing especially under a long-term scheme.
“Under a reasonably-priced car leasing option, customers can drive the latest models without the need to apply for auto loans to cover the down payment fees. Furthermore, they don’t need to commit to long-term payment installments, which usually last up to five years. This is also the best option for customers who love to upgrade to the latest car models,” he added.
Rahul Singh, Managing Director for Thrifty Car Rental and Dollar Car Rental in UAE, said the overall uncertainty and the tight liquidity in the market are both net positives for the vehicle leasing business.
“The market conditions in the current year have been quite tough which was on expected lines given that the entire year has been plagued with the virus and this situation is likely to persist in 2021. Given the tight liquidity conditions in the market and the increase in the number of companies shutting down, as leasing companies, we need to be extra cautious with our credit exposure,” said Singh.
What is trending
Highlighting new trends, Rahul Singh said they are seeing an increasing trend among companies switching to leasing vehicles instead of owning them.
“We have seen an increase in demand in the commercial vehicles segment and with regards to cars, the demand is moving more towards smaller vehicles,” added Singh.
Kyle Gilliam said customers are preferring to avail of a monthly lease rent versus the entire lease period with the option to own the vehicle once the lease expires.
“This provides them with complete peace of mind, knowing that they will eventually own the vehicle of their choice without the burden of long-term financial commitment. A high number of working women take advantage of this option as they are drawn to the fact that they can drive their dream car while enjoying many perks such as flexible payment terms and hassle-free services throughout the lease period. This way, they can better manage their finances,” he said.
Greg Cottrell, general manager of the Automotive Division at Swaidan Trading, said the pandemic has had a significant impact on people across the region.
“A trend that has emerged as a result of the pandemic is leasing, for those who are looking to drive a brand new car, without the risk of making a long-term commitment,” he added.
