Sales of luxury cars in Dubai have seen record growth this year with consumers going on a buying spree of both new and used prestige marques – despite double-digit inflation.

High-end brands such as Bentley, Mercedes-Benz, Audi and Porsche have set the sales charts alight for Dubai dealers, some of whom have succeeded in selling more vehicles than any other market in the entire Middle East.

Gargash Motors, the sole distributor of Mercedes-Benz in the UAE, has witnessed record sales.

"Our sales boomed in the first quarter of this year," said Marketing Manager Wassim Derby. "Many more people are buying our cars now.

"Car safety has become a major concern and high-profile brands such as Mercedes offer greater safety. The introduction of new models this year and face lifts to existing ones contributed to the sales jump."

Al Nabooda Automobiles, the authorised dealer and exclusive distributor for Porsche, Volkswagen and Audi in Dubai and the Northern Emirates, has also reported record sales.

CEO K Rajaram told Emirates Business: "We are seeing a major increase in the number of our vehicles sold so far this year. The increase is significant compared with our sales figures from the final quarter of last year."

Khalid Dadoush, General Manager of Bentley Emirates, said: "We have experienced a steady increase in the demand for our cars. We attribute our increasing sales to the booming economy in the UAE and the fact that buyers are making profits from the stock market. There is also demand from high-earning CEOs and businessmen and five-star luxury hotels who want to offer their guests luxury cars."

The increase in sales means consumers are having to wait longer to collect their cars. Derby said: "Sometimes people have to wait two to three months for delivery. Due to unexpectedly high sales, cars are out of stock."

Rajaram said: "Some customers have to wait at least seven months if they want to purchase a Porsche Cayenne or Audi Q7."

But despite low stocks, customers are taking advantage of easy finance to buy their dream car.

UAE national Mohammed Al Nuaimi, 24, a student, recently bought an Infiniti FX35. He said: "I got a good deal from a bank, a six-year loan with a good interest rate, so I could afford it."

And rising prices are not deterring new customers.

Syrian Yusuf Saeed, the manager of a Dubai-based food company, recently bought the latest BMW 335i.

He said: "The prices of cars are going up so I thought I might as well buy now. What I pay in a higher price I will get back in value and the value of this brand does not really go down that much."

The increase in luxury car sales is not limited to new vehicles – used car dealers are also reporting a rise.

Mark Price, Sales Manager of Gargash's pre-approved division, which mainly deals in Mercedes-Benz cars, said: "Our sales figures have increased by 10 per cent over last year's figures."

Sony Predit, Manager of Dubai used car dealer Western Auto, said: "Business is booming as more people are purchasing prestige brands."

Khalil Ali, owner of Triple One Car trading – which has witnessed a 25 per cent increase in sales in the first quarter of 2008 – said: "More people are opting for used luxury vehicles as the cars are good quality and retain their value well."

Other used car dealers, including Al Jazeera Motors in Dubai and a second-hand dealer who sells a leading brand, reported a 25 per cent increase in profits.

Car dealers and economists attribute the rise in demand to many factors including the booming economy, the ease of obtaining finance and the fact there is a growing population with high disposable incomes.

Rajaram said: "The market is expanding as more and more people come to the UAE and this growth will affect not only high level cars but also other cars."

The UAE's population reached 4.2 million in 2007 and is expected to rise to five million this year. In 2006 Dubai's population increased by 292,000 and the emirate attracts 24,333 new residents each month – or 800 a day – according to the figures from the Dubai Statistics Centre.

Monica Malik, an economist at EFG Hermes, said: "There is a continuing influx of expatriates, which affects demand. There is also a negative real interest rate in the economy, making car financing cheaper and adding to demand." In addition, many finance companies are offering cheaper loan schemes.

Atul Jain, Vice-President of Products and Marketing for Amlak Finance, said: "People have started to realise the benefits of taking out car loans rather than using their savings and blocking the funds. They realise that obtaining loans is a good idea as they can free up the cash for other uses and investments.

"And tie-ups between financial service providers and car dealers means customers end up getting good deals and special offers such as extended warranties and gifts, so there is added value from tie-ups."

Another factor contributing to the market's growth is the UAE's shortage of public transport. The Dubai Metro is not scheduled to start operating until next year and in the meantime a car is a necessity of life.

The result of all this is that dealers are extremely upbeat, forecasting further increases in their sales figures.

Rajaram said he was expecting a further 25 per cent rise. "We are talking to our principals to see if they can increase shipments to us by 15 cars a week to meet the high demand. However, it takes time to ramp up production."

Al Nabooda is hoping to sell 10,000 units of Audi, Volkswagen and Porsche models a month by 2010.

And Gargash Motors predicted a 10 per cent rise in sales this year and expected annual sales of 15,000 units by 2010.



The Numbers

25%
Rise in sales is expected by Al Nabooda


800
New residents arrive in Dubai everyday