Although the demand for used cars has remained stagnant, their dealers are optimistic about their sales in the coming year.

Their optimism is based on the likely success of their plan to attract more Saudis and expatriates by offering fancy discounts and installment schemes.

One factor favoring them is that the Kingdom’s youth population is mounting and the tradition among average Saudi families to change their cars every two or three years.

Increasing demand from such quarters is, in fact, impacting new car sales.

Several automobile companies have introduced a certified pre-owned vehicle program. Generally, the used car market is down. However, the dealers are coming up with attractive payment facilities to enable the used car lovers purchase vehicles of their choice.

According to an industry leader, the market for used cars in the Kingdom accounts for 30 percent of total annual car sales.

A wide range of cars including Toyota Camry, Hyundai, Honda Civic and Kia, besides SUVs and MUVs like Innova, Prado, Fortuner and GMC are on sale in the used car market.

“The dealers are aware of the customer’s apprehension in buying used cars. The lineage of the car is checked and intimated to the customer,” said Sami Al-Aloul, manager of Universal Certified Pre-owned Motors Company.

He said the price of the car strictly depends on the model, refurbishment costs and the kilometers run.

“We ensure full transparency in our used car deals.”

Last year’s sales were reportedly a shade better than this year.

Although the decline has not been dramatic, used car prices are stabilizing their share in the Saudi market.

The new rules implemented by the Customs Department last year to inspect the vehicle spare parts of imported vehicles have contributed to a price increase.

Customers selected the car on the basis of safety and maintenance, which eventually reduced the sale of used cars due to their low quality.

Besides, the new scheme in the market to complete the four-year installment plan for their new cars led the used car market to increase the prices.

The local car agencies are selling used cars at prices ranging from SR40,000 to SR90,000, according to their brand and age, said market executives.

One of them said the down payment for a new car along with an easy installment scheme is less, which has affected the used car business.

Sameer Khan, a resident of Dammam, said: “Everyone prefers new cars these days as one can afford to pay monthly installments, which start with SR700.”

Thousands of vehicles are likely to be sold on the grey market in each city of the Kingdom. The car Haraaj, the vehicle auction market in South Jeddah, had low sales this year.

Hamid Rehman, a salesman at one of the showrooms at Haraaj, said: “The market has been down due to several factors. Customers are looking for safety, maintenance and advanced technologies in cars along with other luxury services, which are not available in old car models. There is said to be a 30 percent difference in price between a used car and its original model. The narrow difference is prompting car buyers to go in for new models.”

The expensive nature of used cars are actually slowing down their sales in the market and this has affected both the Saudi and expatriate residents looking around for purchasing cars.

Obaid Abdullah, a resident of Jeddah, said many people are faced with financial constraints due to the rising cost of living and so consider buying second hand cars if found affordable.

Some used car buyers say they found the vehicles sold at Haraaj were of poor in quality and maintenance compared to those sold by dealers at their used car divisions.  

Mohammed Ghamdi, manager of a pre-owned Hyundai car dealer, said: “People have become more careful with the money so they don’t find spending on the maintenance of used cars worthwhile.”

Likewise, the manager of a pre-owned Porsche, Mohammed El Khoudairy, said: “At present, the sales of second hand cars are on a par with last year. The cars have been in less demand due to their costly maintenance.”

He said: “The used 4-wheel-drive German car segment is our best-selling sector now. Earlier, it was the sports car market.”

He said that although sales of used Porsche models are low at present prices might start leveling off soon.

“They’ve gone up but certainly will get stabilized and a lot more realistic than they used to be,” he added.

Several owners of automobile agencies believe that the used car sales are likely to grow in 2014.

When we compare the Middle East’s auto market with some global markets, it is found that the region has a high ratio of cars per household.

Some dealers are optimistic that used car sales will reach the volume of their new counterparts.

Manufacturers are channeling more of that business through the authorized dealers, commented the marketing director of a leading Saudi dealer. Sales under certified used car programs will attract more customers. He expects the sale of used car to rise around 12 percent next year.

The Kingdom has a huge car market. Nearly 650,000 vehicles enter the Kingdom every year.

This is a leading automotive market with firm restrictions on the age of imported vehicles.

The used car market sector is moving to increase the postings on classified websites.

Hisham Mohammed, a local dealer, said there has been a change in the current scenario with the Nitaqat program making its impact on the industry.

Despite the fluctuating prices, used cars will become a considered option for a lot of people after the Nitaqat program comes to an end.

“It will become more important because people in the Kingdom, especially the expatriates, are used to a stable used car market,” he added.

The dealers and traders taking advantage of the ongoing situation in the Kingdom are expected to be a lot more sophisticated and the market will see more used car dealers, and the manufacturers and dealers will be a lot stronger in used cars than they used to be.

The used car market will be least hit by the ongoing situation, according to industry experts.

“Used car sales have always picked up in the US whenever new car sales slowed down,” says Hisham.

“In Saudi Arabia, the two have moved equally, but the magnitude of the impact is less on used cars. Demand is likely to be hit since people will hold on to their old cars as they put off buying new replacements. The supply side will also dry up a bit and the two will neutralize each other,” he added.