Car rental companies across the Emirates are exporting more of their used vehicles around the region this year as huge demand in Iraq and Afghanistan drives up prices.
Executives at rental companies said prices offered by wholesale traders from the region were often better than the price that could be achieved from a retail sale at home.
"Most cars are getting sold to the export markets," said Tony Hinder, the general manager of sales and marketing at Budget. "Traders come to our yards. They do not just take one car, they take 20 cars and we get a better price than selling in the local market."
Car rental companies are some of the biggest suppliers of used cars in the regional market because the life cycle for a leased car is short, ranging from 18 months to three years. There are no official statistics for the number of used cars that leave the UAE but demand in markets such as Iran, Iraq, Libya and Afghanistan has increased this year, analysts say.
Major car manufacturers, such as General Motors, Renault, Land Rover and Nissan, are doing a bustling trade selling new vehicles in some of these countries and demand for used cars is no different.
Car rental companies said used sales have also spiked in recent months because the end of this month marks a cyclical cut-off point in Iraq, when cars older than 2011 models are not allowed to be imported. "It shows how much margin there is for these traders, they are willing to do the work," said Bill Carter, an analyst at Autodata Middle East, the car valuation and information specialist.
Traders travel to the UAE, buy the cars and manage the export and import process and then sell the cars to retail customers.
Marwan Al Mulla, the general manager of Dollar Rent A Car, said the premium paid by wholesale traders over the price available in the local UAE retail market was small.
"The prices depend on the quality of the vehicle. The local market is also buying a good number of used cars," he said.
Mr Hinder said, however, new cars were more popular in the UAE than used cars because of the culture of buying new that prevails here. "I believe people tend to want new cars and that's why the leasing business is good."
Sales of new cars in the UAE have accelerated this year with manufacturers reporting rapid sales growth and many recording their best ever first-half sales.
Mahesh Rohra, the general manager for pre-owned cars at Arabian Automobiles, said sales of used cars had also been strong, increasing 34 per cent in the first half compared with a year earlier.
Despite these strong sales, he said the Iraqi deadline had meant prices being offered by foreign traders were very competitive. "What is happening is that, historically, there's been a short supply of quality cars in Iraq," Mr Rohra said.
"So all the dealerships are trying to set up business there."
He said Arabian Automobiles, the distributor of Nissan and Infiniti cars, was selling an increasing number of cars to Iraq.
"Iraq is currently one of the biggest markets but there are signs that other markets are opening up."
Last year, Arabian Automobiles conducted a review of the overall UAE market and found just 25 per cent of the 650 used-car dealers were professional garages affiliated to a major manufacturer. The majority of the dealerships were small, independent sellers.
