Used car prices plummet on rising supply

December 30, 2013 - 4:21:52 am

 

DOHA: Used cars are selling 20 to 25 percent cheaper thanks to an increasing number of citizens offering their vehicles for sale to source cash for the mega state-sponsored initial public offering (IPO) being launched tomorrow, dealers said yesterday.

According to dealers, most citizens are selling off their expensive cars and buying the ones available at a lower price to pocket the difference for subscribing to the primary issue of Mesaieed Petrochemical Holding Company (MPHC).

Supplies are abundant while the takers aren’t as many, according to dealers. “Just about everyone who is coming here wants to sell,” Hani Murad, director of sales at a used cars agency, said.

He said, as he understood, the IPO that opens for subscription for the Qatari community tomorrow was the trigger. Although the size of the IPO is relatively small at less than 324 million, people can apply for every member of the family, community sources said.

Qatari families are usually big and in most cases the bread-winner is just the father. Such families need a lot of money to apply,” said the source. Nuclear families that have lately been increasing in number do not face such financial constraints, he said.

According to a used car dealer in the Industrial Area, Hamad Mohsin, more car-sellers were coming to the market than buyers in the past two weeks.

“There are not many buyers while the market is literally flooded with cars due to a selling spree among the citizens,” said another dealer, Ameer Mustafa.

The used cars market has turned into a buyer’s market. “The prices are, thus, down at least 20 to 25 percent in just a little while,” said Mustafa.

“The situation is such that people who could easily sell a car for QR100,000 are offering it for QR80,000,” Murad said.

Meanwhile, IPO subscription forms have already been distributed in the tens of thousands to various banks, which are setting up special teams to help the elderly and women to fill up forms.

Banks might also give away special short-term loans to citizens at competitive rates to apply for the primary issue.

There is likelihood that loans could be disbursed for up to 65 percent of the subscription amount with an undertaking that they be repaid a month after allotment with the allotted shares as collateral. 

The Peninsula

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