High oil prices spark Gulf 4WD fever
Sales of four-wheel-drives in North America and Europe have been crippled by soaring fuel prices, with some saying the vehicle’s demise as a family car is nigh.
Not so in the Arab lands of the Arabian Gulf.
Roughly one-third of cars on the road in Saudi Arabia, United Arab Emirates, Kuwait and the rest of the Gulf are four-wheel-drives, also known as sports utility vehicles (SUVs).
Despite fuel prices, which have risen even in some parts of the Gulf, sales are shooting through the roof, with yearly increases jumping by double digits in most places.
And buyers there want their 4WDs big, with V-8 engines, seating for seven or more people and as much petrol-sucking air conditioning as possible.
“Our business is booming at the moment. It’s actually affecting our stock levels. It was the busiest summer in my six years here,” said Julian White, who heads sales for Dubai-based 4×4 Motors. “This is the first place I’ve ever sold cars where no one asks about fuel consumption.”
Motorists there want bulky four-wheel-drives mainly because they are perceived as safer on roads plagued with some of the world’s most reckless drivers.
Dealers and automakers say there is also a prestige factor to owning a flashy 4WD, and the Gulf countries – especially the Emirates – have become important markets for the high-priced Porsche Cayenne and BMW X5.
Off-roading
The Arabian Peninsula also offers some of the best off-roading in the world, with empty beaches, boulder-jammed canyons and vast deserts open to anyone with a four-wheel-drive.
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“It’s big, so everybody is scared of it” Mojgan Bahmanyar, |
Most countries there allow camping virtually anywhere, bowing to the heritage of beduin nomads. But, like in North America, few drivers take their four-wheel-drives off-road.
“We have a family of four, so we need a big car,” says Mojgan Bahmanyar, 43, an Iranian architect and mother of two who has lived in Dubai for eight years.
“It’s much safer,” said Bahmanyar, who drives a Toyota Land Cruiser Prado, a model not sold in North America.
“It’s big, so everybody is scared of it.”
Size is key. General Motors expects 2005 Middle East sales of its nine-seat GMC and Chevrolet Suburbans and its lumbering GMC Yukon and Chevy Tahoe to soar to 51% over last year, pushed by frantic sales in the biggest regional market – Saudi Arabia.
Record year
“It’s a record year for us when it comes to large sport utilities,” said Samer El-Khalil, Dubai-based marketing manager for GM’s SUV business in the Middle East. “You can’t compare what’s happening in this region to what’s happening in North America.”
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The Arabian Gulf offers some of |
Nissan says it cannot ship enough of its massive Armada four-wheel-drives, with its 5.6-litre V-8, to keep up with sales in the six Arab states of the Gulf Cooperation Council: Saudi Arabia, Kuwait, Oman, Bahrain, Qatar and the Emirates.
“There’s a waiting list of two months,” said Tariq Danish, Nissan’s SUV brand manager for the Middle East. Maybe Nissan dealers in the States could ship over some unwanted vehicles. In North America, Armada sales dropped 23% in October, compared with the same month last year.
General Motors, Ford and Nissan all reported big October sales declines in America last week, with four-wheel-drives taking the biggest hit. Sales of the Ford Explorer, Lincoln Navigator, GMC Yukon, Hummer H2 and Toyota Land Cruiser were all down by 50% or more. High oil prices were cited as a chief reason.
Oil price hike
But in one of the auto industry’s great ironies, the same oil price rise is driving four-wheel-drive fever in the Gulf. Oil revenues in the six GCC countries are expected to reach almost $300 billion this year, up from just $61 billion in 1998.
As oil wealth trickles into every aspect of life there, GCC governments subsidise petrol prices. There are few places where owning a car is so inexpensive.
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The oil price rise is helping people |
In the Emirates, a gallon of petrol costs $1.70 (44 cents a litre). In Saudi Arabia, petrol costs about a dollar a gallon (25 cents a litre), and in Kuwait, the price is about 83 cents per gallon (21 cents a litre).
In the United States last week, the average pump price was $2.48 per gallon (64 cents a litre).
The economic boom in the Gulf has seen car sales rising more than 6% a year in the region and almost 10% in the Emirates, according to the Abu Dhabi Chamber of Commerce and Industry.
Overall, the Gulf market is about 5% of America‘s, with about 700,000 vehicles expected to be sold in 2005, versus about 14.7 million in the United States.
Camel substitute
In the energy-rich Gulf States, four-wheel-drives have a long history that harkens back to the days when they literally replaced camels for overland trips.
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4WDs have replaced camels in |
A few models from 50 years ago are still popular. The Toyota Land Cruiser outsells all others in the region, accounting for 18% of 2004 Middle East sales for Toyota, the Middle East‘s top manufacturer.
In the Emirates, the Land Cruiser dominates the ranks of 4WDs used by safari operators driving tourists deep into the orange dunes.
El-Khalil said GM’s giant Suburbans are popular with big Saudi families who traditionally drive for summer vacations to the cooler environs of Beirut and Damascus.
“This is probably the only market in the world where you’ll see growth in large and medium SUVs,” El-Khalil said. “It’s double-digit growth.”