On the road to a greener future

As the Gulf's economic boom continues, so the region's roads are becoming more flooded with cars than ever before. They're not small cars either, with the typical Gulf driver more likely to be behind the wheel of a hulking 4x4 than a diminutive hatchback. Yet is there really a strong enough demand among motorists for green cars in the Middle East?

"There will always be a few people who are more ecologically minded, but for the great majority of customers in the Middle East, it's just not a top priority," Phil Horton, managing director of BMW Middle East, tells Arabian Business. "Certainly through the GCC, we are in a market where big is still good."

This assertion is borne out by the sales figures. In contrast to the US and Europe, Horton's biggest sellers in the region are large cars - the X5 SUV at number one, then the 5-Series, followed by the 3-Series. Tellingly, BMW sells just a handful of the small 1-Series vehicles.

According to Horton, the fact that the region has the cheapest fuel in the world "by a massive margin" means that driving fuel efficiently is not seen as a priority in the Gulf. There is simply no incentive for consumers to demand more kilometres for their petrol litres. "What has driven the ecological [demand] in most European countries is the fact that governments have not only talked a lot about it, they've done a lot about it in terms of punitive rates of taxation on fuel and cars generally," he notes.

"This has forced the consumer to take energy conservation and CO₂ emissions seriously, but in the Middle East, the oil price can't rise enough."

Horton sees no reason that the shape of the market should change dramatically over the next five years. Although he does not discount the possibility of BMW launching a hybrid car in the Middle East within the next 18 months, he maintains that: "right now there's no demand for it".

Others would beg to differ, and the region's governments are behind the recent shift towards eco-friendly vehicles. For example, Iran has announced that it is to start producing hybrid cars from next July in a bid to cut down on fuel consumption in the country. Iran Khodro Company (IKCO) will begin operations of the eco-friendly cars in the central province of Qazvin next year, and the carmaker has so far purchased 70,000 fuel tanks from a domestic company, as well as inked a deal for a further 300,000.

In the UAE, Dubai government officials in May announced that all taxis operating in the emirate must be replaced over time with environmentally friendly cars - although it has not yet set a deadline for the replacement programme.

The new gas electric hybrid model draws its power from an electric motor and gas-power transmission, producing less carbon dioxide and pumping less nitrates into the environment.

Manufacturers have been quick to respond, and Dubai Roads and Transport Authority (RTA) last week unveiled an agreement with General Motors (GM) for the operation of 10 environmentally friendly hybrid vehicles. As of January 2008, RTA will start an operational trial of 10 GM hybrid taxis - five Chevrolet Tahoes, each equipped with a two-mode hybrid engine, and five Chevrolet Malibus.

"We will be looking to operate that technology, and particularly those batteries, in a very high-temperature climate," Terry Johnsson, president of GM's Middle East operations, tells Arabian Business. "While those systems have all been tested and designed and validated for hot weather as well as extreme cold, we just want to go through the discipline of putting the vehicles through the normal city driving taxi durability cycles, which should give us a pretty good read."

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