DUBAI, United Arab Emirates // Pity the poor sport utility vehicle dealer. Sales of the bloated automobiles in North America and Europe have been crippled by soaring fuel prices, with some saying the SUV’s demise as a family car is nigh.
Not so in the Arab lands of the Persian Gulf.
Roughly a third of cars on the road in Saudi Arabia, United Arab Emirates, Kuwait and the rest of the Gulf are SUVs. Despite fuel prices, which have risen even in some parts of the land of oil, sales are shooting through the roof, with yearly increases jumping by double digits in most places.
And buyers here want their 4x4s big, with V8 engines, seating for seven or more and as much gas-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 here want bulky four-wheel-drives mainly because they’re perceived as safer on roads impeded by reckless drivers.
Dealers and automakers say there is also a prestige factor to owning a flashy SUV, and the Gulf countries – especially the Emirates – have become important markets for the high-priced Porsche Cayenne and BMW X5.
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. Most countries here allow camping virtually anywhere, bowing to the heritage of Bedouin nomads. But, like in North America, few drivers take their SUVs 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 51 percent over last year, pushed by frantic sales in the biggest regional market – Saudi Arabia.
“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.”
Nissan says it can’t ship enough of its massive Armada 4x4s, with its 5.6-liter V8, to keep up with sales in the six Arab states of the Gulf Cooperation Council trade area: 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.
In North America, Armada sales dropped 23 percent in October, compared with the same month last year.
General Motors, Ford and Nissan all reported big October sales declines in America recently, with SUVs taking the biggest hit. Sales of the Ford Explorer, Lincoln Navigator, GMC Yukon, Hummer H2 and Toyota Land Cruiser were all down 50 percent or more. High oil prices were cited as a chief reason.
But in one of the auto industry’s great ironies, the same oil price jumpis driving 4×4 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 here, GCC governments subsidize gasoline prices. There are few places where owning a car is so inexpensive.
In the Emirates, a gallon of gasoline costs $1.70. In Saudi Arabia, gas costs about a dollar a gallon and in Kuwait, the price is about 83 cents per gallon. In the United States last week, the average pump price was $2.29 per gallon.
The economic boom in the Gulf has seen car sales rising more than 6 percent a year in the region and almost 10 percent in the Emirates, according to the Abu Dhabi Chamber of Commerce and Industry.
SUV sales in the Mideast will not be enough to buck up the 4×4’s fading fortunes. Overall, the Gulf market is about 5 percent the size of America’s, with about 700,000 vehicles expected to be sold in 2005, versus about 14.7 million in the United States. The Gulf market could even see automakers quashing production of some models that hold the most local popularity.
“This is probably the only market in the world where you’ll see growth in large and medium SUVs,” GM’s El-Khalil said. “It’s double-digit growth.”