Oasis in the desert for cars..

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Another international press article about Dubai, this time in India Times about the car market in UAE. It's interesting how people outside perceive the life here...

Car makers hit oasis in the desert as Gulf guzzles custom-made cars

TOKYO/DUBAI: Custom-made Rolls-Royces, stretch Hummers and bright red Maseratis line the entrance to Dubai’s Mall of the Emirates, where the spoils from booming oil prices are feeding a buying frenzy among the wealthy. It’s the other face of what a five-fold spike in crude prices since 2002 has done for car makers.

Far from feeling the pinch at the pump, drivers in the Gulf Arab region have been enjoying booming economies and government-subsidised gasoline as low as 12 cents a litre (55 cents a gallon). No official statistics are available, but automakers expect the combined car and light trucks market of Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, UAE — collectively known as the Gulf Cooperation Council — to grow around 10% to 1.2 million vehicles this year.

While that would only make the market equal in size to South Korea or Australia, automakers are increasingly finding the region a haven from their difficulties elsewhere. With mature markets in Europe, the US and Japan shrinking, and even China and India not living up to expectations, Morgan Stanley forecasts global car sales to dip 0.3% this year.

Climbing sales are just one of the region’s many attractions. Because the region has no local auto-making industry, it places few regulatory restrictions and import tariffs of just 5% on vehicles. Carmakers can simply ship cars in without worrying about producing a wide range of models or meeting local parts content requirements imposed by many governments. Emissions and safety standards are also low.

In Saudi Arabia, the Gulf’s biggest car market, consumers like their cars and sport utility vehicles as big as they come, in stark contrast to the US, where $4 a gallon gas is turning consumers to hybrids and small, fuel-efficient models. “There’s good demand for big SUVs and pickups that people don’t want in the US or Europe,” said Tim Armstrong, director of emerging auto markets at Global Insight, noting growing supply from the United States and Thailand.

Replacement demand is also high because the scorching heat, sand storms and rough driving lead to shorter vehicle lives. Raising product prices to absorb dearer raw materials is easier here, since demand is so strong, executives say. The oil-rich region is a big market for super-luxury cars with its wealthy locals, but the fastest growth is occurring at the low end.

As the local mass market gets richer with strong economic growth and expatriates flow in to work on development projects, brisk demand for cheap, small cars is what GM and Hyundai are counting on to challenge Japanese automakers, which control roughly 70% of the market.

Car purchase decisions are heavily based on family tradition or reputation spread by word of mouth, meaning automakers with a long, successful history in the region, such as Toyota, Nissan and Mitsubishi, have an advantage. Japanese vehicle exports to the Middle East surged 38% last year to 823,000 vehicles, up for a seventh straight year.

Safety is also the reason why SUVs such as Toyota’s Land Cruiser and Mitsubishi’s Pajero do so well. “I like being up high so I can see what the idiot drivers are up to and plan accordingly,” said Georgia Lewis, an Australian ex-pat residing in the UAE since 2006. “I’d never have a Pajero back in Sydney but here with cheap fuel, bad drivers and the deserts, it makes more sense.”
http://economictimes.indiatimes.com/Int ... 445892.cms

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Makes all of it sound so cool and heavenly! Things are always brighter on the other side for most.

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Hey, maybe life here ain't that bad after all! Be Happy