Middle East fleet management Snapshot: moving towards a more sustainable future
The Middle East was long dominated by private car ownership, but other mobility options are increasingly being embraced. In spite of their oil riches, many countries are now looking for ways to introduce sustainable energy sources. Global Fleet spoke with Luay Al Shurafa, Managing Director, Commercial Operations, General Motors Africa & Middle East.
1. How big is the car market in the Middle East?
Like any industry, the automotive sector is dynamic and can change quickly based on consumer preferences. At the moment, the car market in the Middle East and North Africa region is estimated at around 1.1 million vehicles, based on the latest data by IHS and BMI.
What’s truly exciting is the breakdown of this market. From new modes of transportation with carhailing, or ridesharing, to government engagement, we have seen unique opportunities for business development and fleet growth across the region.
2. What are the popular car brands and models? What body styles do people prefer?
Each market brings its own unique consumer needs. While the UAE leans toward the global preference for SUVs, followed by Car B, D and C, respectively, consumers in Saudi Arabia still prefer the traditional car bodystyles to SUVs.
Our answer to this at General Motors is to provide a range of vehicles across all segments to cater to shifting consumer needs and lifestyles in the region.
Taking Chevrolet as an example, we’ve experienced strong growth in crossover models across some of our top performing models like the Equinox and Traverse. The Chevrolet Tahoe, however, with its powerful engine and dynamic size still leads in sales for fleet.
Simultaneously, driving the mid-size sedan segment, models like the Chevrolet Malibu continue to be one of our top selling vehicles in the region.
As Cadillac is growing its offerings with the XT4, the brand’s first crossover that has become one of the best sellers in the segment, we also see ongoing desire for the iconic Cadillac Escalade, a vehicle that is established beyond question in corporate circles.
3. Is there a corporate fleet market? Who would receive a “company car”?
While vehicle sales are not reported by segment, we can definitely tell you that there is a very active corporate fleet market in the region and the business opportunities that accompany it are endless.
It is common practice, and sometimes even a requirement, for both private and public entities, for example multinationals, large local corporations and government entities, to provide their employees with company cars. This of course depends on the activity carried out by the entity however as a general rule, management and sales employees are usually eligible for company cars in this region.
At the same time, we’re seeing drastic change in the make-up of traditional corporate fleets.
Carhailing has grown exponentially across the Middle East. This is not just because of its ease for customers but also the independence offered to drivers. Recognising the trend towards majority corporate fleets through carhailing, we recently signed a Memorandum of Understanding (MoU) with Careem, the leading online platform in the Middle East that was recently acquired by Uber, to provide accessible, capital (finance) lease opportunities for their Captains [drivers] on any Chevrolet, GMC and Cadillac models.
4. Do corporate clients buy or lease, and what motivates that decision?
The majority of non-governmental corporate entities leans towards leasing models and in recent years we have also witnessed a shift from certain government entities from a buying model to a leasing one.
The decision between buying and leasing is mainly based on preferences hinging on the nature of the entity and its cash flow, however it can also be driven through wider entity or government goals.
For example, across the Gulf we’ve seen government commitment to raising sustainability. With our own commitment to a future of zero emissions at GM, we’ve been able to partner with entities from Dubai Police to Sustainable City and Sultan Qaboos University in Oman to drive education and adoption of electric vehicles (EVs).
Our own fully electric Chevrolet Bolt EV, has now officially launched in the UAE and Lebanon, covered more than 4,000km across the Emirates and Oman during the 2018 and 2019 EV Road Trips and is owned by over 100 individual and entity groups in the region.
5. If leasing, are we speaking about operational lease (all services included) or finance lease (just the funding)?
Corporate entities tend to target operational leasing, while retail players are more geared to opt for finance leasing. If we again look at the dynamic shift of corporate fleet through carhailing, capital (finance) lease has continued to gain momentum in the market in line with carhailing’s rise in popularity.
6. What characterises the second-hand market?
The second-hand market in the region is growing each year and is still not yet as structured as European and American markets.
One of the main reasons for this is that there is no official guide or blue book used in any of the region’s countries to regulate second hand markets. This in turn leads to greater differences in pricing and discount programmes, which can impact the landscape.
We are also witnessing ongoing developments where used car importing regulations are concerned, affecting re-export activities directly linked to the second-hand market.
7. How does public transport perform?
Public transport systems are well-developed in the region, especially when looking at markets like the UAE. Government players are continuously driving robust programmes forward to enhance their country’s infrastructure while working closely with private firms that have come to be an essential part of this journey.
If we look at Saudi Arabia as another example, the country’s leadership is taking strategic steps towards developing the Saudi transport industry, as part of the country’s Vision2030, spearheading mega projects that are the largest of their kind in the region.
We believe it is essential for public sector planning to be paired with private sector knowledge and technology, to ensure we are all moving towards a more advanced and sustainable mobility landscape. Already, the change carhailing has brought, impacting the way residents move across the region and the demands for infrastructure and mapping technology to guide their trips.
If we consider the options to come with autonomous and connected vehicles, even more collaboration is required from regulations and incentives, to infrastructure needs and market readiness.
8. Can you comment on the car insurance industry?
The car insurance industry in the region is still considered to be quite conservative compared to other markets across the world with wider offerings that customers can choose and benefit from.
9. Is mobility a conversation topic in the Middle East?
From Oman’s 2040 vision to Dubai’s Clean Energy Strategy, Saudi Arabia’s Vision 2020 and Egypt’s commitment to increased renewables in the country’s power mix, we are witnessing a concerted government drive across the region to a more sustainable and accessible future mobility landscape.
From alternative propulsion vehicles, like EVs, and the opportunities for freedom of movement with autonomous vehicles, to the safety inherent in connected vehicle technology, government bodies and independent entities are not only in the conversation but leading the way in developing the infrastructure required. In Dubai alone, the city is committed to be the world’s leading smart city with 25% of all its vehicles autonomous and clean energy by 2030.
This commitment from governments provides almost limitless opportunities in which transportation leaders, such as General Motors, can bring value, and help make our own commitment of creating a world with zero crashes, zero emissions and zero congestion a reality.
10. What technologies are used by corporate fleets?
At the moment, corporate fleets tend to use basic GPS tracking systems. However, the desire for smarter, connected vehicles is shared by both consumers and government entities. More connectivity across our transportation can help not just make commutes more enjoyable but keep us alert to dangers on the road and even help save lives.
The building blocks of smart, integrated programming is across our current vehicle line-up in the region, and our flagship platform, OnStar, has more than 20 years’ experience delivering safety and security services to its more than 14 million members. We are working closely with our partners to bring this technology to the region.