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Oiling the green wheels in the UAE
Few will be able to justify the cost of more expensive vehicles to reduce fuel costs...
In earlier columns I contrasted the elements of fleet cost between the UAE and in more mature fleet markets. Cost is of course not the only focus of a professional fleet operator. Two other themes are common – those of environmental impact reduction and safety. In this column I’m going to explore the local position on the first and in the future, I’ll explore the latter.
Environmental impact reductions have been possibly the single greatest trend in the European fleet arena in recent years – helped by the close affinity between cost and emissions reductions. This trend and this
connection are barely evident in the UAE today, and with fuel at around €0.36/litre and not rising as the price is fixed, this is no great surprise. But there are clear signs of change.
Firstly, there is increasing leadership from Government to do the right thing – largely because it is the right thing to do for the country. Behind this leadership a number of major companies and government departments have started to focus onalternative fuels; the carbon footprint of their fleet and the emissionsstandards of their vehicles. Few will be able to justify the cost of more expensive vehicles to reduce fuel costs – with the obvious exception being taxi operators whose 36month/500,000km operating cycle means that even a modest reduction in fuel consumption will offset higher priced but more fuel efficient vehicles. Clearly for other fleets, whose operating cycle is a more typical 36 months/100,000km, the economics are very different.
Despite this, some forward thinking government departments and companies are challenging suppliers to provide vehicles that consume less fuel – after all, these are common in Europe and the US – why can’t we have them in the UAE? This is helped by a deep dose of reality in the business world in the UAE in 2012. Current growth rates, approaching 4%, are doubtlessly the envy of the western world but with memories of the tough times of 2009/10 fresh in the mind, many businesses are more focused on costs, including fuel. This is evident in the demand from a number of major fleets that are increasingly interested in the few hybrids available locally.
Increased use of CNG is also being promoted by government with its consequent positive impact on local air quality. This area though, is one that needs more focus – the emissions standards of many cars sold here still only reach Euro II. It is not clear if this is an area that government will address soon, but with such a clear focus on CO2 it seems possible that emissions standards will also be in focus before too long. Even without government leadership on this specific point some more advanced fleet operators are already considering emissions standards when they weigh up the relative merits of different fleet choices.
With the market share of medium and large SUVs still significant and with a V8 badge not an uncommon sight – both on a tailgate and on some fleet tender documents – it is clear that there is a long way to go. But when the government talks so clearly about the need for environmental improvements and when many major companies respond so quickly, change may be inevitable. Therefore it seems quite possible that this country, one of the world’s top 10 oil producers, is just starting on the road towards greener fleet management. And if the speed at which that trend took root in Europe is an indicator, then given the UAE’s ability to turn words into action – so clearly evident in the rapid development of the country – greener fleets may be here much quicker than many might expect.
16 Jul 2012 10:42