With fuel prices rising in the UAE, the demand for hybrid technology, smaller compact SUVs and electric vehicles is on the rise.
Car buyers are also putting purchase decisions on hold and looking at car rentals, which offer around 20 percent saving on mobility costs.
Fuel prices in the UAE have jumped around 75 percent since January 2022. Super 98 petrol price increased to Dh4.63 ($1.26) per liter in July 2022 compared to Dh2.65 per liter in January this year. Fuel prices crossed the Dh4 per liter mark for the first time in June this year after the deregulation of fuel prices in the country in August 2015.
The hike in the UAE petrol prices is due to rising global crude oil prices and the war between Russia and Ukraine. Compared to the April 2020 Brent crude oil rate of $14 a barrel, it was $101.83 a barrel on July 5 after touching $133 a barrel in March 2022.
Speaking to TRENDS, mobility experts said that rising fuel costs and a growing awareness of the dangers of climate change are convincing many to seek alternative modes of transport.
A recent Digital Life Index report by Publicis Sapient, a digital business transformation company, revealed that more than 80 percent of potential buyers in the UAE would consider an EV, rising to 90 percent for a hybrid, showing there is clear market demand for this shift in automotive technology.
“Hybrid is most desirable for individuals who appreciate top technology and want to integrate a more eco-conscious driving practice into their lifestyle. It is also a great proposition for companies with high mileage vehicles which are looking to save money on fuel,” said Vincent Wijnen, Senior Managing Director, Al-Futtaim Automotive.
Wijnen added, “I believe that the demand for hybrid vehicles will continue to grow in the years to come as current owners are expected to upgrade to newer hybrid models while more and more people will realize the benefits of hybrid mobility. This demand brings an opportunity for automotive manufacturers and dealerships to embrace the UAE’s vision and be a driver of change to support this vision.”
The shift to an all-electric future can already be witnessed and is being supported by Volvo worldwide, with over 34 percent of total sales volume in Q1 2022 consisting of electrified “Recharge” models.
Of these, 8 percent were fully electric, a percentage which has doubled over the last two quarters.
Toyota and Lexus have been pioneers in Hybrid technology for over a decade now, with Al-Futtaim Toyota and Lexus having the widest range of Hybrid Electric models in the UAE available in all sizes and trims, ranging from small sedans to full-size SUVs.
Toyota Hybrid sales have grown consistently YOY since 2016, with the growth of 33 percent in 2017, 42 percent in 2018, 147 percent in 2019, 52 percent in 2020 and 108 percent in 2021.
The Toyota Corolla Cross is anticipated to perform well this year also, after enjoying the highest sales in one year of any Toyota Hybrid model in 2021, its debut year.
To date, the RAV 4 Hybrid has been Toyota’s best-selling HEV model.
On the Lexus front, the Lexus RX Hybrid has enjoyed consistent growth in sales YOY since 2018 and accounts for almost 70 percent of all Lexus Hybrids sold since 2010.
The RX Hybrid and ES Hybrid models have seen a 22 percent increase in demand since last year alone, with a very promising outlook now with the launch of the NX Hybrid model to the region.
The figures reflect the popularity of compact SUV models in the UAE, as well as the desire for low-emissions vehicles and efficient powertrains.
Wijnen said, “Driven by the UAE’s vision for sustainable development and the UAE National Smart Mobility strategy, Al-Futtaim Automotive is committed to the success of the UAE and has been and will continue to be a pioneering force in making mobility sustainable to achieve net-zero emissions by 2050 as per the UAE’s core mission.”
He said Al-Futtaim Automotive has “clear objectives” in place to become a front runner in sustainability mobility and Fuel Cell Electric Vehicle (FCEV) technology, providing innovative mobility solutions and services that “our customers want and deserve to keep the UAE moving towards building a more sustainable future of mobility”.
Car Rental Industry
Soham Shah, CEO of Selfdrive.ae, said that rising petrol prices in the UAE are pushing small businesses and private individuals to switch from vehicle ownership to rentals.
Car buyers are also putting purchase decisions on hold or reconsidering preferences due to rising automobile prices, fuelled by chip shortages at global car manufacturers, Shah said.
Rising fuel prices have also led to a massive shift from larger V6 and V12 engine requirements coming down to compact SUVs, Shah said.
“People have also realized that with car rentals, they can save anywhere between 15 to 20 percent on mobility costs with the subscription done correctly,” Shah added.
Apart from the usual impact of ownership like down payment, insurance cost, registration cost and maintenance cost, renting a fuel-efficient economy-size vehicle could reduce the impact of fuel compared with V6 or V8 engines.
Considering the second vehicle as a fuel-efficient economy vehicle would help with overall cost management.
Shah said, “We are looking to lead the digital transition/transformation in the mobility space by offering seamless customer experience and ease of access for mobility across GCC, Europe, UK and Western Markets. As we see exponential growth in the mobility space, we definitely plan to expand our team.”
Currently, Selfdrive.ae offers an all-in-one portfolio of services starting from one day to 36 months, he said.
“As we see an exponential growth in the mobility space, we plan to be a global leader in the mobility sector and ha
ve plans to launch EVs, Digital Charging Network, E-scooters and integrated mobility network across channels,” Shah said.
Jaideep Dhanoa, Co-founder and CEO of FENIX, said that consumers are opting more often for public transit, escooters and EVs. The high cost of mobility is also causing consumers to reduce their mobility trips, Dhanoa added.
FENIX offers a multimodal, multi-business model platform that includes escooters, e-bikes and cars, connected with public transit.
“We will continue to increase choice for consumers, reducing friction to move, so we move more and do more. Demand for FENIX services has surged 88 percent in the past couple of months,” Dhanoa said.