Boasting cheap fuel and a host of aluminium producers, Gulf countries are being encouraged to build a car manufacturing sector to challenge the traditional global hubs.
Aluminium can drive Gulf car manufacturing industry
With cheap fuel and a host of aluminium producers, Gulf countries are being encouraged to build a car manufacturing sector to challenge the traditional global hubs.
Industry executives believe the growing number of cars bought in the Gulf, coupled with low fuel costs and the huge aluminium smelters planned, means the region is well placed to begin assembling cars and component parts at lower costs to global prices.
Aluminium is becoming an increasingly important material in the manufacture of cars as it is lighter than steel and reduces carbon emissions by 25 to 40 per cent.
"It has to be about cooperation [between Gulf countries]," said Ahmed Sorour, the chief executive of Qatar Automotive Gateway (QAR), on the sidelines of the Aluminium 2012 conference held last week in Dubai.
QAR is a new initiative to build a cluster of car component manufacturers in the Gulf, leveraging the region's aluminium production and its strategic geographical location.
Targets are being put in place in both Europe and the US to reduce emissions from cars in the next 10 years, giving manufacturers an incentive to examine products such as aluminium. Audi, Jaguar and Mercedes are all now heavily using aluminium.
"We can easily increase performance and fuel efficiency with aluminium products. This is the low-hanging fruit," said Mr Sorour.
The traditional major car producers are China, Germany, Japan and Korea, with new countries such as Thailand and Australia making ground in assembly and component parts.
Mr Sorour wants to establish aluminium component makers and lithium-ion batteries to supply to car manufacturers globally at lower prices, given the lower labour and fuel costs, along with the ready supply of aluminium from regional smelters such as Qatalum, Emirates Aluminium (Emal) and Dubai Aluminium Company (Dubal).
Dubal is one of the world's biggest producers of the metal and Abu Dhabi's Emal is investing billions of dollars in infrastructure.
Together, Emal and Dubal are capable of producing about 1.75 million tonnes of aluminium a year.
Qatalum, an equal joint venture between Qatar Petroleum and Hydro Aluminium of Norway, can produce 585,000 tonnes per year and Aluminium Bahrain produces more than 870,000 tonnes per year.
"Unfortunately, we do not find the cooperation platform in the region," said Mr Sorour.
"There is a competition trend rather than a cooperation one, which is bad."
Countries within the Gulf have started to establish car component plants or assembly of commercial vehicles, but nothing on a major scale or region-wide.
In 2004, Volkswagen and Abu Dhabi had talked about investing Dh2 billion (US$544.49 million) to Dh5bn in building a cluster of car component manufacturers, while a manufacturing plant was built for Ashok Leyland commercial vehicles in Ras Al Khaimah in 2010.
There are also relatively small assembly plants in Egypt, Morocco and Saudi Arabia.