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Pursuing performance: maturing market perspectives in the Gulf

Have motives shifted in PMV procurement in the Gulf, and has the question of price finally ceded to the question of how things perform?

COMMENT, PMV

Performance is the standout theme of April 2017’s issue of PMV Middle East: from the Gulf’s tyre industry and forklifts through to the earthmoving and rental segments, we see the industry drive back to performance-oriented purchasing, the need for this, and critically, the demand for it.

If you looked at the PMV segment in the Gulf five years ago, performance was not the word on everybody’s lips; that word was price. In fact, this issue sees tyre industry stakeholders say just as much — that price has been driven strongly downward in the segment for the past five years.

But a price-oriented approach, or at least a superficially price-oriented approach — one that values minimal capital expenditure at the expense of total cost of ownership — is unsustainable. The OEMs know it, the more savvy fleet operators know it and the industry at large should know it, but it hasn’t ... until now.

In the end, we might finally have the oil price to thank for this. Twin pressures have beset fleet operators: fresh volatility in the cash flow from civil and commercial projects, whether through cancellation or payment delays, and the novel volatility in fuel prices, as GCC economies unpeg fuel and reduce subsidies. This has created an environment where operators must warily bat away all and any threats to their operating margins.

I personally no longer feels like a naïve optimist or futurist talking openly about total cost of ownership and fuel efficiency, and OEMs and distributors that discuss the subject no longer sound like they are simply showboating about realities that have been achieved and are only realistically achievable in other markets.

At long last, in the Gulf, the future is now and everybody is now talking about performance. Some regional governments are even ahead of the general curve. Dubai’s relentless driving of clean and green energy ahead of Expo 2020 is infectious — everyone is now discussing how they themselves align with Dubai’s green goals.

Beyond the bottom line, various nations’ aspirational 2020, 2030 and 2050 targets across the region are driving companies in every industry and segment to declare how they themselves are doing their bit. And there is even circumstantial evidence to suggest that green credentials are helping contractors win contracts.

Performance is officially a driver, fuel efficiency is also key and it is now green not to be green.

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