A quick glance at Lebanon’s smog-choked roads reveals that hybrid cars and green technology are yet to be embraced by the country’s drivers.
The vehicles are still a bit of a novelty in the West, accounting for a market share of only 0.5 percent in Western Europe and 2.8 percent in the United States in 2008 according to Polk, a firm that researches trends in the global automobile market. In Lebanon, the number of hybrid cars on the road is even lower. But things may be changing soon.
In Lebanon’s proposed budget for 2010, a clause was included that would waive import tariffs on hybrid cars entering Lebanon. Currently, import tariffs and the 10 percent value added tax (VAT) on new vehicles can result in buyers in Lebanon spending up to 50 percent more than the market value of the car outside of Lebanon.
The Lebanese Ministry of Finance and the Ministry of Environment pushed for these fees to be lifted to help Lebanon’s environment. The World Bank has reported that environmental deterioration — primarily caused by pollution caused by transportation — costs Lebanon more than $560 million per year. While the government nets a significant income from taxes on imported vehicles, some people are starting to think that the resulting damage is too high.
The finance and environment ministries further suggested that Lebanon’s 20,000 or so aging and smog-belching taxis could be replaced with hybrid or green technology vehicles.
Additionally, stringent reductions on carbon dioxide (CO2) emissions for cars in Europe (where the majority of cars in Lebanon’s lucrative secondhand market come from) could also mean greener car imports in the coming years. The European Commission has mandated that by 2015 manufacturers’ cars in Europe must have a fleet-wide average of 130 grams per kilometer (g/km) of CO2 emissions or lower. If they fail to comply, manufacturers will face fines per car — a costly venture.
As these cars become more and more commonplace across Europe, they should filter down into the Lebanese secondhand car market. As manufacturers make their marques ever greener to appease the new European Commission regulations, environmentally friendly cars will inevitably become an ever more familiar sight in Lebanon’s showrooms in years to come.
Rare and pricey
One of the major problems facing the development of the hybrid market in Lebanon currently is that not every car manufacturer makes hybrids and out of those that do, not all export to Lebanon. “If they produce, we’ll import,” said Henry Nawar, a sales manager at Autostars, the Daihatsu and Subaru dealership in Lebanon. “I’ll be the first one to have one of our hybrid or electrical car products.”
The Toyota Prius — the world’s most well-known hybrid car, having sold over 1.8 million units since it first went into production in Japan in 1997 — is currently available on a limited basis at Boustany United Machineries Company (BUMC), the sole dealer of Toyota and Lexus vehicles in Lebanon.
But with the price of new cars in Lebanon already excessive compared to many other parts of the world thanks to the high tariffs, few people are willing to pay even more to have a clean conscience about the environment and a few more kilometers per gallon.
In Lebanon, the Prius retails at about $60,000 including import taxes — far higher than the $22,800 to $28,000 price tags found in the US.
“The price is not a commercial price,” said Salim Haddad, general manager for Marketing Communication and Advertising, the advertising firm that handles public relations for BUMC. If tariffs are dropped or lowered, Toyota’s range of hybrid vehicles should become more affordable and make models such as the Prius more alluring to the average consumer, not just those with unflinching environmental ethics and the thick wallets to pay for them.
The cost of hybrid cars in Lebanon today puts them primarily in the range of luxury car buyers, yet many of these hybrids lack the flash and power that their non-hybrid model equivalents have. Still, the market is starting to see some luxury hybrid models; if the tariffs are waived, these cars could offer a chance to be stylishly eco-friendly at a cheaper price.
Take Porsche’s Cayenne S Hybrid SUV. The 2011 model comes loaded with a 333 horsepower V-6 engine and gets 24 miles per gallon. It looks exactly the same as any other Cayenne, save for a small “hybrid” marking on its rear.
Currently, the hybrid version of the Cayenne sells for about $137,000 in Lebanon including VAT, according to Charles Tarazi, an owning partner of Porsche Lebanon. This price is about 7 to 8 percent higher than a non-hybrid Cayenne.
Minus the import tariffs, however, and the hybrid could end up a good deal cheaper than a normal Cayenne and boost its market share. So far though, sales on the Cayenne S Hybrid haven’t been great. “We’re getting a few to test the market, but so far [there has been] nothing positive,” said Tarazi.
BUMC has started to offer the Lexus LS 600h, a luxury saloon that emits 218 g/km of CO2 while achieving 30.4 miles per gallon and reaching speeds of up to 250 kilometers per hour. Yet, as with the other hybrids offered by BUMC, the LS 600h is only available on a special basis and has yet to go mainstream in Lebanon. A handful of other luxury car manufacturers have entered the hybrid market, though it is not known when or if these will be made available in Lebanon.
Will it Work?
As the 2010 budget is still stuck in the country’s bureaucratic maze it is too soon to confidently say whether hybrid (and other green technology) cars will see growth in Lebanon or not; members of the automotive industry in the country agree that the clause in the budget is key.
However, it’s worth noting that elsewhere in the region, efforts to promote green cars have met some success. In Jordan, the government issued a partial reduction on taxes on hybrid vehicles earlier this year and offered additional benefits for customers who want to trade in their non-hybrid car as part of the purchase. According to the Jordan Times, Jordan has imported 9,000 hybrid vehicles so far this year and customers trading in their traditional cars for hybrids have been able to save up to $5,600.
In Egypt, many cars in Cairo’s massive fleet of taxis have gone green, utilizing compressed natural gas as a cheaper and cleaner alternative to gasoline. Similar efforts have been made with cabs in the United Arab Emirates.
Still, in Lebanon as it stands today, “there’s been zero support from the government for hybrid cars for private use,” said Tarazi.
But some are optimistic things will change.
“It has a future and it has potential,” said Haddad. “The environmentally-friendly mentality is gaining [here]. We can’t really measure it because it hasn’t been commercialized yet, but we feel there is potential.”
As hybrids and other green cars have yet to feature on the Lebanese radar, few people in the country outside of the automobile industry are conscious of the potential environmental and cash-saving benefits they could bring to prospective buyers.
Consumers will need to be made aware of the advantages of going green if we are to see more than a trickle of hybrids rolling down the streets of Lebanon, but the first step is lifting the tariffs. Thus, the country’s environmentally friendly future, as so much else, hangs on the fate of the 2010 budget.