Vehicle buyers in Oman prefer small cars due to fuel efficiency

Muscat: Oman’s total vehicle registrations edged up by 0.6 per cent to 52,674 in the first half of 2016, from 52,370 units for the same period in 2015.
Although there has been reluctance on the part of the people to spend on high-value products like vehicles in view of recent slackness in oil prices, the marginal growth shows that the trend is gradually changing.
There is also a growing preference for small cars this year, thanks to an increase in fuel price (after deregulation of petrol prices from mid-January), cost of vehicles and maintenance cost.
“Even if people postpone purchase of cars, they can do it only for a limited period. At some stage, they have to go for a new car due to two reasons – an increase in maintenance cost and the vehicle becomes unreliable,” said Aftab Patel, chief executive officer of Al Omaniya Financial Services.
“Therefore, when there is an economic slowdown, there is a fall in demand for one or two years. Thereafter, there will be a steady growth in demand for vehicles,” he added.
Patel also said that there was a growth in demand for small cars in recent months. “This could be due to an increase in fuel price (since mid-January), vehicle cost and cost of maintenance.”
Among various segments, a marked growth in registrations witnessed in two segments – government and diplomatic vehicles. While government sector new vehicle registration grew by 18.1 per cent (1,573 units) new registration of diplomatic vehicles surged ahead by 36.4 per cent (although the total number in absolute terms is insignificant).
Private vehicle registrations grew by 3 per cent to 35,387 units in the first half, while commercial vehicle registrations showed a fall 4.6 per cent to 11,288 units during the period, compared to the same first half of 2015, according to monthly statistics released by the National Centre for Statistics and Information (NCSI). However, new registrations of car rental firms, taxis and motor bikes dropped by 14.1 per cent, 8.2 per cent and 30.2 per cent, respectively.
Patel said that his company did not witness a fall in demand for car finance in the first half compared to the same period of previous year.
Also, the interest rate for vehicle finance has not grown in line with the general increase in interest rates due to several players offering vehicle finance. The lending rate of vehicle finance (real rate of interest or IRR) ranges anywhere between 5 and 8 per cent.
Oman imports vehicles for domestic sale and for re-exports to regional markets, mainly for some African markets. The Sultanate’s total vehicle registration in 2015 was 112,761 vehicles, which include 74,113 private cars. Total number of vehicles on Omani roads is estimated at 1,334,776 units by end-June 2016.