Automotive industry in Oman hopes for revival in 2018

Muscat - 

The automotive industry hopes that a revival in sales by next year will help it shake off the decline it faced in 2016 as government departments and businesses trimmed spending. Automotive dealers expect to see a bit of a slow start to their business this year before things change for the better by 2018. According to the National Centre for Statistics and Information (NCSI), businesses bought fewer new commercial vehicles as part of cost-cutting measures leading to a drop in registration by 21.5 per cent in the January-November period in 2016 compared to the same period in 2015.

NCSI reported in its December bulletin, that 18,501 new commercial vehicles were registered in the January-November period in 2016 compared to 23,566 during the same period in 2015. That means 5,065 less vehicles were registered, a decline of 21.5 per cent.

Several companies working in the logistics field confirmed that decline in buying was directly related to finances and market changes. An official from Al Mutahidha Transport Co said, “Purchasing is directly related to orders. Since business is slow, it’s only logical that commercial vehicle sales are down. While some operators are tempted to stretch the life-cycle of existing vehicles, major contracts usually have a clause in them pertaining to the age of the vehicles to be used.”

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Gulam Mohammed Ansari, an official from Al Daraii Group, said, “The oil and gas industry is still a major factor contributing to the economy. While business is down and we didn’t add to the fleet last year, we are concentrating on our existing contracts.”

Statistics show there was a drop in almost all types of vehicles registered including rentals(-20.0 per cent), taxis (-17.7 per cent), tractors (-25 per cent), motorbikes (-25.8 per cent) and private (-5.5 per cent).

The only increases were registered in diplomatic (12.2 per cent), driving school (10.4 per cent) and temporary (9.2 per cent) vehicles.

Al Sumri Transport, which uses large buses to transport employees in the oil and gas sector, has actually seen a positive effect. “More oil and gas companies are relying on them to transport employees on a mass scale, rather than investing in their own individual vehicles,” said its CEO Najma al Harthy.

She said companies were adjusting to the higher petrol prices after government subsidies were removed. “They need us more, they need more buses,” she said. “Because of this economy, the fuel price is high, so many people tend to use public buses, especially in the desert, to save.”

She said this is leading companies and their employees not to buy as many of their own smaller vehicles. “If you have more people using buses, especially going to the interiors, then obviously people will buy less vehicles.”

The marketing manager at the commercial vehicles section at an auto dealer, said, “When it comes to commercial vehicles, sales will directly depend on economic activities within a country. The 2016 decline was on account of a slowdown in commercial activity. In 2017, the expectation is that sales will remain at par with 2016. No dramatic upswing is expected, but the market will hopefully recover in 2018.”

An official from another automotive dealer said, “The year 2015 was very good, while 2016 was bad. I think this year things will remain the same. We expect things to improve from 2018. Car rentals businesses are doing okay though.”

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