Passenger cars in Oman is projected to reach over 889,000 in 2020

Muscat: Number of passenger cars in use in Oman is projected to reach over 889,000 in 2020, translating into a five-year compounded annual growth rate (CAGR) of 3.6 per cent. The country has witnessed a drop in new passenger car sales in last couple of years due to the economic slowdown, according to the GCC Automobile Industry report published by Alpen Capital, an investment banking advisory firm.
This phenomenon is anticipated to continue in the short-term. Accordingly, Oman‘s share of the total GCC passenger cars in use is likely to drop from an estimated 7.2 per cent in 2015 to 6.8 per cent in 2020. However, growing population and tourist arrivals is likely to revive demand in the years to 2020. The Oman government‘s plan to develop various tourist spots and encourage private investments in development of tourism-related infrastructure is expected to increase international tourist arrivals by 6.3 per cent CAGR during the forecasted period.
Consequently, new car sales in the country are forecasted to reach nearly 135,000 units in 2020 from 121,100 in 2015. Oman through its sovereign wealth fund has made over a couple of investments to develop local vehicle manufacturing landscape. Such investments are likely to strengthen the country’s automobile sector going forward.
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The report provides a perspective of the GCC automobile sector by presenting the current state of the industry, market dynamics, and scope for future growth. It covers the recent trends, growth drivers, and challenges in the industry, along with an outlook until 2020. Lastly, the report profiles some of the prominent automobile companies in the region.
“The GCC automobile sector is dynamic and one of the faster growing sectors in the world, primarily owing to the growing population and high disposable income coupled with significant infrastructure developments in the region. The sector, however, is currently facing a slowdown amid a weak economic environment and low oil prices as consumers scale back new car purchases. Passenger car sales will remain under pressure in 2017 but are likely to rebound in 2018 and thereon grow at a stable pace in anticipation of a recovery in oil. Other factors fueling growth include increasing disposable income, growing population and availability of attractive financing options in the country,” said Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited
New technology
“The regional governments’ diversification initiatives away from oil and gas could also permeate the GCC Automobile Sector which is overwhelmingly trade centric. The region continues to offer opportunities in the areas of automotive manufacturing, aftermarket, and new technology development," said Siraj Bhavnagarwalla, managing director, Alpen Capital, Oman
"While presently there are a limited number of vehicle manufacturers in the GCC, the situation could possibly change in the future, as Saudi Arabia, the UAE, and Oman are receiving investments to set up ancillary manufacturing plants which could signal the start of an interesting trend creating in its wake exciting opportunities for strategic and financial investors alike," he said.
"While the sector is undergoing weakness in the near term, tacking the prevailing economic downturn, the long term growth drivers remain intact and underpin the strong positive outlook for the sector over the medium term,” he further added.
According to Alpen Capital, number of passenger cars in use in the GCC is expected to grow at a 5 per cent CAGR from an estimated 10.3 million in 2015 to 13.2 million in 2020.