Y Investigation: Is this the best time to buy a car in Oman?

08 Nov 2017
POSTED BY Y Magazine

Dealers used to sell 40 or more a month are now trading in just about four cars. And that’s a drastic drop. Alvin Thomas tailgates motorists and showroom staff on the road to slowdown

Quick question: How often do you see a car sporting a green plate on the roads in the Sultanate? The ‘green-plate cars’, as they are fondly known by the public, are those that are newly registered – fresh from the dealer – and with green number plates. Many in Oman see it as a symbol of status.

A new car on the road draws admiring glances. But the growing consensus is that there is a drop in the number of cars on the streets with green-coloured number plates.

Is that true?

“Yes,” says Ronald (name changed to protect identity), a sales manager who works with one of Oman’s leading luxury automotive showrooms.

“There has been a very sharp dip in the number of cars sold across our showrooms. We operate several brands under our umbrella and they have all been affected in one way
or another.

“It’s been the case since the oil price crash of 2014. But even then, I would say the market did hold well until mid-2015. That was when the whole scenario shifted; companies were quickly cutting down on staff and recruitments slowly went down.

“What this meant was fewer expatriates were coming into Oman, and those who did migrate here did not want to invest in a car or take a loan.

“Omanis did continue to keep the market afloat until the latter part of 2015 – September or October – but then the sales really crumbled.”

This, he says, was when everything turned “topsy-turvy”.

“Up until the Ramadan of 2016 (June to July) we were barely attaining our targets. And remember, our targets were quite high. I remember our sales staff were asked to do a minimum of 15-20 (depending on the grade of job) cars a month.

“Ramadan, however, was a great time for us. We were raking in sales, which was good,” Ronald adds.

His company could attain that by providing buyers with lucrative offers. Some of these offers included providing new cars with a free service package, cash-back up to RO2,000 and free registration.

The period after that marked dark times in car sales.

“After July sales came to a standstill, literally. We were registering fewer than 22 cars a month; a trend which continues till today. Remember, back in the days, we were selling roughly 40 cars in a month.

Ronald’s words are proved correct in the new report published by the National Centre for Statistical Information (NCSI), which highlighted a sharp drop in the total number of new cars registered within the country.

For instance, the report states that 45,498 new cars were registered in Oman from January to September this year, as opposed to 56,782 cars registered during the same period
last year.

This reflects a 19.9 per cent drop in new car registrations.

Justin*, another car salesman from a Japanese car showroom here, says this is because of the austerity measures taken by expat workers in Oman.

“Who would want to take a new car on a loan in this current market?” he asks.

“It’s like shooting yourself in the feet before running. People have come to terms with the fact that they should hold back from spending until they are stable financially.

When we ask about his company’s car sales, he reveals: “We’re doing good. At least much better than our own car dealer next door.

“They’re selling roughly four cars, while we’re hitting the late 30s in a month. It’s still at the lowest since I came from India to the Middle East, but I feel that we’re blessed when compared to other car dealers,” he tells, before steering our attention towards the dwindling sales of commercial vehicles here in Oman.

Again, we turn to NCSI for the statistics. The statistics are worrying, as the number of newly registered commercial vehicles stood at a mere 10,234 from January to September this year. In contrast, a total of 15,693 commercial vehicles made it to the roads last year during the same period.

All of this has adversely affected the industry.

Forty members from various teams were let go at one of Oman’s largest automotive showrooms in October, marking the beginning of a wave of cost-cutting measures.

Another company sacked 150 members in a bid to reduce the number of sales, marketing and management-level staff. To understand the situation, we reach out to several members who were recently let go, but to no avail.

But, after promising complete anonymity, a former employee of the firm agrees to speak about the issues he now faces as he is now unemployed.

“A huge cloud had always been above our heads from 2015 onwards,” he tells.

“But when we were given our termination letters, we couldn’t believe it,” says the employee of a company for 18 years.

“My office was like home to me, and we would always work as a team when we would ever fall short of sales. But, I think we had come to a point where we had to let go, or the company would incur more losses in the form of our salaries.

“The letter that we received was mass-printed and did not even have our names on it. It addressed me as ‘Dear Employee’. There was no sense of thankfulness or even gratitude towards our efforts to make the company the best.

“Even my experience letter was handed over to me only after they cancelled my visa at the airport.

“I’m just hoping that things settle down in Oman, and everything falls in place really soon,” he adds. 

While several dealers are struggling to roll their cars out of the showrooms, a handful of dealers – mostly Japanese – are achieving their targets but only barely.

“Each of the staff members in sales has a target of 10 cars a month,” says one salesman from a Japanese luxury car showroom in Oman.

“And thankfully we’re achieving it. But we know our cars are moving slower, because a few years ago, I remember how people would simply walk into the showroom without even the desire to buy a car but eventually go back to their homes with the keys to a brand-new vehicle.

“That doesn’t happen anymore. The number of people walking into the showrooms has reduced drastically but I feel that the conversion rates are higher now as people who do walk in are more serious about buying the cars.

“But one thing I can tell you is that fewer expats are purchasing our cars. Omanis comprise our customers nowadays,” he reveals.

“I think at the end of the day it is the brand name and value that matters. We have been consistently hitting our targets, and some of the sales staff in our budget car showroom are achieving 120 per cent every month.”

Sailesh Chandran, a new petro-chemical engineer in a petroleum firm in Oman, however, says he, like many others, is skimming on buying a car just to save money.

“I don’t know how long I can stay here. I am here with my family and I am not even thinking of buying a car here. I used to drive in the UAE where I worked for six years. But then I lost my job last year and had to sell my car.

“I don’t want that to happen again. So, however desperate I am, I have made up my mind that I will not buy another car.”

“Another factor is the fuel. It costs 201 baisas for a litre of premium fuel. That’s quite high for the normal middle-class worker and, therefore, the times are quite unfavourable for us.”

Fatima Moussa, a student at Sultan Qaboos University, echoes Sailesh’s voice. “Taking a car loan and paying EMIs (monthly payments) is risky. I would rather take a bus or a taxi than buy a car; at least until I am capable of sustaining myself and my family.

Fatima takes the Mwasalat bus to college daily and says she is “extremely happy” with the facilities offered on the buses.

“Youngsters like me, or even young employees like you, can actually try taking the bus. It is very clean, the people are all well-mannered and there’s WiFi. I’m not sure if there’s a better way to travel in style,” she says.

On a positive note, the public transport system in Oman is also on a roll, as it is rapidly developing its fleet of buses. In recent news, it was announced that 98 new buses would join the fleet by August 2018.

If buses aren’t your cup of tea, then you can simply head to the nearest car rental company and sign for a car of your choice. This has slowly become the preferred mode of driving for expatriates in recent times.

Statistics revealed by the NCSI further tell us that a total of 3,271 rental cars were registered in Oman from January to September this year, as opposed to 2,716 from the same period last year. This reflects an increase of 34.8 per cent.

British expat James William, who works in a telecom company, tells us that renting a car can seem a bit expensive at first, but the long-term benefits can be rewarding.

“Today, I drive a Toyota Fortuner rented out from car rental company – Budget. It costs me roughly RO300 every month, and another RO50 in petrol. But all of the mechanical expenses are handled by Budget and I don’t have to worry about anything.

“When the car is in for service – which by the way is free – I even get a replacement car,” he laughs.

“But the main reason why I drive a rental is because when the time comes for me to leave Oman, I do not have to worry about finding buyers or settling papers with the Royal Oman Police,” he adds.

Melissa Joan, an economist based in Oman, asserts that one of the main reasons for the drop in car sales in Oman is due to the strengthening of the rental car industry.

“A few years ago, buying a car would have made sense, as she or he could be sure that they would be staying here for a period of at least five years.

“Today, people are coming and going quickly, as work could be based on a contract level, or visas are short. This means it’s best for the employee to either obtain a company-provided car (in some cases) or rent a car.

“While renting a car could cost you 25 per cent more than buying a car on a five-year loan, the major benefits can include the lack of any paper trail associated with your bank. You can also simply return the car back to the company and fly out of the country.

“So, why would you buy a car?” asks Joan.

Apart from the residents taking such austerity measures, one Shura member maintains that the total drop in the number of newly registered cars is also because of the strict measures taken by the Omani government to cut down on spending.

In an interview with Y, Shura member Mohammed Sulaiman Al Kindi says: “The reason behind the drop in car sales this year is that the government has bought fewer cars compared to previous years due to the austerity measures.

However, the official is keeping his hopes high for the next year.

Still, Sultan Al Kindi, an entrepreneur who runs an aluminium company, tells that certain automotive showrooms in the country are exploiting people’s need for cars by marking up the prices.

“I feel we are paying more to buy cars here in Oman than in the United States or even our neighbouring country UAE. I have seen that the price of the car is at least 10 to 20 per cent more than the original price of the car.

“This is more so in the case of European cars,” he adds.

Al Kindi explains that despite Oman maintaining a zero-taxation agreement with the United States the prices of American cars in the Sultanate are similar to or higher than the prices in other GCC countries, even when some of them do not have the same agreement.

“That is why we met representatives from official car dealers, second-hand sellers, Public Authority for Consumer Protection, Royal Oman Police, Oman Chamber of Commerce and Industry and Ministry of Commerce and Industry to discuss the prices,” he says.

Nevertheless, the total number of cars now on the roads has touched 1,426,350 – an all-time high.

A part of this could be due to the increasing sales of used cars in Oman.

Jameel, a salesman in a used-cars showroom in Baushar, says Indians and British expats now prefer used cars to new ones.

“I have nearly 50 or 60 people walking into the showroom daily asking for cars. Most of the people look for reliable Japanese sedans or SUVs but now people are also coming forward to purchasing American cars.

“We are selling nearly 12 cars a month, which is quite good for a small business like ours. Our arbaab is actually asking us to purchase expensive cars from sellers so that we can put it on sale in our showroom.We’re buying out a Bentley from one businessman, next week.

“Of course, the commission the company takes is now reduced, which could be one reason why people are buying from us,” he adds.

“You can tell that there is a drop in the number of cars being sold, but I think the ideal way to judge the sales would be over the second and third quarter of 2018,” says Ronald.

“You see, the oil prices are still only stabilising and that means things will begin to pick up. But, whether this will reflect in car sales and bring it back to the level it was at five years ago, we should wait and see.” ν

*Name changed to protect identity

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