The year 2014 was a positive year for Omani new vehicle sales, which ended the year up by 8.6% year-on-year (y-o-y), at 141,646 units, according to BMI calculations based on figures from Oman's National Centre for Statistics and Information. Passenger car sales were up by 12.3 y-o-y, to 119,115 units, while commercial vehicle sales actually fell by 7.8% y-o-y, to 22,531 units.
However, looking at early sales trends for 2015, it is clear that the current year will prove considerably more challenging for the new vehicle sales market in Oman. Total new vehicle sales were down by 19.7% y-o-y, to 26,133 units, over Q115. Passenger car sales were down by 25% y-o-y, at 20,390 units, while CV sales rose, by 8%, to reach 5,743 units.
As such, BMI has scaled back its 2015 new vehicle sales forecast considerably. We are now anticipating a 24.3% fall in new vehicle sales over 2015, to 107,263 units. However, while passenger car sales are expected to fall dramatically (-30% y-o-y), we believe there may be scope for some growth (in the order of 6% y-o-y) for commercial vehicle sales over the full year on current sales trends.
The main reason behind the sharp downward revision in our near-term autos sales forecasts is the recent collapse in the global oil price. For 2015, as with other oil-producing nations in the Gulf, BMI has become more cautious on the outlook for Oman's economy, and by extension its auto sales, following the recent sharp falls in the global oil price.
Overall, we feel that economic activity will slow over 2015, as the continued slump in oil prices weakens business and consumer confidence and limits growth in government spending. Our outlook will also be influenced by two key geopolitical developments over the coming quarters. The easing of international sanctions on Iran - we now believe that a deal will reached on the latter's nuclear programme in June - will be a net positive for the Omani economy. On the other hand, the escalating conflict in neighbouring Yemen presents clear negative implications, although the impact on Omani private sector activity will be relatively modest. We project Oman's economy to grow by 3.2% in real terms this year.
As well as slowing growth, the authorities also have to contend with a deteriorating fiscal position - we forecast the budget deficit to widen to a record 12.9% of GDP this year, as a result of the continuing depression in oil prices. As such, it is clear that there will be an end to the high spending growth of recent years, a development that will impact on private sector activity over the coming years. Investor confidence has fallen, as shown by a significant correction in the stock market since November 2014.
All of which will weigh on private consumption growth, which we see falling to 4.2% for 2015, down from an annual average of 5.1% over the 2009-2013 period. While domestic demand will be hit by weaker consumer and business sentiment, strong population growth (due to continued increases in the number of expatriate workers) and the improvements in household incomes achieved over the past few years should provide a continued boost to consumer purchases.
Beyond the current year, some medium-term support to new vehicle sales should be provided by a promising fixed investment outlook for the Sultanate. The government has numerous projects in the pipeline, covering transport and utilities, as well as healthcare, retail, and tourism, among other sectors. This should benefit demand for new commercial vehicles in particular and helps to inform our belief that CV sales will outstrip PC sales over the coming period, although PCs will continue to account for the lion's share (75%) of all new vehicles sold in Oman.
In 2014, Toyota remained by far and away the leading player on the Omani new car sales market, selling more than five times the vehicles of its nearest rival. Toyota's 115,650 unit sales meant that the Japanese carmaker held a very dominant market share of 55.6%, according to information from the BestSellingCarsBlog website. The Japanese carmaker also accounted for the six most popular models sold in the country in 2014, with its, Hilux, Land Cruiser pick-up, Prado, Land Cruiser, Hiace and Corolla models. Toyota is represented in the country by Saud Bahwan Group.
Nissan was a significant way behind Toyota in second position on 21,211 units (10.2%), followed by Hyundai on 20,243 units (9.7%). Nissan's top-seller in Oman is the Patrol SUV, while Hyundai enjoys strong sales from its Elantra, Santa Fe and Accent models.
Looking forward, BMI expects Toyota's dominance of the Omani new car sales market to endure in 2015. This bodes well for a continued strong performance by local distribution partner Saud Bahwan Group. A Company Profile (including SWOT Analysis) of Saud Bahwan can be found in this report.
Oman is currently looking to commence the local production of both cars and auto parts by the end of the current decade. To help the Sultanate meet this goal, in April 2015 the Omani govenment (via its Oman Investment Fund) bought a 40% stake in Italian thermoplastic parts supplier Sigit. Speaking to Automotive News Europe at the time of the purchase, the OIF's chief economist, Fabio Scacciavillani, said that ' Oman has the financial strength to attract parts suppliers first and then automakers by offering them a combination of oil-derived products, low energy costs and access to the Greater Arab Free Trade Area'.
As well as Sigit, the OIF owns a 30% equity interest in Karwa Auto Motors, which is investing around USD200mn to establish the Gulf's first-ever bus assembly plant in Mudhaibi, in Oman's North Al Sharqiyah Governorate. The remaining 70% stake in Karwa is held by Qatar's national transportation company Mowasalat. This plant is expected to open in the coming 2-3 years and has been designed to produce around 2,000 buses per annum for sales across the MENA region.