Oman Car Finance Market Set To Surpass Valuation Of USD 1,019.4 Million By 2032 | Astute Analytica

(MENAFN- GlobeNewsWire - Nasdaq) The demand for car loans in Oman is expected to continue rising, driven by favorable government policies, increasing urbanization, technological advancements, and cultural preferences for ownership. With expanding road infrastructure and a growing middle class, car loans will likely remain the dominant choice for vehicle financing in the coming years.

New Delhi, Aug. 08, 2024 (GLOBE NEWSWIRE) -- According to the latest Astute Analytica research study, the Oman car finance market was valued at US$ 630.90 million in 2023 and is projected to reach US$ 1,019.4 million by 2032 at a CAGR of 5.48% during the forecast period 2024–2032.

The rising demand for car finance market in Oman can be attributed to the country's economic recovery and growth. Oman's GDP growth rate has been stable, with significant contributions from the non-oil sector, particularly in tourism and services. The average price of crude oil, which plays a crucial role in Oman's economy, has remained above $70 per barrel, providing financial stability and consumer confidence. With the government's focus on improving infrastructure, numerous road projects worth over OMR 2 billion are underway, enhancing connectivity and increasing the need for personal vehicles. Additionally, the population's median age of 25 years suggests a young, working demographic eager to invest in new cars, further driving the demand for car finance.

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Financial institutions in Oman are playing a pivotal role in the car finance market by offering tailored products to meet diverse consumer needs. Bank Dhofar, HSBC Oman, and Ahli Bank are among the prominent players providing competitive interest rates and innovative loan packages. These banks have introduced zero down payment options and bundled insurance products, making car ownership more accessible. The average interest rate for car loans has decreased to 5.5%, making financing more affordable. Furthermore, the Central Bank of Oman's regulations ensure transparency and consumer protection, enhancing trust in financial products. The availability of pre-approved loans, which can be availed within 24 hours, has also simplified the purchasing process, contributing to the market's growth.

The increasing inclination towards luxury cars is another factor driving the car finance market growth in Oman. The sales of luxury car brands like BMW, Mercedes-Benz, and Audi have seen a significant rise, with over 1,500 units sold in the first quarter of 2023. The higher disposable income and lifestyle aspirations are fueling this trend. Luxury car dealers, such as Zawawi Trading Company and Alfardan Motors, are offering bespoke financing solutions to attract affluent buyers. The availability of certified pre-owned luxury cars with attractive financing options has also expanded the market. Additionally, the rise in corporate leasing and car rental services, with over 100 new companies entering the market in 2023, is stimulating the demand for car finance. The combined effect of economic growth, financial innovation, and consumer preferences is driving the robust growth momentum in Oman's car finance sector.

Key Findings in Oman car Finance Market

Market Forecast (2032)	US$ 1,019.4 Million
CAGR	5.48%
By Type	Loan (75.23%)
By Car Type	Sedan (34.63%)
By Vehicle Ownership	New Car Financing (61.48%)
By Vehicle Usage	Private (72.77%)
By Providers	Banks (61.79%)
Top Trends	Sustainable financing solutions for electric and hybrid vehicles gaining traction. Technological innovations simplifying loan applications via mobile platforms. Increased demand for new car models and branded vehicles.
Top Drivers	Economic development and favorable government policies supporting market growth. High oil prices and fiscal consolidation boosting consumer purchasing power. Strategic location as a gateway to the Gulf Cooperation Council (GCC).
Top Challenges	Economic fluctuations impacting consumer sentiment and credit demand stability. Potential changes in regulatory policies affecting market dynamics. Cumbersome government regulations and bureaucratic obstacles for foreign firms.

Most of the Car Finance Market Revenue Comes for Car Loan than Lease, Generates over 75.23% Market Share

The rise in car loan demand is also influenced by technological advancements and digitalization in the financial sector. As of 2023, 55% of car loan applications are processed online, which has streamlined the approval process and made it more convenient for consumers. This digital shift has particularly appealed to tech-savvy younger demographics, who are more likely to engage with online financial services. Additionally, the competitive landscape among banks and financial institutions has led to more attractive car loan offerings, with 40% of banks introducing special promotions and incentives for car loans. Another factor contributing to the preference for car loans is the increasing availability of used cars in the market. Approximately 50% of car loan applicants are financing pre-owned vehicles, which are seen as a more economical option compared to new cars.

Moreover, the cultural aspect of car ownership in Oman car finance market cannot be overlooked. Ownership is often associated with social status and personal achievement, motivating 70% of consumers to purchase cars through loans rather than leases. The influence of social media and advertising also plays a crucial role, with 30% of car buyers citing online advertisements as a significant factor in their decision-making process. Additionally, the introduction of electric vehicles (EVs) has sparked interest in car loans, as 20% of car loan applications in 2023 were for EVs, driven by government incentives for sustainable transportation. These findings collectively underscore the multifaceted drivers behind the robust growth in car loan demand in Oman, highlighting the dynamic interplay between economic, technological, and cultural factors.

Urban Elegance and Efficiency: Sedan Revolution in Oman's Car Financing Market, Takes a Front Seat with Revenue Share of over 34.63%

Long-term value retention of sedans is the key factor behind the dominance of this cart type in car finance market. Sedans tend to depreciate at a slower rate compared to SUVs and MPVs, making them a more attractive option for financing. For instance, a study in 2023 showed that sedans like the Hyundai Elantra and Honda Civic retain up to 65% of their value after three years, compared to 50% for similar SUVs. This slower depreciation rate ensures that buyers retain more value in their vehicles over time, which is a significant consideration for those looking to finance a car. Additionally, the cultural preference for owning a vehicle rather than leasing it plays a significant role in the Omani market. Ownership is often seen as a status symbol and a long-term investment, which drives the demand for financing options over leasing agreements. In 2023, 80% of car transactions in Oman were purchases rather than leases, underlining this cultural trend.

Furthermore, the versatility and practicality of sedans make them a popular choice among various demographics in Oman. For instance, sedans are favored by both young professionals and families in the car finance market due to their spacious interiors and advanced safety features. A report from 2023 indicated that 45% of sedan buyers were young professionals aged 25-35, while 40% were families looking for reliable and safe vehicles. The introduction of new sedan models with cutting-edge technology and enhanced safety features has also contributed to their growing popularity. Models like the Honda City and Hyundai Elantra, which offer advanced infotainment systems and superior safety ratings, have seen increased demand in the Omani market with sales figures reaching 15,000 units combined in 2023. Additionally, the government's focus on improving road infrastructure and urban development has made sedans a more practical choice for daily commuting and long-distance travel, with over 2,000 kilometers of new roads constructed in 2023 alone.

New Cars are Most Financed in Oman than Used Cars: New Cars Hold Over 61.48% Market Share

The dominance of new car financing in Oman can be attributed to several key factors that drive strong growth momentum in this sector. The Omani government's economic diversification efforts, particularly under Oman Vision 2040, have significantly boosted consumer confidence and spending power, leading to increased demand for new vehicles. Additionally, the availability of attractive financing options from leading banks and financial institutions has made it easier for consumers to purchase new cars. For instance, platforms like yallacompare provide comprehensive comparisons of car finance deals, simplifying the decision-making process for buyers. The introduction of new car models and the continuous influx of global automotive brands into the Omani market have also played a crucial role. In 2023, there were 5,504 new car models and 16,408 versions available, offering consumers a wide range of choices. Furthermore, the rise in income levels and urbanization has fueled the demand for personal vehicles, with the Southeast region emerging as a dominant player in the car finance market.

The preference for new cars over used ones is also driven by the reliability and advanced features of new vehicles. Brands like Toyota, Nissan, and MG have shown significant growth. Additionally, the economic stability provided by high oil prices and fiscal consolidation efforts has supported higher growth in the new car market. The Omani new car market saw a 16% year-on-year increase in registrations in the first seven months of 2021, with Toyota doubling the market growth rate. This robust demand is further evidenced by the 5,861 new light vehicles sold in March 2023, despite a year-on-year decline.

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Banks are the Leading Financer in Oman Car Finance Market, Contribute More than 61%

Banks in Oman have established themselves as the largest financiers in the car finance market due to several key factors. Their widespread accessibility and strong reputation for reliability make them the preferred choice for consumers seeking car loans. Oman has over 20 major banking institutions that offer car financing, making it easy for consumers to access credit. Banks offer diverse financing options, including competitive interest rates and flexible repayment terms, which cater to a broad spectrum of customers. The average car loan tenure offered by banks is 5 years, allowing for manageable monthly payments. Additionally, the financial strength of banks allows them to provide substantial loan amounts, making it easier for consumers to purchase both new and used vehicles.

In 2023, banks in Oman financed over 25,000 car loans. The Southeast region of Oman, which heavily relies on vehicle imports, has seen significant growth in car financing, further bolstering the dominance of banks in this sector. Approximately 60% of all vehicles in Oman are imported, highlighting the need for robust car finance solutions. The rise in income levels and the increasing demand for luxury cars have also contributed to the growth of the car finance market, with banks playing a crucial role in meeting this demand. Luxury car sales increased by 15% in Oman in 2023, reflecting an upward trend in consumer spending.

The strong growth momentum for banks in the car finance market is driven by several factors. Economic development and technological innovations have created a favorable environment for car financing. Oman's GDP growth rate for 2023 was 4.5%, indicating a healthy economy that supports consumer borrowing.

• Growth of Non-oil Sectors Increased Demand for Credit, Leading to an Expansion in Banks' Lending and Assets

Banks' total lending portfolio grew by 8% in 2023. Strategic partnerships between banks and auto dealerships have also enhanced the availability of car financing options. For instance, the National Bank of Oman has actively engaged with partner dealerships to promote its car financing products. National Bank of Oman partnered with 15 leading car dealerships in 2023 to offer exclusive financing deals.

The used car market in Oman is expanding, with banks providing on-site financing options through partnerships with dealerships. Used car sales accounted for 40% of total car transactions in 2023. This has streamlined the car buying process and increased consumer confidence in used cars. Furthermore, the vibrant Islamic banking sector has supported the overall growth of the banking industry, contributing to the dominance of banks in the car finance market. Islamic banks financed 15,000 car loans in 2023, showcasing their significant role in the market.

Oman Car Finance Market Key Players

• Ahli Bank
• Al Omaniya Financial Services
• Bank Nizwa
• Muscat Finance
• National Finance
• Oman Arab Bank
• Oman Orix Leasing
• Taageer Finance
• United Finance
• Other Prominent Players

Key Segmentation:

By Type

• Lease
• Loan
  • Direct
  • Indirect

By Vehicle Type

• Sedan
• Hatchback
• MPV's
• SUV's

By Vehicle Ownership

• New Car Financing
• Used Car Financing

By Vehicle Usage

• Private
• Commercial

By Provider

• Banks
• OEMs
• Non-Banking Financial Companies (NBFCs)
• Others (Credit Unions)

By Duration

• Short Term
• Mid Term
• Long Term

By End User

• Individual
• Enterprises

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