By Kabeer Yousuf — MUSCAT — The total number of vehicles in Oman has jumped by more than 20 per cent, disproportionate to the number of new roads and the expanded ones, which according to experts is one of the root causes of rise in accidents. These facts and figures emerged in a survey by a leading player in the auto finance sector in the Sultanate which said the auto finance in the country has grown by 20 per cent in the Q2 over the same period last year as is witnessed by leading auto agencies.
Experts say the unprecedented traffic snarls and chaotic traffic movement at various parts of the country, with special focus on the capital city, is the by-product of the disproportionate growth in the number of vehicles. However, latest figures of total number of vehicles in the country was not accessible. Invariably the increased sales of both new and pre-owned cars, increased purchasing power of the youth triggered by minimum salary stipulation and additional jobs generated both in the private and public sectors have collectively contributed to the sudden rise in the number of vehicles on road, according to a chief executive of Suhail Bahwan Automobiles LLC.
“The volume of our auto finance or in other words the instalment credit has jumped by 20 to 25 per cent in the first half of this year compared to the same period last year,” Tom Cyriac, Vice-President, Credit and Collections, Suhail Bahwan Automobiles said, adding, “This scenario is undoubtedly owing to the minimum salary hike, increased number of job opportunities, rise in number of people opting for own cars and finally inadequate public transport system which have collectively contributed to the increased purchasing power of the youth translating into a surge in auto sales."
He said the youth prefer both sedan and SUVs alike but majority of new drivers prefer sedan while the experienced ones opt for the latter. Sale of pre-owned cars also increased. As to the repayment scheme, a ceiling of 50 per cent is kept as the maximum deductible instalment as per the CBO norms. “As per the norms of the CBO, we maintain the maximum deductible instalment or EMI to be 50 per cent of the total earnings or the net disposable income (NDI) of the customer. This income is what is routed through the bank as his salary.
"However, we don’t give into the request of the customer when he wants us to deduct half or more than the allowed percentage but we consider his or her living expenses and decline to do so." Cyriac added that no other income such as sponsorship fee is included in the total earning category. If the spouse is also employed, his or her income will be liable to pay the company in case the borrower defaults.
A maximum of 80 per cent of the value of the car can be financed because we follow CBO rule of 20 per cent down payment. The maximum repayment period is set as five years.
“Although the maximum period is five years, it can go up to six in some cases, depending upon the market conditions. However, the only condition is that we can only finance the cars that Suhail Automobiles and Al Jenaibi are selling."
“The advantage of such auto instalment credit is that we can close the deal with any customer walking into our office in a short time. Our offer of instalment credit helps the customer in such a way that he doesn’t have to run around looking for a bank for auto finance and others for various vehicle related needs. It’s like this: you buy the car and we finance you in the instalment mode of finance”, he concluded.
The fact that a number of bridges and new roads, along with the expansion of the existing ones are expected to ease the heavy traffic rush as experienced in some parts of the city. Several dual carriageways, overbridges, round abouts which are currently under way will help smooth movement of vehicles during the peak hours is a reason to heave a sigh especially during the Iftar times.