By Bandula Sirimanna
The depreciating rupee, appreciating yen, high excise duties and other taxes have hit Sri Lanka’s automobile market hard raising import costs sharply in a sector which is already under pressure from a continuous slide in vehicle sales over the last four months, motor traders said.
A recent tax hike aimed at curbing car imports and the outflow of foreign exchange as well as the appreciation of yen has dropped vehicle sales by at least 75 per cent, Lanka Vehicle Importers’ Association Chairman Indika Sampath Merinchige told the Business Times.
The price of a Toyota Prius hybrid car has increased by Rs. 300,000 due to yen appreciation alone, he said adding that car dealers find it difficult to survive under the present circumstance. Mr. Merinchige noted that motor traders have already stopped the importation of vehicles due to high taxation and the current valuation system and they are selling the existing stocks of cars which have been imported before the tax revision. He added that he believes the government will continue the present tax policy aimed at curbing vehicle imports.
The leasing facility has been brought down to 70 per cent from 90 per cent with effect from December 2015 in a circular issued by the Central Bank. This has also affected the car sales in the country, he said adding that this may also signal finance firms and banks to re-adjust conditions for vehicle financing in a market where most of the people buy vehicles through leasing. Mahesh L. Ganwani, Director – Lekhraj Automobiles Pvt Ltd said motor traders will continue to monitor the market over the next few months or so as dealers adopt a wait and see approach towards vehicle buyer reactions. “We expect the market to return to normalcy over the coming months as needy buyers may adopt to existing conditions,” he said.
But the continuation of vehicle taxation policies could result in a lull situation in the car market where buyers will have to pay high prices to purchase vehicles, he cautioned. India continues to dominate the Sri Lankan market for vehicle imports accounting for 50 per cent of the import value. Japan has remained resilient maintaining 30 per cent of market value facing challenges from other countries, he said adding that Japanese car imports will also be lowered in the coming months due to Yen appreciation. Meanwhile farmer organisations complained that the price of tractors has also gone up by Rs.300,000 and it will hit the agriculture industry badly in the long run. Sri Lanka’s large truck and tractor new registrations have continued to fall in January this year amid weak economic conditions, Motor Traffic Department data revealed.
The depreciating rupee, appreciating yen, high excise duties and other taxes have hit Sri Lanka’s automobile market hard raising import costs sharply in a sector which is already under pressure from a continuous slide in vehicle sales over the last four months, motor traders said.
A recent tax hike aimed at curbing car imports and the outflow of foreign exchange as well as the appreciation of yen has dropped vehicle sales by at least 75 per cent, Lanka Vehicle Importers’ Association Chairman Indika Sampath Merinchige told the Business Times.
The price of a Toyota Prius hybrid car has increased by Rs. 300,000 due to yen appreciation alone, he said adding that car dealers find it difficult to survive under the present circumstance. Mr. Merinchige noted that motor traders have already stopped the importation of vehicles due to high taxation and the current valuation system and they are selling the existing stocks of cars which have been imported before the tax revision. He added that he believes the government will continue the present tax policy aimed at curbing vehicle imports.
The leasing facility has been brought down to 70 per cent from 90 per cent with effect from December 2015 in a circular issued by the Central Bank. This has also affected the car sales in the country, he said adding that this may also signal finance firms and banks to re-adjust conditions for vehicle financing in a market where most of the people buy vehicles through leasing. Mahesh L. Ganwani, Director – Lekhraj Automobiles Pvt Ltd said motor traders will continue to monitor the market over the next few months or so as dealers adopt a wait and see approach towards vehicle buyer reactions. “We expect the market to return to normalcy over the coming months as needy buyers may adopt to existing conditions,” he said.
But the continuation of vehicle taxation policies could result in a lull situation in the car market where buyers will have to pay high prices to purchase vehicles, he cautioned. India continues to dominate the Sri Lankan market for vehicle imports accounting for 50 per cent of the import value. Japan has remained resilient maintaining 30 per cent of market value facing challenges from other countries, he said adding that Japanese car imports will also be lowered in the coming months due to Yen appreciation. Meanwhile farmer organisations complained that the price of tractors has also gone up by Rs.300,000 and it will hit the agriculture industry badly in the long run. Sri Lanka’s large truck and tractor new registrations have continued to fall in January this year amid weak economic conditions, Motor Traffic Department data revealed.
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