Small car prices in Sri Lanka cut further fearing tax reductions

By Our Political Correspondent

ECONOMYNEXT - Small car specialist AMW slashed prices of popular Suzuki Celerio and Alto models by up to 369,000 rupees today hot on the heels of slashing 422,000 rupees off the sticker price of a Renault Kwid.

"Special advantage of Rs. 370,000 before budget and not to be repeated," said an advertisement AMW took out in a mass-circulating Sinhala paper on Thursday.

A prospective buyer noted that he would wait till the November budget because he expected a bigger duty reduction and saw the AMW advertisement as a bid to push their inventories to minimise losses from a drastic customs duty reduction.

On Sunday, the second hand car sales slowed sharply following expectations that customs duties on electric and mid-size vehicles will be slashed in Finance Minister Mangala Samaraweera's maiden budget.

Sellers of Nissan Leaf electric cars were seen advertising repeatedly in the past month, but there were hardly any takers as news of the possible tariff reduction was known since late last month.

Official sources said duty reduction will apply to small cars with an engine capacity under 1,000 cc and electric cars with a motor of 80 kilo watts or less.

However, the sources said the authorities were also contemplating reducing taxes on all cars with an engine capacity of less than 1,500 cc. The vehicle category with an engine capacity of less than 1,000 cc is expected to benefit more.

Taxes on commercial and agricultural vehicles are also expected to be brought down.

In August, the minister slashed tax on single cab vehicles by 300,000 rupees and also lifted the 100 percent ad volarem tax on small motorcycles, mainly those imported directly from Japan.