Sri Lankan vehicle prices soar with the rupee depreciation
In the wake of the Sri Lankan rupee’s significant depreciation against the US dollar, the prices of imported motor vehicles have risen by 8 to 10 per cent and expected to rise further if the rupee continues its slide, motor traders warned.
Director of Lekhraj Automobiles (Pvt) Ltd Ashok L. Ganwani told the Business Times that small car prices have increased by Rs.l00,000 to Rs.150,000 and luxury cars by more than Rs.300,000 depending on the rupee/dollar fluctuations. Even the price of three wheelers has increased by Rs. 6000.He pointed out that duty concession permit holders (politicians, senior government servants and professionals) would also have to pay an additional sum of at least Rs.500,000 as tariffs.
These permit holders are going to face a situation where the vehicles imported by using their duty slashed permits valued at US$35,000 will increase to $36,000 when the vehicle lands in the country, he disclosed. The Customs will levy the import duty considering the increased value pushing them into difficulty, he said, adding that the percentage of taxes on customs value (CIF basis) on duty slashed permit car imports has also been increased.
He noted that this situation will continue during the present interim period but the Sri Lankan rupee depreciation will not be sufficient to slow the demand for vehicles in the long run as needy buyers will get accustomed to it. Motor traders especially the small timers and used car dealers are heading towards the doldrums unless the strong dollar flows by way of foreign direct investments materialise during the remainder of the year, he added.
Sector insiders said many reconditioned car traders are planning to diversify their business to more lucrative trades such as pharmaceuticals or fast moving commodities while others are about to shut down their business to save their dwindling investments.
Chairman of the Sri Lanka Vehicle Importers’ Association Indika Sampath Merinchige said that vehicles imported into Sri Lanka would increase by around 6 per cent in the long term. A Toyota Prius, Honda Vezel etc would increase by some Rs.300,000 and a Wagon R and Nissan Leaf by some Rs.150,000, he revealed. “The prices of all imported motor vehicles as well as spare parts will increase definitely,” he added.
Sri Lanka car dealers have sharply raised prices for existing units imported before the rupee fell 11.76 per cent against the Japanese yen this month. There was a sudden rush to buy new and second-hand Japanese hybrid cars as some buyers anticipated a possible tariff hike in the 2016 budget.
According to car market sources, the prices of the Toyota Prius, Camri, Hilux and Toyota Hiace would increase by around Rs.100,000 to Rs.300,000. Sri Lanka’s fast moving cars like Suzuki Alto, Suzuki Celerio, Suzuki Swift and Alto K 10 would rise by around Rs.75,000 to Rs.100,000 each.
The price of Micro panda cars will also be increased by around Rs.25,000 to Rs.30,000. The depreciation of the rupee against the dollar is also likely to impact Tata Motors. Faced with increased restriction on car imports in Sri Lanka, the company may have to phase out its ultra low cost car Nano from the country, Indian media reports revealed.