Indian car manufacturers aim to rebuild battered Lankan market
View(s):Indian automobile manufacturers are eying new avenues to rebuild their fifth largest and fastest growing car market in Sri Lanka badly hit by the recent political turmoil and a recent raft of measures towards curtailing vehicle imports, industry sources said.
The value of Indian car imports came down to US $36 million in 2017-18 from $300 million about three to four years ago totally wiping out the Indian small car market in the country.
The industry is in a wait-and-see attitude expecting some relief from the upcoming 2019 interim budget.
Several leading auto makers in India will be seeking local partners to invest in car assembly plants in the island nation as there was a future potential in the under-penetrated market, a frontline vehicle franchise dealer said.
The government is also encouraging them to invest locally instead of importing vehicles, he said adding that the cost should be properly managed to compete with Chinese manufacturers.
Chinese car manufacturer Geely which sells the second highest number of cars after Maruti in the local market has already set up an assembly facility in collaboration with Micro Cars Ltd founded in 1995.
Since then several automotive companies including Maruti Suzuki were looking at setting up car assembly plants in Sri Lanka without much success.
Sri Lanka has also made Euro 4 fuel engines, air bags and anti-lock braking system compulsory for all cars, which will further increase the cost of vehicles.
With the cleaner fuel fast emerging as an order of the day, Indian automobile manufacturers would need to make cars with engines compatible for Euro 4 standard fuel.
Sri Lanka is also looking at stringent emission control rules to promote green vehicles, a senior Transport Ministry official told the Business Times adding that Indian automakers will have to clear this hurdle before venturing into car assembly joint ventures.
Vehicle Importers Association of Sri Lanka (VIASL) President Ranjan Peiris said “at present most of Indian vehicles that are imported into Sri Lanka are below the Euro 4 standard”.
The new regulations have curtailed all Indian vehicle imports into Sri Lanka with effect from July 1onwards, he said.
According to Motor Traffic Department statistics, small cars less than 1,000 CC accounted for around 90 per cent of the total vehicles imported during the first eight months this year. Of the total imports, 86 per cent were imported through the grey market.
The Ceylon Motor Traders Association (CMTA) noted that a large number of vehicles are being imported by individuals and private dealers who have the capacity to stock large volumes and that it is the unregulated imports that need to come under the scrutiny of the government.
Chairman of the CMTA Sheran Fernando stated that over 70 per cent of local vehicle registrations were made up of Indian-made automobiles.
He emphasised the need of the association to work together with Indian automobile manufacturers towards their mutual benefit.
A 20-member delegation from the Society of Indian Automobile Manufacturers (SIAM) held a fruitful and cordial meeting with the CMTA recently focusing attention on the import of used cars in Sri Lanka, which has resulted in the demand for new cars being wiped out.