The demand for brand new vehicles in the country has fallen to a very low level as a result of high levels of taxation of 300 to 400% on imported vehicles, in force during the past few years, resulting in some companies considering assembling vehicles.
The industry was further hit in the last financial year due to the slowing down of the local economy following the global economic crisis, according to Ranjit Fernando, Chairman of United Motors Lanka Plc in his review of the un-audited accounts of the Goup for the six months period ending September 30, 2009. The adverse impact on demand was further exacerbated during the first six months of this financial year as a consequence of a steep appreciation in the value of the yen, he added.
United Motors total sales of brand new vehicles during this period was 4,438 vehicles, down sharply by 68 % from 15,499 vehicles in the 6-month during period last year. He said the first quarter of the financial year was marked by high interest rates charged on the company borrowings, further compounded by curtailed lending by financial institutions to the automobile sector.
Representations were made to the taxation commission by the industry and it is hoped that a downward revision will be made at the earliest opportunity. In order to take advantage of the lower duty structure that applies to locally assembled vehicles, United Motors intends commencing the assembly of a well reputed Chinese brand of vehicles shortly, he added.
Many small car sales centres are experiencing difficulties although the registered card sales recorded a slight increase, according to the General Secretary of the Automobile Dealers Association, Faiz Zahir. He said at least 20 car sales centres have been shut down as they didn’t have sales in the past few months.
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