Sales of imported vehicles have gone up dramatically after the government’s overnight decision to slash the duty on vehicle imports.
On June 1, the government cut duty on a number of imported items by 50 per cent. The idea is part of a plan to make Sri Lanka a shopping destination.
The 50 per cent reduction comes at a time when the international motor vehicle industry is suffering serious setbacks.
The reduced prices for new and reconditioned vehicles have also had a direct impact on the market for second-hand vehicles; this market is experiencing what looks like the beginnings of a boom time.
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| Top seller Maruti is selling even more briskly. |
Last year, sales of passenger vehicles such as cars, SUVs, vans and double cabs dropped by 72 per cent, compared with prices in 2008, while sales of trucks and buses dropped by 41 per cent, compared with 2008.
Zeeniya Rasheed chairperson of the Ceylon Motor Traders Association, told the Sunday Times that motor vehicle traders perceive the current market boom as a positive outcome of lobbying for tax cuts.“For nearly three years we have been calling for tax reductions on vehicle imports,” she said.
“Last year was the worst year for the industry. The recent slash on duty has raised the demand for vehicles. We expect vehicle sales to go up in the next few months. Motor vehicle traders are getting lots of orders. Customers are prepared to wait for up to three months to get a vehicle.”
Car importers are anticipating good times ahead.
Meanwhile, some importers are resigned to selling previously imported vehicles for a narrower profit, in line with current market prices.
But even they are optimistic, knowing it will not be long before they start enjoying the full benefits of the 50 per cent cut. The fact that last year’s stocks are starting to move is a big plus for all dealers in town.
At Supun’s Car Centre, in Kottawa, a sales manager said the demand for new and reconditioned vehicles is good, and that much of their stock has already been sold. “We thought we’d incur losses on stock bought under the old tax rate,” he said.
“But the demand for cars is going up. This week alone we sold four cars and a van. We are confident of more sales in the coming weeks.”
A senior manager at Toyota Lanka said enquiries were pouring in and vehicle sales were going up.
The popularity of the Maruti, the top seller in the local market, is set to increase tenfold. “Maruti is the number one in the market, and we have sold a major portion of our previous stock,” said Ashantha Atukorale, assistant manager, Business Development and Promotions, Suzuki and Suzuki Maruti, which comes under Associated Motorways (Private).
“The slash on vehicle duty will certainly boost sales, and this will benefit the entire industry, in which we have a major market share.”
A sales officer at Magni Car Sales said the company has been receiving a steady stream of inquiries from potential buyers, and that many made orders have been made.
The mood was also upbeat at US Car Sales, which had sold three vehicles in one day, last Friday. “We are clearing old stock at a good speed,” said a salesman at US Car Sales.
The increased demand has been noted in Japan, where car exporters are responding with raised prices. “Naturally, those raised rates will be reflected in prices at this end,” said United Motors general manager Gihan Pillapitiya.
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