The booming vehicle market is expected to further surge in sales this year following import duty reductions last year that gave a kick start to the once ailing motor industry in the country.
Motor vehicle dealers are confident that there will be a 100 percent growth in sales this year due to the drastic reduction in import duty which has increased sales by around 75 percent since mid last year.
Chairman Ceylon Motor Traders Association, Tilak Gunasekera said that vehicle sales had shot up sharply since the slashing of the import duty mid last year and added that most dealers had recorded substantial growth in sales.
“The motor car market will record 100 percent growth this year giving a new lease of life to the once dormant market that plummeted sales by around 60 percent”, Gunasekera said.
The vehicle market in Sri Lanka went through a bad patch a few years ago due to a 300 percent import duty, the highest in the world. The import duty on vehicles is yet high compared to many countries in the region.New registrations went up 75 percent to 284,991 from January to October last year, statistics revealed.Around 3,700 new cars were registered from January to September last year while around 5,700 new cars were registered in 2009.
The number of registered vehicles rose 61 percent in October alone last year to 34,183 from a year ago driven primarily by import of new cars. Vehicle merchants said that the reduction of import duty will help government coffers as there will be more vehicle imports.
Vehicle import revenue will contribute to the economic growth which is predicted to be around eight percent this year.Central Bank data revealed that import of buses, trucks and other transport vehicles have risen sharply following the duty reduction.
The import of trucks and other transport vehicles have increased by around 57 percent to 9,564 from January to October 2010.
The import of vehicles has increased sharply since the liberation of the North which is fast returning to normal.
Gunasekera said the car sales market which had dropped by around 60 percent received a big boost with slicing of duty and added that most importers are doing well.
The sale of new cars had been around two to three units a month before the reduction of duty while today sales have peaked. Buyers of new cars are on the waiting list as the lead time is around four months.
The VAT component on imported new vehicles was slashed to 12 percent from 20 percent in the 2011 budget that gave incentives to used vehicle importers. The 70 percent duty on used cars was reduced to 55 percent. Sri Lanka imports new and used vehicles from Japan and India.Japan has a huge used vehicle export market due to the low price of new vehicles.
“The second-hand vehicle market has benefitted from the concessions given through the budget”, Gunasekera said.
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Our road network may not be adequate to absorb all these vehicles. An alternative would be either to control vehicle use or focus on better/faster/more economical public transport.
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