ECONOMYNEXT – Drive One (Pvt) Ltd, agents for Germany-based Audi in Sri Lanka is expecting a revival in the vehicle market, which could boost sales to around 300 units, with stable policies vital for businesses to expand, an official said.
The firm had sold around 200 units in 2019, halving from 2018 as import restrictions were slapped after the rupee collapsed to 182 to 153 to the US dollar amid liquidity injections and a rate cut from the central bank.
The currency collapse and restrictions came just as the economy recovered from 2015/2016 currency collapse which sent the rupee down from 131 to 150 to the US dollar.
“Just after we launched in 2018, we sold almost 400 units,”, Drive One (Pvt) Ltd Chief Operating Officer Anushka Polonowita told EconomyNext.
“But last year we ended up with less than 200. This year too we are not sure, with the general elections and policy changes.”
“If there is a standard long term policy it is easy to hit our numbers. So, for the next year the target we have given to Germany is less than 300.”
In 2018 and 2019, the automobile sector was buffeted by a series of policy changes and restrictions as well as shocks to consumer confidence.
“There was a tax change, taxes for luxury was introduced. And then the Easter Sunday attack,” Polonowita recalled. “Then the presidential election came, so because this series of events, it was not good for everyone.”
Cars (and gold) and imports in general are favourite targets of policy makers when Sri Lanka’s soft-peg with the US dollar comes under pressure from liquidity injections (printing money), triggering a currency crises.
Analysts have pointed out that monetary instability from the soft-peg has been a key driver of both policy instability and restrictions on the economic freedoms of the people.
Drive One had invested in a showroom in Nawala, a suburb of Colombo, to help drive sales, which opened on January 29.
The new showroom facility at Nawala comprises of three floors and has been built to Audi standards using materials sourced from Audi-approved suppliers.
Along with the showroom an Audi workshop facility is also built in Wattala with a space of 100,000 square feet.
Polonowita says stable policies are vital for businesses to operate and recover investments.
“The challenge we have is, it is difficult to plan because there is no consistence policy” Polonowita said.
“If policy makers can give us even a four to five-year policy, then we can plan and work accordingly. Here every six to seven months policies change one way or the other, taxes change and import policies change, so it is very difficult to plan.”
Drive One is selling five models in their new showroom; the Q2 at 9.7 million rupees upward, A3 Sedan 9.5 million rupees, the 1.4 litre A4 Sedan at 13.5 million rupees, A5 Sportsback from 13.8 million rupees upwards and Q5 model 24.5million rupees.
Later in 2020 the firm wants to add three more models; the latest the Audi Q3, eighth generation Audi A6, and Audi Q7.
“This year we are looking forward to the new A6 which we are hoping to introduce at the end of March,” he said. The new generation Q3, which is in production at the moment will be here in April. Towards the end of the year we have the new A7 coming.”
The firm also has plans to move into electric cars in the future. Audi’s e-tron introduced in 2019 has sold over 18,000 units globally. (Colombo/Feb03/2020)