Hybrid auto purchases plunge in Sri Lanka after tax hike
COLOMBO (EconomyNext) – New registrations of hybrid automobile have plunged 46 percent to 2,296 unit in April 2015 from 4,320 units in January, when the state hiked taxes and arbitrarily inflated the valuations imported used cars by not allowing depreciation.
An analysis of Sri Lanka’s vehicle registry data by JB Securities, an equities brokerage based in Colombo shows that car registrations started to pick up in the second quarter of 2014 as economic activity picked up following a balance of payments crisis triggered by the Central Bank in 2012.
Hybrid car and SUV registrations rose to 4,320 units in January 2015 from 915 units a year earlier.
Taxes were hiked in a January 29 budget.
In February registrations of hybrids fell to 2,727 but picked up slightly to 2,912 in March. In April registrations were down to 2296.
April however is a slack months with a number of holidays for a traditional new year, which reduces economic activity.
The sharpest fall was seen in SUV’s which fell to 408 units in April from 1367 in January with Honda’s Vezel registration falling to 312 units from 1,263.
Registrations of Honda Fit vehicles fell to 629 units in April from 971 in January. Toyota Aqua fell to 532 units from 957 and Prius fell to 300 units in April from 467 in January.
Hybrid’s are taxed at 80 percent and conventional cars at over 150 percent.
Dollar for dollar, the state gets more taxes through imports of conventional vehicles.
Some also argue that lower operating costs of hybrids may encourage more travel and contribute to city congestion, but drivers may also spend the money on other goods, improving their living standards or boost savings and repay leases.