ECONOMYNEXT – Higher taxes, exchange rate deterioration and slower credit has drastically dampened demand forcing dealers to cut prices to push older stocks and reduce inventories, trader said today.
The perception that prices of most mid-range brand-new Japanese cars had gone up by about a million rupees immediately dampened demand to the extent that sales hit a nasty speed bump.
At least one dealer, Nikoba Auto Trading took out an advertisement in the Hit Ad section of the Sunday Times to reassure potential customers that overall prices still remained unchanged as a result of lower prices in Japan.
"Japanese (car) auction prices have come down," the company said trying to erase the perception that many have had their "hybrid dreams shattered" due to the recent changes to the tax structure that actually increased car levies.
The smaller Suzuki Stingray and Wagon R models were being offered at prices below 2.8 million rupees while Kia offered a line of sports utility vehicles "at the old exchange rate."
The credit restriction on vehicle purchases was due to go into effect from Monday although finance minister Ravi Karunanayake had announced last month that he would allow banks and leasing companies to extend up to 90 percent of the value of a vehicle.
In mid-September, a vehicle owner could get only 70 percent of the vehicle’s value financed through a loan.