COLOMBO (EconomyNext) – Imports of small cars from India and China, which began to rise sharply from December as credit picked up, surged further in March following a tax cut, an analysis of vehicle registry data shows.
Registrations of of Maruti/Suzuki cars from India was up nearly 1000 percent from a year earlier to 2,531 units in March 2015 compared to 234 in March 2014, an analysis by JB Securities shows.
March Maruti registrations were also sharply up from the 1,363 units in January, after which taxes were cut by around 15 percent.
The best-selling Maruti Alto registrations rose to 2,263 unit in March up from 1,160 in January and 1,320 in February.
Chinese Geely cars, sold in Sri Lanka under the Micro brand rose 463 percent to 479 units in March 2015 from 85 units a year earlier. There were 445 units of the best-selling Geely Panda model in March.
New registrations of more expensive hybrid cars were largely stable, following a tax hike.
Car imports including hybrids, started surging from December 2014 as credit picked up.
Registrations of Maruti cars surged to 1,100 in December from 325 in November, while Micro car registrations rose to 386 units in December from 386 units.
Imports of other goods have also picked up as credit began to pick up after August 2014.
Dollar for dollar however cars are among the best type of imports from a government revenue perspective, as more than two dollars equivalent of revenue is earned for every dollar spent, except for electric cars and hybrids, which are taxed less.
In most other imports, taxes are lower.
Out of 5,856 cars registered in March 2015, 3,059 were leased, up from 789 in March 2014. Another 264 were covered by mortgages, up from 133 in March 2012.
By December 2014, lease financed cars rose to 2,488, up from just 1,172 in November.
In February 2012, rates were raised to stop printing money and halt a balance of payments crisis triggered by the Central Bank, lease financed cars were 1,959 unit.
Analysts have warned that Sri Lanka’s interest rates have to rise as fiscal policy deteriorated with rates now at 30-year lows, through inflation is also low.
The Central Bank has also been engaged in ‘quantity easing’ by coughing up temporarily sterilized excess liquidity, firing credit and losing foreign reserves.
This month the Central Bank made another pro-cyclical policy rate cut, despite state borrowings from domestic credit markets going up.