Sri Lanka auto agents urge govt not to increase competition in vehicle procurement
ECONOMYNEXT – Ceylon Motor Traders Association, representing agents of global automakers has urged Sri Lanka not to increase competition in tenders for vehicle procurement by allowing other importers to bid.
"We have noted the numerous press articles lobbying for Government tenders to be opened to importers of used cars or non brand new vehicle importers," the CMTA said in a statement.
"We write to clarify that Government Tenders are effectively sales agreements between the manufactures of motor vehicles and the Government of Sri Lanka.
"The local agent is often not a party to this contract. The manufacture, nominates their local agent to act on their behalf and carry out pre delivery inspections and give warranty support etc.
"This procurement process is internationally accepted."
The CMTA said by dealing with the automakers themselves, the government was assured of the most suitable vehicle for the conditions in the country and there was also a manufacturer’s warranty.
Controversially the CMTA also claimed that the government was assured of the ‘best price’.
If the best price is the lowest price however it is not clear how such a price could be assured by restricting the number of bidders, analysts say.
Restricting entry of participants to any market tends to create an oligopoly putting upward pressure on prices and allowing free entry tends to increase competition and lower the price.
Sri Lanka’s so-called re-conditioned car dealers import cars used in Japan.
Of late they have also started to import so-called ‘registered de-registered’ or near ‘zero mileage’ cars which have not been used by anyone, arbitraging the price difference between the market price in Japan and the dealer price in Sri Lanka. (Colombo/Aug20/2018)