Sri Lanka car dealers cash in on rupee free float windfall
ECONOMYNEXT – Sri Lanka car dealers have sharply raised prices for existing fleets imported before the rupee fell 11.76 percent against the Japanese yen this month.
There was a sudden rush to buy new and second-hand Japanese hybrid cars over the weekend with at least one advertiser warning potential buyers that they had only 60 days to beat a possible tariff hike in the November budget.
Hybrid cars which had been imported when the Japanese curreny hit a low of LKR 1.05 were dearer by an average of 300,000 to 500,000 as dealers cashed in on the government’s currency free float that led to the depreciation.
Toyota Axio hybrid car which went for around LKR 4.8 million shot up to LKR 5.3 million on Sunday.
An exasperated government servant who hawked his duty concession permit for LKR 1.8 million to raise money for a new hybrid car said he had to look for another LKR 500,000 to buy his dream car.
The smaller Suzuki Wagon R and Sting Ray models which became popular after Finance Minister Ravi Karunanayake raised taxes on bigger Toyota Aqua and Honda models, were also going for about LKR 200,000 more.
This has had a knock on effect on the second hand car market too. The smaller Maruti Estilo model which fetched LKR 1.8 million for a two-year-old version had shot up to LKR 2.0 million, according to sellers this Sunday.
An advertiser in the popular Hit Ads of Sunday Times warned that electric cars may go up in price after the budget and suggested that customers place their orders immediately.
There were others promising guaranteed delivery of cars within a month to beat the budget.
Even the Bajaj three wheeler was raised by LKR 6,000 by David Peiris Motors company this month. The new Bajaja three wheeler is touted as an advance on the former models, but the build quality has got even worse with the local agent adding cheaper tyres to an already dangerous vehicle which is the cause of most accidents on Sri Lankan roads.
The Central Bank’s recent directive to restrict credit to finance the purchase of vehicles and the high exchange rate are expected to slow down imports after record breaking months when nearly 10,000 new cars got on the roads on a monthly basis.
In July, a staggering 400 new three-wheelers got on the road every day of the month. (Colombo/Sept21/2015)