Sri Lanka car market slows expecting duty reductions
ECONOMYNEXT – Both second hand and brand new car sales have slowed sharply following expectations that customs duties on electric and mid-size vehicles will be drastically reduced next month, trade sources said.
Sellers of Nissan Leaf electric cars were noticed advertising repeatedly in the past month, but there were hardly any takers as news of the possible tariff reduction was known since late last month.
"The original intention was to reduce taxes on electric-powered cars and small vehicles with an engine capacity of less than 800 cc," an official source said on Monday.
However, he said the authorities were now contemplating reducing taxes on all cars with an engine capacity of less than 1,500 cc. The vehicle category with an engine capacity of less than 1,000 cc is expected to benefit more.
Some dealers stuck with large fleets of unsold, unregistered cars took out advertisements in Sunday papers trying to drive fear into potential buyers speculating that prices could go up after the budget.
"Beat the budget," said U. S, Car Sales (Pvt) Limited. "Grab your opportunity before the budget hits you," said Wheels Lanka Trading (Pvt) Limited.
However, Associated Motorways was trying to push its stock of Renault Kwid 800 cc model cars with a hefty 422,000 rupee discount (17.2 percent) from the sticker price of 2,377,000.
AMW initially offered the discount till October 15, but the company said yesterday that the offer will be valid till stocks last.
The 422,000 rupee reduction is one of the biggest offered to get rid of the existing stock of cars.
In the second hand market, fewer cars changed hands over the weekend judging by an informal telephone survey among classified advertisers. Sellers of electric car owners were the worst off, with one desperate seller offering to exchange a Leaf with a Maruti.
Taxes on commercial and agricultural vehicles are also expected to be brought down in Finance Minister Mangala Samaraweera’s first budget which he has promised will be "green and lean."
In August, the minister slashed tax on single cab vehicles by 300,000 rupees and also lifted the 100 percent ad volarem tax on small motorcycles, mainly those imported directly from Japan. (COLOMBO, October 23, 2017)