COLOMBO (EconomyNext) – Sri Lanka’s vehicle registrations rose 82 percent from a year earlier to 38,398 unit in May 2015 amid historically low interest rates which boosted credit and discouraged savings.
Motor car registrations rose 205 percent in May to 5,999 units, an all-time record, sharply higher exceeding the 4,500 units a month seen during a credit bubble in 2011, an analysis of Sri Lanka’s vehicle registry data by JB Securities, a Colombo based brokerage, shows.
Sri Lanka’s car registrations started to pick up in the last quarter of 2011 as credit picked up, rising to 4,311 units in December from 2,411 units, mostly driven by hybrid vehicles.
In a budget in January 2015 taxes in hybrids were hiked, reducing imports, but those of small cars were cut slightly further boosting demand.
Taxes in electric cars are also at a low of 5 percent due to a state intervention leading to a surge in electric vehicles.
Registrations of Maruti/Suzuki cars which rose from 325 units in November 2014 to 1,100 in December and 1363 units in January hit 2,512 units in May.
Maruti Alto is now Sri Lanka’s best-selling car with 2,311 units registered in May. Chines Geely Panda cars sold as Micro in Sri Lanka rose to 384 unit in May from 325 a month earlier.
SUV sales were down to 682 units in May from 1,591 units in January though still up from 404 units a year earlier, mostly due a reduction sharp fall in Honda Vezel hybrids to 308 units from a peak of 1,263 units in January.
Total hybrids dropped to 2,791 units in May 2015 from 4,320 in January. Sales of Zuzuki Wagon R, has started to pick-up, JB Securities said.
Three-wheeler sales continued their blistering pace, with 10,996 units registered in May 2015, up 91 percent from a year earlier.
Three wheelers are now increasingly used as a personal vehicle, J B Securities said.
Motor cycle sales were up 61 percent from a year earlier to 25,435 but down from a 42,331 unit peak hit in April, which was probably driven by concessionary vehicles given to state workers, J B Securities said which in another state intervention.
Sri Lanka’s central bank has been intervening in interest rates releasing tens of billions of rupees in liquidity in addition to cutting rates as state salaries and subsidies were hiked and government domestic borrowings rose sharply, putting pressure on the balance of payments.