Sri Lanka vehicle registrations weak, tipper truck imports up
ECONOMYNEXT – Sri Lanka’s vehicle registrations recovered in May but remained weak compared with last year owing to high taxes and interest rates and loan limits but tipper trucks imports rose to meet demand from revived construction projects, an equities research house said.
“The vehicle market experienced a rebound in May from a slow April due to the extensive New Year holiday, JB Securities said.
“Nevertheless, on a seasonally adjusted basis on most categories, demand remains weak due to high taxes, restrictions on LTV and high interest rates.”
The brokerage had noted a sharp fall in imports in February from the previous month with mini-trucks and three-wheelers used by small businesses among the worst hit by highly iniquitous and distortionary taxes and import restrictions
Total motor car registrations were 2,811 units in May up from 2,632 in April but significantly down from 3,664 units 12 months ago, JB Securities said.
Imports of mini-trucks and three-wheelers, used by small businesses, remained significantly lower in May 2017 than last year.
JB Securities said 3-wheeler registrations were 1,665 units in May up from 1,452 units in April but significantly down from 5,747 units 12 months ago.
For 3-wheelers the LTV (loan-to-value ratio) is 25% which is significantly below the normal rate of 50% imposed on motor cars. Financing share was 59.5% significantly down from the normal figure of 90%, JB Securities said.
Mini truck registrations recorded 272 units in May rebounding from the low figure of 187 units in April but significantly down from 1,123 units 12 months ago.
“This category was majorly impacted by the imposition of a minimum duty of LKR 1 million which was an almost 3x increase,” JB Securities said.
“The retail price of a Tata Ace truck increased by around 65% – this killed the market. Financing share was 82.7% down from the normal 90%. Permitted LTV is 90%, thus it cannot be an explanatory variable for the drop.”
Heavy trucks with a capacity of over 5MT recorded 122 units in May, marginally up from 116 units in April and also noticeably up from 76 units 12 months ago, JB Securities said.
“A noticeable trend is evident in pickup registrations of tipper trucks indicative of demand coming from the large construction projects like the Colombo Port City and highway projects,” it said.
(COLOMBO, June 28, 2017)