ECONOMYNEXT- Registration of cars with engines larger than 1,600cc has nearly halted in December 2019, which requires a rethink of the tax regime, a brokerage said.
“Taxes on cars are via an excise duty based on engine capacity and a luxury tax of 60 percent above a value of 4 million rupees,” JB Securities Chief Executive Murtaza Jafferjee said.
“An illustration of the need for a rethink of the current policy is that during the month of December, only one new car (Toyota Camry) and four preowned cars (a Toyota Prius, two BMW 7 series and one Mercedes E300) were registered with engine sizes greater than 1,600 cc.
In the corresponding month a year earlier, 50 large engine cars were registered.
President Gotabaya Rajapaksa, who took office in November 2019, while campaigning had promised that he would implement a simple tax scheme on vehicle imports.
Overall, vehicle registrations were down to 25,291 in December from 30,327 a year earlier, but marginally up from 24,472 in November.
Vehicle registrations have fallen since 2018, when the central bank imposed temporary controls on imports of vehicles to counter a deteriorating rupee.
The rupee fell 20 percent in 2018.
JB Securities data showed that 2,057 cars were registered, down from 2,669 a year earlier, but marginally up from 2,030 in November. Among the total were 244 new car registrations, down from 264 in November and 352 in 2018.
Toyota was the market leader with 64.2 percent share in December 2019 followed by Suzuki with 15.9 percent.
Just three electric cars (of which two were Nissan Leafs) were registered in December, down from 14 in November and 5 a year earlier
Hybrid vehicle registrations fell to 317 in December from 390 in November and 1,057 a year earlier, with the market dominated by Toyota Axio, followed by the Suzuki WagonR.
SUV registrations fell to 650 units in December from 854 in 2018, but was up from 638 in November. The Toyota C-HR commanded a third of the market, followed by the Honda CR-V which had a 19 percent share.
Three wheeler registrations plunged to 882 in December from 1,332 a year earlier and 995 in November, with Bajaj remaining the market leader with a 96.7 percent share.
“It seems like the other players TVS, Mahindra and Piaggio are selling remnants of their stock and probably will temporarily exit the segment,” Jafferjee said.