ECONOMYNEXT – Sri Lankan importers of new vehicles have been losing market share to used hybrids, the head of the Ceylon Motor Traders’ Association said, where import taxes are lower than for cars with conventional engines.
The new administration hiked taxes on all hybrid cars and lowered taxes on conventional small cars.
Gihan Pilapitiya, chairman of the CMTA, said last year had been a good year for new car importers in terms of volumes which rose to 38,780 in 2014 from 28,380 in 2013.
Total motor car imports in 2014 had been 566,874 compared with 528,094 in 2013.
“But we must be mindful of the brand new vehicle share when comparing volumes,” Pilapitiya said.
“In the last five years we have lost market share to the reconditioned and used vehicle market mainly due to the ‘hybrid trap’,” he told the annual general meeting of the Ceylon Motor Traders’ Association representing franchise holders of foreign vehicle brands.
“Hybrid car import duties were reduced by the government when none of our members had hybrids in their portfolios. That was the reason for the drop in our volumes and increase in used car volumes.”
The Rajapsksa regime cut taxes on hybrid cars, but the new administration upped hybrid taxes in January.
In 2014 of the 26,729 hybrids imported to the island, 4,451 were brand new hybrids, CMTA statistics showed.
“Used car importers also have the privilege of the benefit of the depreciation table, despite their purchase prices being comparatively lower than brand new vehicles,” Pilapitiya said.
“But we have to expect the unexpected.” (Colombo/August 30 2015)