Further duty reduction will stimulate vehicle market - Merchants
Though the reduction in the duty on vehicles has paid rich dividends
to the private vehicle market the balance is still high compared to many
countries in the region. Chairman Ceylon Motor Traders Association
(CMTA) Tilak Gunasekera said, the vehicle market has benefited from the
duty reduction but still the current structure for new vehicles is high
compared to many countries in the region.
“People are still a bit reluctant to purchase a new vehicle due to
the duty structure. A further reduction will stimulate more sales and
boost the private vehicle market”, he said.
High maintenance costs and insurance premiums are obstructing the
growth of the vehicle market in Sri Lanka. A senior government officer
who is entitled to a duty free vehicle permit said, he was hesitant to
buy a new vehicle due to the high maintenance cost and insurance
Managing Director, Associated Motorways (AMW), Michael Brightmore
said, while the recent duty cut is widely welcomed and has stimulated
the market the remaining structure leaves Sri Lanka with one of the
heaviest private vehicle duty burdens in the region.
He said vehicles in Sri Lanka remain comparatively expensive and the
decision to purchase is one that needs careful consideration.The private
vehicle market in Sri Lanka was stagnant for years due to the staggering
import duty which was the highest in the region.
The duty on imported vehicles in Sri Lanka was 300 percent.
Vehicle sales dropped in the past due to the exorbitant duty
structure. Vehicle merchants said sales before the duty reduction
dropped by around 60 percent.
“The initial surge in the market following the reduction in duty has
stabilised and the current purchasing level is more positive than prior
to the reduction”, Brightmore said.
The second hand vehicle market was the first to benefit from the duty
reduction due to the availability of used vehicles compared to the
manufacturing lead time of new vehicles and as a result sales of used
vehicles have risen sharply.
Second hand vehicle dealers said confidence on used vehicles has
increased and sales have shot up since the reduction in duty last year.
Brightmore said the outlook for the Sri Lankan vehicle market is
bright due to the availability of the world’s best brands in the country
with a duty structure that is less restrictive.
“The future market will be less focused on absolute price and more
selective about quality, reliability and overall customer satisfaction”,