Sunday Observer Online


Sunday, 23 January 2011





Marriage Proposals
Government Gazette

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 premium.

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”, he said.

- LF



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