High import duty hits motor industry

by Lalin FERNANDOPULLE

The decline in vehicle imports has adversely affected the motor industry in Sri Lanka said Ceylon Motor Traders Association (CMTA) Chairman and Executive Director, Sathosa Motors Limited, Tilak Gunasekera.He said the sharp decline in the import of motor vehicles this year due to the high import duty has affected revenue growth and stifled expansion plans of franchise holders.

As a result the number of people employed in the motor industry has come down.

The import of motor vehicles has dropped by 75 percent according to Customs data.

Vehicle registration had slumped sharply during the past eight months. Registration of brand new and reconditioned cars declined 34.6 percent to 25,489 units from 38,974 compared to the corresponding period last year.

Almost 100 percent tax on the import value of certain cars were imposed and increased taxes at a lower rate on hybrid cars aimed at reducing petrol consumption. Taxes on vehicles were increased from 100 percent to 350 percent this year to boost government revenue.

The depreciation of the rupee, high cost of living, increasing interest rates on leasing and financing and credit ceiling for loans affected the growth in registration of motor vehicles this year.

“Our Association constantly requests the governance to have a consistent tax system for the motor industry rather than to revise it in an ad-hock manner" he said.

Ideal Motors (Pvt) Ltd., Chairman, Nalin Welgama said that the government's attempts to halt the influx of vehicles has been successful.

The two-wheeler segment which registered around 22,000 units a month has dropped to around 12,000 units while the three-wheel category which registered around 12,000 units a month has declined to 6,000 units.

The dual purpose LCV category which registered around 2,200 units a month has declined to around 1,700 units.

The car/SUV category which registered 5,000 units a month has dropped sharply .

The only segment that has not been affected is the permit-vehicle segment. He said vehicle imports have dropped by around 50 percent due to high import duties, depreciation of the rupee and liquid market.