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Reduction of LTV ratio will hit motor trade - Vehicle Importers Association

The move by the government to reduce the Loan to Value (LTV) ratio to 70 percent is good for the country to save the outflow of foreign exchange and maintain a healthy Balance of Payment.

However, it does not augur well for the motor trade which will be hit by a sharp drop in sales, President, Vehicle Importers Association of Sri Lanka and Director, Wasana Trading Lanka (Pvt) Ltd., Sampath Merenchige told guests at the launch of 100 charge points across the country by Wasana Trading to promote cost efficient and environment-friendly transportation.

Merenchige said if the move to reduce the LTV ratio is to curtail exposure of banks and lending institutions to risk there should be measures to reduce the number of personal loans which are more liable to default.

Vehicles importers said reducing the lending risk and imports of certain categories of vehicles is good but not at the expense of the motor industry.

The Central Bank in a directive urged banks and financial institutions to reduce the LTV ratio to 70 percent of loans granted to purchase vehicles to reduce exposure of banks and financial institutions lending for the purchase of motor vehicles.

Limiting exposure of banks and financial institutions through LTVs is a practice adopted the world-over to mitigate risk of default in loan repayment. Loans and advances include finance leases, hire purchase facilities and loans and advances granted to purchase vehicles.

Merenchige said the demand for electric vehicles has increased in recent years with the world’s gradual shift towards less costly modes transportation and the growing concern for environmental safety.

He said hybrid and electric cars will be the vehicles of the future and added that more infrastructure facilities such as charging booths will be needed to meet the growing demand for electric vehicles.

Wasana Trading Lanka played a leading role in introducing hybrid vehicles to Sri Lanka. “Our services across the country will encourage people to go for electric vehicles that will be a huge saving on fuel and minimise pollution in cities, he said. The company also hopes to introduce rapid charging points which is used in other countries for long distance travel. Wasana Trading launched the project in collaboration with Vega Technologies (Pvt ) Ltd. Electric vehicle motorists had to face difficulties due to the absence of adequate charging booths in the country. Since charging takes around three hours, motorists are advised to charge the power needed to reach their destination.

“We embarked on this initiative to encourage people to go for electric vehicles which has less maintenance unlike fuel driven vehicles,” an official of the company said. Charge stations have been set up in accessible locations. Six charging points have been set up along the Southern Expressway.

“The electric car is a new technology which is 100% environment-friendly and has many other benefits as well. But in Sri Lanka, the demand for electrical cars has not kept pace with international trends due to the lack of accessible charging points. As a result owners of electric cars are inclined to use them as a second car,” Merenchige said

“As the first step to change this pattern and promote the use of the electric car as the primary car for every consumer, Wasana Trading set up charging points throughout the island. We hope to set up more charging spots around the country in the future, so that consumers will not hesitate to purchase electric vehicles,” he said.

A Memorandum of Understanding was signed between Wasana Trading Company and Vega Technologies to set up rapid charging points throughout the country.

Wasana Trading is also developing an app for use on smartphones which will enable owners of electric vehicles locate the closest charge point.

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