In an attempt to save costs for importers, customers and the government, the two associations importing used vehicles to Sri Lanka have decided to stop imports immediately until the rupee strengthens once again.
“Vehicle prices are going up rapidly, with the weakening of the rupee and the strengthening of the yen against the dollar. We have come to an agreement to stop imports by almost 100 percent. Some importers will stop completely,” Vehicle Importers’ Association of Lanka (VIAL) Chairman Indika Sampath Merenchige told a media briefing yesterday.
He indicated that the prices of vehicles had gone up by approximately 10 percent within the past fortnight. “To save foreign exchange reserves to the government and to stop losses incurred by our importers, we will limit imports,” VIAL President Mahinda Sarathchandra said. VIAL Secretary Keerthi Gunawardena said that the currency fluctuations are not to be blamed in full.
“This is not isolated. The sharp rises in vehicle import taxes over the last two years also led to this,” he said. With the country’s precarious balance of payments situation and the level of congestion observed on the roads, the government is unlikely to reduce taxation for the next few years under the watchful eye of the International Monetary Fund (IMF). Gunawardena noted that with the US $ 1.5 billion IMF loan, the rupee may likely to strengthen, which would allow the importers to resume their usual operations. He added that the 70 percent loan-to-value ratio set by the government had also contributed to a direct 30 percent loss of business to the importers. However, in the meantime, he advised customers to purchase the existing stock of vehicles, before importers start to gradually increase prices due to finance costs, which are also increasing due to rising interest rates. “As a service to our customers, we will attempt to sell at the older prices as long as possible,” Merenchige added.
The two associations are made up of around 500 used vehicle importers. Used vehicles make up around 40 percent of the local market, most of which are cars, vans and SUVs. Sri Lanka is the current record holder for importing used vehicles from Japan, having imported 48,402 vehicles for 84.55 billion yen from January to November last year. Malaysia had followed with 19,409 cars totalling 50 billion yen. (CW)