Motorcar registrations remained steady in August despite the higher duties kicking in at the beginning of the month as buyers appeared to have remained unfazed at the higher vehicle prices in return for some added comfort and the glamour of owning a personal vehicle.
According to the vehicle registration data for August compiled by JB Securities – a leading stock brokerage – Sri Lankans have registered 7,003 motor cars during the month, little changed from 7,162 units in the previous month and significantly up from 3,211 units 12 months ago.
Motor car registrations— a close proxy for motor car imports— jumped to 7,162 units in July, the highest since September 2015 when it reached an all time high of 14,544 units.
Sri Lankan middle income class, which has suffered long hoping for decent public transport, has been in a vehicle importing frenzy since 2015 when the Central Bank printed scores of money to keep interest rates artificially low.
Car registrations have in fact sky rocketed during the last 4 months mainly in the small car category that account for close to 90 percent of the volumes.
To counter this, the Finance Ministry jacked up the excise duties of vehicle imports effective from August 1. The duty hike effectively sent the prices of vehicles less than 1,000 CC category higher by at least Rs.425, 000.
On top of that, the Central Bank last week slapped a 100 LC margin on letters of credit for vehicle imports of non-commercial nature.
As all aspects of the economy is continuously being hammered by the crashing rupee against the United States dollar, the government which hitherto followed a more or less laissez-faire approach towards imports, is seen taking a u-turn to curb excessive imports.
The Prime Minister Ranil Wickremesinghe this week said Sri Lanka needs to cut imports by at least US $ 500 million to US $ 1 billion while a state minister also pleaded with the public to cut down on their luxury car purchases and exotic holidays.
Nevertheless, Sri Lankans have registered 172 units of premium branded cars in August, down from 198 units in July but sports utility vehicle (SUV) imports were up to record 733 units from 622 units in July.
Meanwhile, 1,670 three-wheelers and 30, 042 units of two wheelers were registered in August, little changed from the previous month.
In all categories, Sri Lanka has registered 43,190 units of vehicles in August, up from 42,080 units in July.