Used vehicle prices could rise again after removal of 15% valuation reduction: VIASL

Colombo, June 17 (Daily Mirror) - The Vehicle Importers Association of Sri Lanka (VIASL) has warned that the prices of imported used vehicles could increase significantly following the removal of the 15 percent valuation reduction previously applied when determining the Customs value of used vehicles.

VIASL Vice President and spokesperson Arosha Rodrigo said the impact would be felt across the market, with popular vehicle models expected to record significant price increases. A fast-moving model such as the Honda Vezel Z Play SUV could see its price rise by around Rs. 2 million, while the price of a Suzuki Wagon R could increase by approximately Rs. 700,000.

Rodrigo said the increase stems from changes to the Customs valuation methodology used for imported used vehicles. A spokesman for the Association noted that Gazette Extraordinary No. 1971/10 dated June 14, 2016 prescribes two distinct methods to determine the Customs value of motor vehicles. Section 1(A) applies to brand-new motor vehicles, while Section 1(B) applies to all other motor vehicles, including used vehicles.

He said there have been repeated claims that used vehicles receive a 15 percent concession and that the Government loses revenue when brand-new vehicles are first registered overseas and subsequently exported as used vehicles to qualify under import regulations. However, VIASL argued that such claims overlook the basis on which Customs values are calculated.

According to the Association, the 15 percent reduction was introduced by the Ministry of Finance to better reflect the actual transaction value of vehicles rather than published retail prices. The ministry had recognised that listed retail prices often do not represent the final purchase price due to bulk-purchase discounts available to large-scale dealers and exporters, dealer margins already incorporated into retail prices, local taxes and overhead costs, and commercial price negotiations that are common in international business transactions.

VIASL maintained that the adjustment was not a special concession but a valuation mechanism designed to account for market realities and align Customs values with actual purchase costs incurred by importers.

Warning of the consequences of removing the reduction, the Association said higher Customs values would translate into increased import duties and taxes, ultimately driving up vehicle prices for consumers. It urged the authorities to carefully review the decision, noting that it could have a significant impact on vehicle affordability and the recovery of Sri Lanka’s vehicle import sector.