Brand new car registrations hit all time record in May

Brand new car registrations hit an all time high of 3,206 units in May led by Maruti Altos due to reduced tax rates on small cars by the interim budget, cheaper credit, lower fuel prices and higher disposable incomes.

The May 2015 brand new car registration numbers were shockingly high in comparison to just 577 units registered a year ago. May’s numbers were also higher than the 2,926 units registered in April, data analysed by the research unit of stock brokerage JB Securities (Pvt) Ltd showed. 

There have been 2,512 Marutis of which Altos were 2,311. Further there were 393 units of Micro Pandas. The unity government which came in to power after the January 8 elections significantly reduced taxes of the smaller cars with less than 1,000cc engine capacity. 

The short sighted policies of all the successive governments after opening of the economy in 1978 have done very little to improve the road infrastructure within the Colombo city limits. 

The Colombo roads are getting virtually immovable by the day due to the massive number of vehicle imports each month.  

All in all, in May there were 48,398 vehicles from all types registered, almost doubling from 26,534 vehicles registered during the same month in 2014.  “The government needs to urgently implement congestion fees in the cities with higher tariffs during peak times,” JB Securities (Pvt) Ltd. CEO, Murtaza Jafferjee opined. 

Further the reconditioned car registrations recorded 2,793 units in May, significantly up from 1,385 units a year ago and from 2,190 units in April. Out of this, hybrids accounted for the lion’s share of 2,235 units, 360 units of electric cars and normal engine cars accounted for only 198 units. 

“Lower tariffs on hybrids and electrics is the causal factor,” Jafferjee said. 

Toyota accounted for 1,380 units, Honda – 671 units, Suzuki 331 units and Nissan (Leaf) 365 units. 

Meanwhile, quite notably premium brand vehicles demonstrated a spike in May to record 104 units from 75 units a year ago and 93 units a month ago. 
Brand new Mercedez accounted for 48 units and pre-owned Mercedez accounted for 15 units. Further brand new BMWs accounted for 23 units and pre-owned BMWs accounted for 10 units. 

The number of Sports Utility Vehicles (SUVs) recorded 682 units, up from 404 units a year ago but down from 704 units in April. Toyota accounted for 140 units, Mitsubishi 96 units and Honda 321 units (mainly Vezel). 

However the number of Vezels dropped to 308 units from 1,289 units in December 2014. 

All types of Hybrid vehicle registrations in May accounted for 2,701 units, up from 1,177 units a year ago and 2,300 units April. Cars accounted for 2,274 units and the SUVs accounted for the balance 427 units. 

“A sizeable new entrant to the hybrid category is Suzuki Wagon R hybrid – 308 units,” the JB Securities highlighted. 

Meanwhile, the 3-wheeler as well as 2-wheeler volumes too have spiked in May on an year-on-year basis. 

The 3-wheeler volumes have registered 10,966 units in May, significantly up from 5,733 units a year ago (and slightly up from 10,839 in April) and the 2-wheeler volume registered 25,435 units in May, up from 15,725 units a year ago (but down from 27,669 units in April). 

In the 3-wheeler market, Bajaj maintained a leading share of 87.8 percent followed by Piaggio and TVS with 6.1 percent each. 

In the 2-wheeler market Bajaj claimed 34.7 percent market share (a drop from its normal 40-50 percent), Honda claimed 23.2 percent (an increase of 5 percent), Hero with 18.7 percent and TVS with 13 percent (both increased market share). 



Nissan Leaf & 3-wheeler buyers pay same tax 

After electric car duties were reduced to a paltry 5 percent from the interim budget, a person who purchases a Nissan Leaf pays the same Rs.200,000 tax similar to a person who purchases a 3-wheeler, leading to a huge anomaly. 

Despite the slashing of the import duty, the price of a Nissan Leaf has gone up to around Rs.3 million from Rs.2.2 million for which the same car was sold before the tariff reduction.  “The accentuated demand from Sri Lanka has spiked auction prices of vehicles in Japan. This has led to greater wealth transfer out of the country as CIF prices are higher,” Jafferjee said. 

According to Sri Lanka’s current vehicles import tariffs, 2-wheeler buyer pays 90 percent, 3-wheeler – 105 percent, small cars – 135 percent (subject to a minimum duty of Rs.650,000), mid-sized cars- 150 percent, hybrids – 80 percent and electric 
vehicles – 5 percent. 
“One understands the need for incentives in order to promote alternate technologies, but should it be 5 percent in comparison to normal levels of 80-150 percent,” Jafferjee queried. 

Instead he proposed the Treasury to impose a minimum tax of Rs.650,000 on a Nissan Leaf, equivalent to a level set for a small car as he believes that such a tariff would also taper the frenzied bidding at the auctions in Japan, reducing CIF prices.

In May, there were 356 Nissan Leafs registered compared to just 9 a year ago and, 147 units in April. 

The demand for 3-wheelers are high in recent times and during the last three months the demand has increased by 25 percent as it has now become the personal vehicle for many in the middle class with readily available financing to buy one. 

Hence Jafferjee see the scope to impose a minimum amount of duty as it will be revenue elastic for the government.

 If the minimum duty is set Rs.50,000 higher than what they collect now at current volumes, the Treasury can collect Rs.6 billion in revenues.