Vehicle importers honk for fair deal

  Published : 12:48 am  June 13, 2012  |  2,164 views  |  3 comments  |  Print This Post   |  E-mail to friend
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  • Request meeting with Treasury Secy; say industry in vicious cycle; want relief from regulations

By Uditha Jayasinghe
Alarm bells are ringing for Sri Lanka’s vehicle importers after numbers plummeted by 20.8 per cent in April, motivating the industry to demand talks with the Government, an industry official said yesterday.

Ceylon Motor Traders Association Chairman Thilak Karunaratne told the Daily FT that the industry was worried over the increasingly lower demand driven by high taxes, interest rates, expenses and a credit crunch.
The association has requested a meeting to discuss the issues with Treasury Secretary Dr. P.B. Jayasundera but an appointment given for 7 June had been subsequently cancelled with no new date given.
However, Karunaratne has asked for another appointment to discuss industry challenges, even though it is yet to be granted.    
The Central Bank in its April External Performance report noted: “Expenditure on consumer goods imports declined by 12.9 per cent in April 2012, reflecting a decline in expenditure on most food and non-food consumer good categories. With respect to imports of non-food consumer goods, expenditure on personal motor vehicle imports declined by 20.8 per cent in April 2012 to US$ 56 million.”
Listing out industry woes, Karunaratne pointed out that the industry is “affected from all corners” due to “ad hoc” tax increases by the Government that came into force in April. He recalled that even smaller cars were slapped with heavy tax increases that put them beyond the reach of average income earners and depleted the market severely.
“A 200 per cent tax increase is too high for most vehicles,” he said, adding that the depreciation of the rupee was pushing customers to be wary. According to Reuters, since February the rupee has dropped 13.6 per cent, resulting in car prices becoming unreachable.
Mandatory Government regulation for all vehicle importers to use the Hambantota Port has also caused waves with Karunaratne stating that each vehicle costs around Rs. 40,000 extra.
“Importers cannot absorb all these costs, but if they don’t, then there will be no buyers. Many of our members try to take on around 50% of the additional costs from taxes and other expenses, but it is impossible not to pass on at least some of it to buyers.”
High interest rates of around 20% are also not helping matters, charged Karunaratne, emphasising that the Government was also discouraging consumption-based loans, resulting in a credit crunch. Topping all these issues is the recent move to establish a licensing system for vehicle importers.
It was reported that a scheme has been proposed to issue licenses for the purpose of vehicle imports ranging from a Rs. 5 million fee for small scale importers of reconditioned vehicles and Rs. 10 million for large-scale firms as well as Rs. 25 million for those who import brand new cars.
Even though the Finance Ministry has insisted that this will promote standards, Karunaratne termed it “impossible” to pay the rates proposed by the Government. “This is a vicious cycle that is leaving the industry stagnant. People are not ordering cars and it will take a long time to recover.”


3 Responses to “Vehicle importers honk for fair deal”

  1. faz on June 13th, 2012 9:05 am

    This country has many burning issues, the car industry is the least that we can think of giving incentive. Its really good that the Taxes are increased for Vehicles as the road net work we have does not permit any more vehicles to come in.

    Imagine the Stock of Alto’ s and Nano,s parked at the yard and the number of cars in the car sale, sooner or later these cars will come to the road, where on earth can the road network absorb all these vehicles.

    Strict conditions should be set for future car imports in terms of Age of the car, cylender capacity etc, so that it will benefit the country in the long run.

    This is not a platform to bail out the Car Dealers as there are many other important stakeholders of the country who are have a daily war for their survival.

    The wrong decision made on bringing down the Car Taxes and encouraging credit has caused grave destruction and the entire country is today facing a crisis due heavy imports and BOP .

    Its a good move to amend the car taxes upward and hope this will remian for a long time, until the economy turn back to track.

  2. hansan on June 13th, 2012 12:48 pm

    They don’t give a good deal for the customers So they deserve the increse.They remove the Original parts of some and sell them separatly, This is a known fact.

  3. Ravi on June 13th, 2012 4:11 pm

    It is necessary to reduce the taxes on vehicle imports and interest rate in general.
    Traffic problem should be focused with long term plan. We should go towards developing the country, not in oppposite direction.

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