JB Securities flags vehicle tax distortions limiting hybrid choice

Monday, 31 August 2026 00:21 - - {{hitsCtrl.values.hits}}

Sri Lanka’s vehicle tax structure is restricting consumer access to several globally popular hybrid models and creating market distortions by favouring particular engineering solutions, according to JB Securities.

Commenting on July vehicle registrations, the brokerage noted that hybrid registrations declined to 2,288 units from 3,023 in June, with SUVs accounting for virtually all hybrid registrations. Toyota and Honda remained the dominant hybrid brands, while BYD continued expanding its presence through the Sealion and Denza ranges.

JB Securities said it was “somewhat ironic” that Sri Lankan consumers had limited access to globally acclaimed models such as the Toyota Prius, RAV4 Hybrid and Corolla Cross Hybrid despite their reputation for reliability, fuel efficiency and strong resale values.

“Their absence is largely attributable to a tax regime that penalises their 2.0-litre hybrid powertrains, while often favouring EV-first vehicles whose internal combustion engines play only a supporting role,” JB Securities said.

The brokerage said the use of engine displacement as a key determinant of taxation effectively rewards particular engineering solutions over others.

It said this was “creating market distortions that restrict consumer choice and exclude some of the world’s most successful vehicle models from meaningful participation in the Sri Lankan market.”