Saturday Mar 21, 2026
Saturday Mar 21, 2026
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Vehicle import momentum is beginning to moderate after a sharp surge following the reopening of the market, with January data already pointing to a slowdown and February registrations falling by 3,683 units, suggesting further easing, JB Securities said.
Total vehicle imports declined to $ 236.4 million in January 2026 from a record $ 311.1 million in December, with a sharper correction in personal vehicle imports, which fell from $ 240.9 million to $ 163.8 million, a 32% month-on-month decline.
“While external sector statistics for February have not yet been released, the fact that the Central Bank of Sri Lanka was able to purchase $ 461 million from the foreign exchange market suggests a sizeable current account surplus for the month. Subdued vehicle imports may have been one contributing factor, indicating that vehicle import volumes in February were also likely lower,” JB Securities CEO Murtaza Jafferjee said.
Registration data reflects a similar trend. Total vehicle registrations declined to 51,682 units in February from 55,365 in January, with motor car registrations falling to 4,163 units from 4,648..
Jafferjee cautioned that headline registration numbers may not fully reflect underlying demand.
“The record number of vehicles registered in January, and the elevated level again in February, may not entirely reflect final sales to end users. To discourage the front-loading of imports, the Government introduced a regulation imposing a 3% monthly penalty on the CIF value of a vehicle if it is not registered within 90 days of import,” he said.
“As a result, some dealers may have opted to register slow-moving inventory that was approaching the 90-day deadline in order to avoid incurring the penalty, thereby inflating registration numbers. Slide 2 in the supplementary attachment also highlights a sharp increase in bank credit to the retail and wholesale trade sectors. Part of this expansion may be linked to the financing of the sizeable vehicle inventories held by dealers,” Jafferjee explained.
Data analysed by JB Securities shows that the market remains heavily concentrated in small-engine vehicles, particularly in the passenger and SUV segments, with a continued shift toward compact models and crossovers.
Import patterns also point to a market dominated by Japanese vehicles, with China and India maintaining a smaller but growing presence, particularly in the electric vehicle segment.
Electric vehicles and hybrids remain significant segments, although both moderated in February compared to January, while two-wheelers remain the largest volume category in the market.
Across segments, financing remains a key driver of demand, with credit-backed purchases accounting for a significant share of registrations in categories ranging from passenger vehicles to commercial transport.
Jafferjee noted that current trends differ from previous import cycles. While the surge following the reopening of imports in 2025 has been notable, it remains below the spike observed in 2015 following tax revisions.
He said the composition of demand has also shifted. Passenger vehicle demand is increasingly concentrated in SUVs and crossovers rather than traditional cars, while the two-wheeler segment is outperforming past cycles, supported in part by the growing presence of electric models and increased participation by Chinese manufacturers.
Three-wheeler registrations remain below historical peaks, although they have recovered from the lows seen in recent years.
The moderation in imports, if sustained, could ease pressure on the external sector, particularly as Sri Lanka navigates elevated global oil prices and broader pressures on the balance of payments.
