Vehicle prices in Sri Lanka may spike once again if the government places new restrictions on the remaining $200 million allocated for vehicle imports. The Vehicle Importers Association warns that supply shortages and unclear policies could trigger fresh market volatility, just as relief was on the horizon.
Car Prices Set to Soar Again? $200M Import Fund Under Threat, Warns VIASL
Sri Lanka’s local vehicle market could experience another steep rise in prices if the government decides to impose new conditions on the remaining $200 million from the $1 billion allocation for vehicle imports, cautions the Vehicle Importers Association of Sri Lanka (VIASL).
Addressing the media, VIASL Chairman Indika Sampath Manage explained that according to recent Central Bank reports, local financial institutions have already opened letters of credit (LCs) worth approximately $800 million to facilitate vehicle imports since the restrictions were lifted. However, concerns are now emerging regarding the fate of the remaining $200 million in the allocated import quota.
“We plan to meet with government officials shortly to determine whether the remaining US$200 million will be released without issue or if additional conditions will be enforced. If further restrictions are introduced, vehicle prices in the domestic market are likely to spike again due to supply limitations,” Mr. Manage stated.
He revealed that more than 9,000 vehicles have already been brought in to help stabilize the current market demand. However, uncertainty over the remaining funds could disrupt that balance.
Criticizing the government’s focus on offering tax relief to vehicle assembly plants, the VIASL chairman argued that these incentives have not delivered meaningful economic benefits. He pointed out that substantial amounts of foreign currency were spent on importing vehicle components for these assembly businesses without boosting exports or delivering fuel-efficient models.
“Many of these assembly companies initially justified their tax benefits by pledging export-oriented output. But the ground reality is different. There’s little evidence they’ve generated the promised results,” he said.
Manage called on the government to launch an investigation into the assembly plant operations and verify whether their activities have truly benefited the economy or simply drained resources under the guise of local production.
He warned that unless the funds allocated for imports are released efficiently and without arbitrary restrictions, the market could once again become volatile resulting in further price hikes and consumer uncertainty.
