Vehicle prices surge after Sri Lanka raises the surcharge on imported vehicles, hitting Alto, Yaris and middle-class buyers hard.
Vehicle prices in Sri Lanka have increased sharply after the government raised the surcharge on imported vehicles by 50 percent, importers say.
Vehicle importers said sales across the country have declined following the government’s decision to increase the surcharge on imported vehicles.
The tax amendment, which came into effect on May 15, has pushed vehicle prices significantly higher. Importers say consumers are now struggling to absorb the new costs.
Under the revised tax structure, the price of a Japanese Alto, which was earlier sold for around Rs. 7 million, has risen by Rs. 500,000 to Rs. 7.5 million.
Similarly, the price of a Toyota Yaris, previously around Rs. 10 million, has increased by approximately Rs. 750,000.
Prices of Indian vehicles are also currently rising, in addition to Japanese vehicles.
Vehicle importers point out that because of the higher surcharge, they are now forced to charge consumers an additional Rs. 500,000 to Rs. 1 million, even for a small vehicle.
It is also reported that importers are reluctant to open Letters of Credit (LCs) for fresh vehicle imports due to the current high costs.
This has created the risk of a vehicle shortage in the market in the future.
Although the 50 percent surcharge has been imposed for a period of three months, economic analysts say there is no clear indication that vehicle prices will decrease during that period.
Importers further state that the government decision has made the vehicle market highly unstable, while buying a vehicle has become a dream for many middle-class consumers.
