Except for the makers of three-wheelers, Indian vehicle manufacturers have been hard hit by the steep rise in taxes on imported vehicles in Sri Lanka. According to statistics put out by stock brokering firm JB Securities, only 18, 376 new and reconditioned vehicles have been registered in the island so far this year compared to 31,462 vehicles in this period last year.
JB Securities attributed the drop to the 100 per cent hike in taxes imposed in early 2012 by the Rajapaksa government looking to curb imports and save foreign exchange.
In the first half of 2012, 7,343 small cars below 1000-cc were registered, down from 12,432 units last year. Maruti Alto has been the hardest hit. In July 2011, 858 Maruti Altos were sold; in July 2012 the figure dropped to 127. The Maruti 800 is struggling too. Only 236 units sold this July, down from 1,373 in July 2011. Though the Maruti 800 is no longer the craze it used to be after the advent of the Alto, it is still a very saleable car among the middle class.
The situation is similar in the motorcycle market. In July 2011, 20,460 motorcycles were registered. In July 2012, this figure plummeted to 11,315.
The three-wheeler market is the only cause of cheer. Sales here have gone up significantly from about 4,000 a month to 8,009. The peak period was in January 2012, which saw 11,000 registrations. Almost all three-wheelers on Lankan roads are of Indian make.
Thilak de Soysa, chairman of Associated Motor Works, which is an agency for Maruti Suzuki in Sri Lanka, says his company’s plans to manufacture the Maruti range of cars in the island have now been postponed indefinitely because of inconsistency in the Lankan government’s taxation policy.