Vehicle prices in Sri Lanka are expected to climb sharply following the government’s decision to extend the 50% surcharge on import duties until December 31, which had previously been due to expire on August 15.
According to the Vehicle Importers Association of Sri Lanka (VIASL), the extension will push up showroom prices significantly.
A Suzuki Wagon R is expected to increase by around Rs. 500,000, a Toyota Raize by Rs. 1 million, a Honda Vezel by Rs. 1.5–2 million, a Toyota Prado by Rs. 3 million, a Land Cruiser by Rs. 5 million, and a double cab by Rs. 2–2.5 million.
Association President Prasad Manage told the media that vehicles currently available in showrooms were imported under Letters of Credit (LCs) opened before May 15, which are exempt from the surcharge.
However, vehicles imported under LCs opened after May 15 will be subject to the higher duty, leading to price hikes.
“We expected the surcharge would not be extended, but due to various reasons it has been continued. As a result, we can expect further increases in vehicle prices,” Manage said.
He noted that 90% of vehicles cleared so far were under LCs not subject to the surcharge, but clearing has now begun on vehicles that do fall under the new duty.
Manage added that instead of repeated price changes through surcharges, the government could use alternative tools to stabilize the market, such as revising tax policy, controlling LCs, and implementing fixed rates.
He warned that continuous surcharges create large fluctuations in the market, while other mechanisms could restrict imports if necessary without causing excessive pricing. (Newswire)