It is reported that a key reason for the sudden drop in vehicle prices in Sri Lanka is the disclosure of an issue concerning the 15% depreciation deduction applied when determining the customs valuation of imported vehicles, a matter that had reportedly been kept hidden from consumers until now in relation to the importation of used vehicles.
It is also said that this price reduction does not apply to brand-new vehicles.
The sudden reduction in vehicle prices, ranging from Rs. 300,000 to Rs. 1 million, was revealed by Indika Sampath Meringchige, Chairman of the Vehicle Importers’ Association.
Speaking at a press conference held in Colombo, he said that the prices of several popular models, including the Yaris, Raize, Vezel, Wagon R, Daihatsu Mira and Suzuki vans, had fallen by these amounts.
He also said that, due to the current market conditions, some dealers were even selling vehicles at a loss.
Meanwhile, there is a dispute between the Ceylon Motor Traders’ Association (CMTA) and vehicle importers over the method of reducing the value of used vehicles when determining their customs valuation.
The CMTA has pointed out that the practice has a significant impact on government tax revenue, while vehicle importers argue that it is a valuation method that reflects the actual transaction value of used vehicles.
Meanwhile, in a case in 2019 in which 13 Audi A5 vehicles with 2,000cc engines were allegedly declared as having 1,400cc engines, the CMTA had pointed out that the potential tax loss to the government amounted to Rs. 160 million.
Another important factor is that the Government’s decision to extend the 50% surcharge imposed on vehicle import duties until 31 December has contributed to an increase in the prices of newly imported vehicles.
It was also reported that, at the beginning of September, the prices of some popular models had increased by between Rs. 500,000 and Rs. 900,000.