Car Sales In Reverse Gear

By Chrishanthi Christopher

Following the increase in tariff on all motor vehicles early this year motor vehicle sales have dropped drastically..
The sales have dropped by 48 per cent and the fastest moving motor cycle sales has dropped by 50 per cent says the chairman of the Ceylon Motor Traders Association, Tilak Gunasekera.
Gunasekera says that the motor vehicle companies are ailing and finding it difficult to continue its business “The companies are running with difficulty”. He says that the company has been affected not only by the tariff increase, but also by the exchange rate fluctuation.
Car importers claim that the pent up demand for motor vehicles have already been satisfied when tariffs were reduced in 2010 and with the increase in the tariff last March the demand has slowed down.
Meanwhile  the motor vehicle  importers  were dealt another blow last month when the government decided to impose a license fee of Rs.25 million annually on all franchise holders for car imports.
However at the meeting chaired by the Treasury Secretary P. B. Jayasundera and other customs officials the car importers had placed their problems before the officials. “We told them how the import tariff and the exchange rate are already affecting the industry and that we are not in a position to pay”.
Gunaskera says that the government has achieved its intention of building up its dollar reserves by increasing the tariffs on motor vehicles up to 350 per cent.
He says that almost 50 per cent demand has dried up which means that there is a sharp decline in the dollars leaving the country.
“Our Balance of payment deficit has come down not because of government productivity but because of drop in imports of motor vehicles” Gunasekera  says.
He says that the bleak economic situation will continue for at least another two years and that if the  government continued with its policy decisions it can stay stable without  ‘crashing further’.