By: Staff Writer
July 25, Colombo (LNW):Sri Lanka’s vehicle market has witnessed a dramatic transformation just months after the government lifted the long-standing vehicle import ban in February 2025, with electric vehicles (EVs) and brand-new Chinese cars now dominating new imports.
Data from Sri Lanka Customs reveals that over 14,000 vehicles have entered the country since the ban was eased, generating approximately Rs. 165 billion in tax revenue. However, contrary to widespread expectations, the influx is not led by used Japanese vehicles, but rather by electric vehicles—particularly those from Chinese automakers such as BYD and MG—and new, affordable Chinese gasoline vehicles.
While Japanese reconditioned vehicles like the Toyota Prius and Vitz were once the top choice for Sri Lankan buyers, many car dealers say consumer preferences are rapidly shifting. “Earlier, people would ask for five-year-old Japanese models. Now they ask about battery life and EV charging times,” a Colombo-based car dealer noted.
The Central Bank of Sri Lanka (CBSL) recently revised its loan-to-value (LTV) ratios for vehicle financing, which indirectly impacts the EV market. Although not directly targeted, EV buyers may face stricter borrowing limits, reducing the affordability and accessibility of electric vehicles for some segments of the population.
Adding to this shift, brand-new Chinese vehicles are attracting buyers with their sleek designs, modern technology, and competitive pricing. These new entrants are capturing significant market share and challenging the dominance once held by Japanese used car imports.
However, the Vehicle Importers Association Lanka (VIAL) has issued a warning for buyers rushing to purchase electric vehicles. VIAL President Indika Sampath Merenchige cautioned that many Chinese EV models being imported have depreciated significantly in value—by as much as Rs. 2 to 3 million—shortly after purchase. He advised consumers to do their research and stick to well-established EV brands when possible.
Meanwhile, the traditional market for used Japanese cars is faltering. A recent shipment of 196 used Japanese vehicles, including popular models like the Toyota Land Cruiser and Hilux, cleared in March, but many remain unsold. Dealers suggest that the local market’s growing preference for EVs and newer models is leaving them with unsold inventory.
According to the VIAL, around 75 percent of the first 7,000 vehicles imported after the ban were sold, though it is unclear what portion were used Japanese cars.
With evolving consumer preferences, a surge in EV imports, and increased competition from Chinese manufacturers, Sri Lanka’s vehicle market is undergoing a significant realignment, signaling a new era in automotive buying behavior.
