Sri Lanka vehicle sales have come down to zero level and the car sale centres are on the verge of closing down as a result of the government ban on vehicle imports , motor traders complained.
The Secretary of the Vehicle Importer’s Association of Sri Lanka Prasad Kulatunge says that even used car sales have been affected by the government’s decision as no one wants to buy vehicles now.
Sri Lanka’s auto sector is grinding to a halt while some types of tyres are also not available in the market, with import controls triggered by money printing through an unstable soft-pegged monetary regime.
While some dealers of reconditioned vehicles still have stocks as sales have also weakened amid an economic crisis , many brand agents of cars, as well as commercial vehicle agents, are already out of stock.
Many agents are struggling and are planning to close dealerships and showrooms or lay off staff.The industry is calling for stable policies to survive.
New vehicles bring large volumes of taxes, petrol sales, in particular, is a key source of tax income. As a communications path, transport is also the main tool to keep economic activity going.
Sri Lanka auto service providers warns of job losses, breakdowns over import controls. Vehicles are also a key driver of insurance, finance as well as an islandwide motor vehicle repair business which is claiming to employ around 500,000 persons.
Sri Lanka slapped severe import controls in April 2020, after unprecedented money printing by the central bank.
Cars are a favourite target of bureaucrats each time money printing triggers a currency crisis.
The latest complete import ban comes on top of restrictions imposed in 2018, after the central bank printed large volumes of money to target the call money rate from April 2020 in pro-cyclical liquidity injections just as the economy recovered from a 2015/2016 currency crisis.
There have been calls to reform the monetary regime, without which critics say the country will not be able to progress and policy frameworks will founder on an unstable foundation of unsound money as they had in the past.
Uncertainty arises from Government tax policies which are unfavourable to the motor trade industry and the more recent import restrictions on passenger and commercial vehicles which have impacted the core of the business model of companies .
