In the last couple of months or so the policies with regard to the automobile industry has been very ad hoc. Policies in the last 12-13 months have changes almost 14 times, said new Chairman Ceylon Motor Trader Association(CMTA), Reeza Rauf.
This ad hoc chances in policy especially in automobile industry is a very difficult task to cope with because the industry needs a lot of planning and forecasting. “Once a policy is implemented we work on that. This puts us in a very embarrassing situation in the eyes of our principals also,” he said.
Rauf said as brand new vehicle import agents they invest a lot of money in terms of maintaining showrooms and after sales spare part backups. “ It is not just selling cars, it is an industry on the hold. But unfortunately the policymakers do not see that. This is basically creating a total imbalance in the market. Automobile industry on the whole is a very volatile market,” he said.
The government has revamped the total duty structure. Initially they were accepting the manufacturers invoice value for duty calculation. The government must also understand that the import of brand new vehicles is a different industry altogether representing the manufacturer itself. He said with the unit rate tax valuation method introduced by the government a car beyond 1,500 CC increases by almost four million. A top end vehicle can go up by even 10 million.
Many franchise holders do not have vehicle below 1,500CC because 1,500CC is only available in the Japanese domestic market where used cars are being imported. The end result will be the entire market shifting towards used vehicle importers, he said.
Last year had been yet another year of challenge especially due to many changes that took place once again in the policy framework and the overall trade dynamics, said Gihan Pilapitiya outgoing Chairman, CMTA.
The CMTA was able to negotiate many of these changes at different times by pressuring the authorities to change most of them that were taken against the interests of CMTA member to create a level playing field in the industry, he said.
“Form an overall view point I am happy to note that the last year was among the best ever years for the automotive trade in Sri Lanka with the overall volumes increasing to almost 670,000 units and the majority of the companies in the trade announcing the best ever results. I am sure that all of us can be happy that some of our member companies who are present here today made the magical figure of 10 billion in terms of bottom line,” he said.
Pilapitiya however cautioned that , CMTA be mindful of the new challenges such as the importation of the zero mileage cars by used car channels with better options, government’s consideration for offering discounts for the valuation of used cars that has become and can become a major threat to the professionally set up franchise holders.
“In addition to this the preference given in the new tax structure for the less than 1500 CC cars, a segment predominantly held by the used car products should be of concern to all of us.Meanwhile I think that the CMTA needs to fight for the taxes to be based on non-other than the actual transacted values certified by the manufacturers, keeping away personal preferences,” Pilapitiya added.
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