Vehicle prices expected to rise due to exchange rate and tax increases

Prasad Manange, the President of the Vehicle Importers’ Association of Sri Lanka (VIASL) has warned that vehicle prices are expected to increase in the near future due to the continued depreciation of the Sri Lankan Rupee against the US Dollar.

Manange stated that the rupee depreciation significantly impacted the cost of importing vehicles, leading to higher prices. He also pointed out that the recent hike in the Social Security Contribution Levy (SSCL) by 2.5% starting from May will further contribute to the price increase.

“The government expects a substantial income from vehicle imports, and if my calculations are correct, they are looking at around Rs. 700 billion from this source. We contribute significantly to government revenue, particularly through the import of used vehicles. For every dollar, the government is hoping to earn about US$1.5, but for the vehicles we import, taxes are ranging from US$2 to US$2.5 per dollar. In the case of some electric vehicles, due to tax issues, the income per dollar is even lower,” Manange said.

He emphasized that the government’s earnings from used vehicles are higher than anticipated, providing a financial boost to the state. However, Prasad Manange called for a comprehensive review of the tax structure, urging the government to assess the situation more closely.

The President of the Vehicle Importers’ Association of Sri Lanka also stated that with the tax hike and the ongoing fluctuations in the exchange rate, an increase in vehicle prices is inevitable in the coming months.