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Sri Lanka's vehicle market set to drift downhill

Sri Lanka’s second-hand car market, once overheated, is now poised for a rapid cool-down, according to industry analysts. This shift comes as advertised prices for brand-new vans plummet below the asking prices for used vehicles, following the partial relaxation of import controls for tourism purposes.


Toyota Lanka made headlines by advertising the sale of new HiAce passenger vans on Sunday, authorized for use in the tourism sector. The government's allowance of 750 imported vans for tourism has caught dealers off guard, particularly those who have been pricing their used vans at exorbitant rates.


In a striking comparison, the advertised price for a 13-seater automatic HiAce stood at 16 million rupees, nearly half the asking price of 32.5 million rupees for a five-year-old HiAce with 48,000 kilometers on the clock, as seen in recent advertisements.


Despite these new developments, HiAce vans of varying ages continue to be advertised online for prices ranging from 14 to 23 million rupees.


Toyota sales personnel revealed that a significant portion of the brand-new van's price comprises approximately 7.0 million rupees in taxes. These vans are available for import by individuals registered with the Tourist Board.


Other factors are also expected to contribute to a cooling effect on prices, according to industry analysts. Further appreciation of the Sri Lankan rupee could drive down import costs, particularly as most vehicles are sourced from Japan. The Sri Lankan rupee has already appreciated by 20 percent against the yen this year, as reported by the Central Bank of Sri Lanka.


Moreover, speculation surrounding potential relaxations of the ban on vehicle imports ahead of the presidential elections, scheduled between September 15 and October 15, has prompted some prospective buyers to adopt a cautious "wait and see" approach.

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