Vehicle prices in Sri Lanka are expected to increase significantly after the Government extended the 50% import duty surcharge, which was due to expire on August 15, until December 31.
According to the Sri Lanka Vehicle Importers Association, the extension could result in substantial price increases for several vehicle models.
Estimated increases include:
- Suzuki Wagon R – around Rs. 500,000
- Toyota Raize – around Rs. 1 million
- Honda Vezel – Rs. 1.5–2 million
- Toyota Prado – around Rs. 3 million
- Land Cruiser – around Rs. 5 million
- Double Cab – Rs. 2–2.5 million
Association President Prasad Manage said vehicles currently available in showrooms were imported under letters of credit (LCs) opened before May 15 and will therefore be exempt from the surcharge.
However, vehicles imported under LCs opened after May 15 will be subject to the higher surcharge, resulting in increased prices.
“We had hoped that the surcharge would not be extended further. But for various reasons, it has been continued. As a result, we can expect the prices of vehicles to increase further,” he said.
Manage noted that around 90% of vehicles previously exempted were imported under LCs that were not subject to the surcharge, while the exemption for vehicles affected by the new tax has already begun.
He suggested that instead of repeatedly changing prices through import surcharges, the Government could consider alternative measures such as revising tax policies, regulating LCs and introducing fixed rates to stabilise the vehicle market.
He warned that continued use of surcharges could create significant fluctuations in vehicle prices and said alternative measures could be used to control imports without causing excessive increases in prices.
