Sri Lanka has always depended on vehicle imports, especially from Japan, India, and China. However, since the import ban, used car prices have soared. Some models now cost two to three times more than before.
Impact on Daily Life and Businesses
The restrictions have hurt many, including Gayan Indika, who rents cars for weddings and works part-time as a cab driver. He said, “I want to buy a new car so that I can do my work and resume my private cab rental. Without a car, without mobility, I am losing a lot of my revenue.”
Cars are vital in a country with poor public transport. Sasikumar from Kandy said, “As we don’t have a good public transport system, a car is essential to travel to other parts of the country. Either the government should lift the ban on cars or improve public transport.”
Vehicle Import Data and Challenges
Before the ban, Sri Lanka imported vehicles worth $1.4 billion. This year, the central bank plans to allocate up to a billion dollars for vehicle imports. However, the funds will be released gradually. Arosha Rodrigo from the Vehicle Importers Association stated that even if the ban is relaxed, high taxes and a weak currency will still make vehicles unaffordable for many.
Increased Taxes and Currency Depreciation Drive Up Prices
The government has raised excise duties on imported vehicles. Taxes now range from 200% to 300%, depending on engine size. On top of this, an 18% Value Added Tax (VAT) applies to all imported vehicles. The weak Sri Lankan rupee against major currencies like the US dollar further drives up prices.
Affordability Issues for Sri Lankans
As a result, many people can’t afford to buy cars. R Yasodha, a school teacher, said, “We have been waiting to purchase a vehicle for a long time. But if we calculate the tax and the price, the cost of an average-sized car has doubled from 2.5 million rupees ($8,450) to five million rupees. It would cost a fortune for us.”
The combination of import restrictions, high taxes, and currency depreciation is making it harder for Sri Lankans to buy vehicles.