Vehicle Importers Association criticises Govt. decisions favouring select dealers

From left: VASL Executive Committee Member and former President Ranjan Peiris, Assistant Secretary Usman Ali, Secretary Arosha Rodrigo, President Prasad Manage and Vice President Madushan Mannapperuma

• Fears unfair decisions will distort market by favouring only a few at the expense of many
• Urges Govt. to reconsider policies to ensure fair competition, broader interests of trade

Claims Tourism Ministry scheme exclusively benefits “few franchise dealers”, sidelining other importers

Asserts Investment Promotion Ministry scheme with 0% customs tariff on CIF value for importing EVs and PHEVs in SKD form for local assembly designed to benefit “single company”

The Vehicle Importers Association of Sri Lanka (VIASL) expressed serious concerns over two recent Government decisions they claim unfairly benefit specific dealers and companies.

The Association contends that such selective favouritism undermines fair competition and the broader interests of the vehicle import sector.

VIASL fears these decisions will distort the market, favouring only a few at the expense of many.

“The Government must reconsider these policies. Authorities must promote fair competition and support the broader interests of the motor vehicle trade in Sri Lanka,” they added.

They detailed issues regarding two Cabinet decisions taken. One issue arises on Tourism Ministry allowing to import 1,000 vehicles to boost sector and the other by Investment Promotion Ministry, where it favours a single company with 0% customs tariff on the CIF value for importing electric vehicles (EVs) and Plug-in Hybrid Electric Vehicles (PHEVs) in semi-knockdown (SKD) form for local assembly, inevitably leading to an “unjustifiable monopoly”.

VIASL claims that the scheme exclusively benefits a few franchise dealers, effectively sidelining other importers.

“A scheme was introduced in May 2024 by the Tourism Ministry to import 1,000 number of motor vehicles to hotels involved in the tourism sector to import 750 vans and 250 buses. However, this completely restricts all the parallel importers in the country from importing, only allowing a small number of franchise holders to totally benefit from this,” they claimed. 

They alleged that the scheme was deceitfully planned by few individuals in the Tourism Ministry for few companies to benefit, much like the recent scheme introduced to supply electric cars for migrant workers on their remittances.

“Vehicles imported by brand-new franchise dealers are more expensive compared to the import of new vehicles by parallel importers who have sources to purchase vehicles used for demonstration or display purposes etc, at discounts exceeding 20% below the original price,” they pointed out.

VIASL said parallel importers have the ability and flexibility to supply leading brands on an immediate basis hence importing vehicles into the country within 1-2 months as opposed to brand new agents whose lead time is around 6-8 months. They also argued that import taxes paid by parallel importers are similar or more compared with franchise dealers hence revenue to the Sri Lankan Treasury is not compromised. 

Vehicles from developed nations are definitely of higher quality compared to their export models thus a high-quality vehicle can be imported. Most importantly a back-to-back dealers’ warranty is issued to the consumer ensuring all warranty claims are carried out free-of-charge. “We urge the authorities to allow vehicles which are within six months from date of first registration in the country of export with mileage under 400 kms to be adapted for importation of vehicles for the tourism sector. This would still yield substantial benefits by bolstering foreign reserves, revitalising the tourism sector and increasing tax revenue,” they said.

The second concern also involves a Cabinet-approved policy by the Investment Promotion Ministry, which imposes a 0% customs tariff on the CIF value for importing EVs and PHEVs in SKD form for local assembly. “This policy does not require any value addition to these vehicles in the first two years,” they alleged.

VIASL claims this policy is designed to benefit a single company, Western Automobile (formerly known as Senok Automobile Assembly Ltd.) which reportedly fulfilled the necessary investment requirements in 2021. 

“Fraudulently, Western Automobile (Senok) claims to have fulfilled the requirements for this via investments made back in 2021 even including the Rs. 6.5 billion bank loan obtained, based on an obsolete currency exchange rate of Rs. 161/USD. Most importantly the foreign exchange reserves will not benefit whatsoever from this investment made back in 2021,” they alleged.

They said this proposal lacks an upper ceiling for imports of brand new SKD units hence there is a high possibility that Western Automobile (Senok) will import well beyond $ 500 million. 

The motor vehicle industry accounts to more than 100,000 direct and indirect employees while around 400,000 are dependents of these employees.

“Allowing a single company to enjoy the benefits of a 0% customs tariff will drive out majority of the motor vehicle dealers from the market resulting in large scale redundancy,” they pointed out. 

As per the current tax structure the tariff payable including luxury tax on a small-size electric car is

Around Rs. 5 million and the tariff including luxury tax on an average-size electric car is approximately Rs.12. 5 million. 

“The applicable taxes on a PHEV are far greater and will range from Rs. 25 million to Rs. 75 million. Hence allowing a 0% customs tariff to a single company at such a critical juncture is absolutely disgraceful,” they asserted. 

On the whole, VIASL said this proposal will inevitably lead to an “unjustifiable monopoly”.

The Association asserted that the lack of a value addition requirement gives this company an undue advantage, potentially stifling competition and innovation within the local assembly sector.