ECONOMYNEXT – Demand for cars in Sri Lanka are likely to be mainly for smaller and cheaper vehicles after prices went up following the depreciation of the rupee and higher Customs valuations, on online retailer said.
“Recent events resulting in vehicle values going up have definitely affected the market,” said Firaz Markar, Managing Director of retailer Carmudi Sri Lanka.
“We see lower sales in vehicles since news broke of this increase. Interest rate changes are not expected to affect the market drastically due to it being a very nominal increase thus far,” he told a news conference.
A study on Sri Lanka’s vehicle leasing industry done by Carmudi said savvy Sri Lankan consumers appear to have capitalised on cheaper loans to buy cars as shown by a larger reliance on car financing.
“We expect the market to return to normalcy over the following month or so with sales expected to be largely within vehicles falling within lower price brackets,” Markar explained.
However Markar noted that potential changes to vehicle taxation policies and a reversal on downward interest rate momentum could tip the balance of vehicle financing in favour of an alternate model.
Consumers may be forced to take on a larger proportion of the total cost of the vehicle, potentially signalling a shift in conditions for finance companies and banks, he said.