Sri Lanka requires to improve the investment climate with transparency and good governance for businesses to flourish. If not the economy will suffer immense fiscal pressures, Carmudi Sri Lanka Managing Director Firaz Markar said.
"The wider macro-economic factors, such as steady GDP growth, access to low cost credit, and a rising level of affluence within major demographics of Sri Lankan society, have combined to generate an unprecedented level of growth within the Sri Lankan automotive industry in the recent past , Markar told a media conference in Colombo on Thursday.
Sri Lanka’s pioneering online vehicle retailer, Carmudi.lk, released a ground-breaking new research white paper detailing the recent performance of the Sri Lankan automotive industry and an in-depth analysis into key trends in vehicle financing.
Among the key findings of the Carmudi white paper was the dramatic increase in registrations of new vehicles in 2015, which hit an all-time high of 4,990 vehicles in August 2015, as compared with the previous year, Markar said.
He said small cars, hybrids and full-electric vehicles were found to have displayed a rapid increase in popularity among Sri Lankan consumers in 2015.
"This is boosted by the volatility in state regulatory and import policy, which may be having a notable impact on demand as consumers look to secure the best possible deal on their purchases, he said.
Analyzing historical data, the newly released Carmudi.lk white paper, titled ‘Car Financing in Sri Lanka’, offers valuable insights into the overall performance of the vehicle retail industry.
Markar said there is today a considerable amount of debate with regard to the current levels of demand for vehicles in Sri Lanka and regulations are needed to effectively cope with such demand in a manner that is beneficial to all stakeholders.
"In that context, the release of this report is a timely development that we hope will shed some light on the current dynamics in Sri Lanka’s automotive industry and hopefully contribute towards the formation of an effective discussion on regulatory policy and other salient issues that are informed by hard facts, he said.
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 where 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.
"Recent events resulting in vehicle values going up have definitely affected the market.
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.
"We will continue to monitor the market over the next month or so as dealers adopt a wait and see approach towards vehicle buyer intent, Markar added.
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