Is The Vehicle Market Crashing In Sri Lanka?

[MoneyMaker]

Sept 11, 2012 (LBO) - Sri Lanka's new vehicle registrations have plunged 48 percent in June 2012 from a year earlier in the wake of higher taxes and currency depreciation with three wheelers falling the most, official data showed.

Three wheeler registrations in the month of June fell 68.4 percent to 4,300 from 13,753, motor cars fell 56.4 percent to 2,208 from 5,069 and motor cycles fell motor cycles fell 46.3 percent to 12,181 from 22,690, a year earlier, central bank data showed.

Sri Lanka jacked up vehicle taxes in the second quarter of 2011 after the island's rupee peg came under pressure when rulers manipulated energy prices with commercial bank credit and printed money to keep interest rates down as loan demand rocketed.

Amusingly authorities blamed car imports for the fall in the rupee and not the credit funded energy subsidies. But in February 2012 energy prices and interest rates were jacked up and the rupee allowed to fall in line with the underlying monetary policy.

Taxes were raised for ordinary citizens while the island's ruling class of elected politicians get tax free cars and state workers get tax slashed cars. In the past authorities have jacked up taxes on electronic goods claiming they were 'luxuries' for citizens.

Analysts point out that raising interest rates (and energy prices) to go up would have curbed demand, allowing citizens to make the choices which give them the maximum benefits with their own hard earned money without the rulers or bureaucrats interfering in their decisions.

The energy and interest rate manipulation eventually forced the rupee to fall from 110 to 132 to the US dollar.

In the month of July bus imports fell 22.4 percent to 197, dual purpose vehicles fell 26.5 percent to 812, goods transport vehicles including lorries fell 12.9 percent to 944.

In the six months to June total car registrations were down 5.7 percent to 234,388. Motor car registrations were down 26.8 percent to 21,886, motor cycles were down 4.4 percent to 117,689, and three wheelers were down 26.8 percent to 50,811.

http://www.lbo.lk/fullstory.php?nid=642587420

[MoneyMaker]

MoneyMaker,

Japanese vehicle imports have come down due to price increase. Beneficiaries were importers who had large of low duty imported stocks.

Even big time importers are importing after few months only to replace to the sold stocks that also 50% of what they have sold.

Popular low cost vehicles from Japan. Exporters who had stocked for S L market have reduced their profit margins too.

Japanese small vans, (Batta) commercial vehicles, are still coming but it is difficult to compete due to the cheap C I F cost of cheap commercial vehicle manufacturing countries.

Our neighboring country imports not reduced that much can see large new stocks in their yards full.

S L manufacturers vehicles have to be in waiting list with a substantial cash deposit.

There was another vehicle assembler started in big way but he has diverted back to Japanese Hybrid vehicles and other Japanese fast selling vehicles.

I hope my post to the topic as I read plenty of negative feed back posts to the topic.

Sylvi wijesinghe.

Thanks Silvi.. Valid points to consider for further discussion by a few more intellects.

[ramithad]

Here i post a saranapala theory as few people wanted to hear

There was a guy called saranapala in the campus interested on a pretty girl in the same campus.

she was rejected his love several times because she had higher demand and she didn’t like to sell into a cheap guy like saranapala. even though he is a useless fellow in that girls points of view, he is brilliant fellow and never give up try to win his love. One day he got a brilliant idea. What he did was he went into a male washroom when nobody is in the wash room. female washroom is adjacent to the male washroom was separated by a wall as usually in everywhere. he shouts in high tone to be heard by anyone in girls side "do you know XXXX is fall in love with saranapala". Another day he went and said "machan, saranapala took XXXX into a film". Next time he said "machan, saranapala took his baduwa into a room". This process repeated few times a day and rumor was spread among the girls and many girls told what she is being heard to that pretty girl too. Even though she had a very good demand initially, that demand was fallen fairly rapidly and she had no alternative other than sell into a cheap guy like saranapala.

[Sampath Gunasekera]

Here i post a saranapala theory as few people wanted to hear

There was a guy called saranapala in the campus interested on a pretty girl in the same campus.

she was rejected his love several times because she had higher demand and she didn't like to sell into a cheap guy like saranapala. even though he is a useless fellow in that girls points of view, he is brilliant fellow and never give up try to win his love. One day he got a brilliant idea. What he did was he went into a male washroom when nobody is in the wash room. female washroom is adjacent to the male washroom was separated by a wall as usually in everywhere. he shouts in high tone to be heard by anyone in girls side "do you know XXXX is fall in love with saranapala". Another day he went and said "machan, saranapala took XXXX into a film". Next time he said "machan, saranapala took his baduwa into a room". This process repeated few times a day and rumor was spread among the girls and many girls told what she is being heard to that pretty girl too. Even though she had a very good demand initially, that demand was fallen fairly rapidly and she had no alternative other than sell into a cheap guy like saranapala.

http://ndpdarshana.p...rnapalas-theory

(Sorry for moving out of the topic a little bit)

Edited September 26, 2012 by Sampath Gunasekera

[Crosswind]

Go on...

Warnapala's theory seems to be more interesting and useful to our younger members than MoneyMaker's theories

Edited September 26, 2012 by Crosswind

[ModX]

Well to add the two cents of mine on "Warnapala Theory", basically what happened was a guy called Warnapala in the Peradeniya University had a crush on one of his batch mates. But non of the usual methods worked. Consequently he made his hide out in the Hilda Obesekera Hall and when ever the girl went to the Sangamiththa girls hostel, he yelled out "Aa... Warnapalas it a, where are you going" or "Aa... you are in love with Warnapala no?" A girl who gets hitched once can not get re-hitched according to the unwritten laws of campus.

Edited September 26, 2012 by ModX

[Komisiripala]

How has the market fallen? Used cars are all the more valuable now. Sold a 302- carina for 1.8. Have got offers for my teg for same price. And the sonata was requested for 1.5 mil

[XBeat]

Market will never fall. From my birth so far I have seen that the cost of every thing is going up.

even if there is a slight dip the trend is always for upward. Economists will agree with me.

[GTAm]

I think both MoneyMaker and Komisiripala are both correct. Demand for and sales of Brand new and Un-reg cars have dwindled. All importers are reporting this. I met a CEO of a large PLC that is in vehicle imports and according to him they are revising their targets downwards by two thirds over last year. The only vehicles that are coming in now in some quantities are ones on permits and hybrid luxury vehicles like Lexus' and Porsches. I don't know much about the cheaper hybrids to comment.

However there is selling pressure on the vehicles that are coming on permits are also adding to selling pressure. For example a BMW 520d which started out at 12.5m is now 10.5m. The government policy is mind boggling to say the least. By increasing duty they want to restrict our import bill but at the same time by issuing so many permits they reduce potential revenue that they earn on taxes And worse when diesel vehicles are imported the (subsidized) diesel fuel bill is increased while the profitable petrol bill is reduced. They are just shooting themselves in the foot.

@Komi since a regular unreg car that used to be affordable like a Toyota Vitz is now over Rs. 4m, definitely prices of used cars in the lower price brackets will go up due to demand. Many people will put off their plans for replacement due to a) High cost of replacement even if one were to downgrade to a smaller car, and Increase in costs of funds.

Therefore with less used cars coming up for sale, demand for these cars will be stay stronger than supply and should impact the price upwards.

@MoneyMaker, the stock market is slowly recovering with a lot of foreign inflows and could put pressure on interest rates to ease a little by end of this year. Already there are some small signs. The govt. is under pressure to reduce interest rates to maintain economic growth. This is why they want to borrow even more from the IMF and sell out shares to foreigners. Also I feel the govt. revenue will be way off target without non-permit vehicle imports, so they must be wondering if any changes are to be made at the budget presentation in November.

[MoneyMaker]

I think both MoneyMaker and Komisiripala are both correct. Demand for and sales of Brand new and Un-reg cars have dwindled. All importers are reporting this. I met a CEO of a large PLC that is in vehicle imports and according to him they are revising their targets downwards by two thirds over last year. The only vehicles that are coming in now in some quantities are ones on permits and hybrid luxury vehicles like Lexus' and Porsches. I don't know much about the cheaper hybrids to comment.

However there is selling pressure on the vehicles that are coming on permits are also adding to selling pressure. For example a BMW 520d which started out at 12.5m is now 10.5m. The government policy is mind boggling to say the least. By increasing duty they want to restrict our import bill but at the same time by issuing so many permits they reduce potential revenue that they earn on taxes And worse when diesel vehicles are imported the (subsidized) diesel fuel bill is increased while the profitable petrol bill is reduced. They are just shooting themselves in the foot.

@Komi since a regular unreg car that used to be affordable like a Toyota Vitz is now over Rs. 4m, definitely prices of used cars in the lower price brackets will go up due to demand. Many people will put off their plans for replacement due to a) High cost of replacement even if one were to downgrade to a smaller car, and Increase in costs of funds.

Therefore with less used cars coming up for sale, demand for these cars will be stay stronger than supply and should impact the price upwards.

@MoneyMaker, the stock market is slowly recovering with a lot of foreign inflows and could put pressure on interest rates to ease a little by end of this year. Already there are some small signs. The govt. is under pressure to reduce interest rates to maintain economic growth. This is why they want to borrow even more from the IMF and sell out shares to foreigners. Also I feel the govt. revenue will be way off target without non-permit vehicle imports, so they must be wondering if any changes are to be made at the budget presentation in November.

Agreed with you 100%.

In reference to the Permit vehicle imports. The deal behind that i suppose is that during the past 2+years when the duty for vehicles were dropped most of the car sales and private importers made big money by importing unregistered recon vehicles. Agents were not doing too well as they couldn't compete in-terms of price and options. The whole permit scheme is to keep agents happy for I don't know how long.

Eg: Unit#d Mot#rs Motors made Rs.1billion profit for last financial year(31.03.2012) (Perodua VIva, 3000+ Montero Sport Sales).

[MoneyMaker]

To all the jokers who have commented on this thread!!!

Moderators: Please create a link/tab called JOKERS and let these guys thrash themselves out.

What you will hear from me is the fact.. Its not always what you would like to hear but its the truth. Lets face it...

Remember we are all in this mess together, you are not alone..

And a fact of life is that some people Win, And some people loose.

[Supra_Natural]

To all the jokers who have commented on this thread!!!

Moderators: Please create a link/tab called JOKERS and let these guys thrash themselves out.

What you will hear from me is the fact.. Its not always what you would like to hear but its the truth. Lets face it...

Remember we are all in this mess together, you are not alone..

And a fact of life is that some people Win, And some people loose.

MONEYMAKER

Leave the moderating to us, thanks. Its not really good policy to try to tell us what to do okay?

And the jury's still very much out on whether what you post is "fact"

[Komisiripala]

Agreed gtam, but if we are to have such an influx of new cars, taxes aside, we should have a sustainable outflow of cars as well. Like Japan does.

[Watchman]

To all the jokers who have commented on this thread!!!

Moderators: Please create a link/tab called JOKERS and let these guys thrash themselves out.

What you will hear from me is the fact.. Its not always what you would like to hear but its the truth. Lets face it...

Remember we are all in this mess together, you are not alone..

And a fact of life is that some people Win, And some people loose.

So you say "To all the jokers" and then "moderators"... So you're calling the moderators jokers eh? tsk tsk tsk...

As for your 2nd part, I believe there's a big logic flaw.If we're all in this mess together, how can some win and some loose? Shouldn't we all win or all loose?

Edited September 26, 2012 by Watchman

[Supra_Natural]

Well to add the two cents of mine on "Warnapala Theory", basically what happened was a guy called Warnapala in the Peradeniya University had a crush on one of his batch mates. But non of the usual methods worked. Consequently he made his hide out in the Hilda Obesekera Hall and when ever the girl went to the Sangamiththa girls hostel, he yelled out "Aa... Warnapalas it a, where are you going" or "Aa... you are in love with Warnapala no?" A girl who gets hitched once can not get re-hitched according to the unwritten laws of campus.

OT, but seriously, that is the dumbest thing I've ever heard....Not the theory (which seems oddly applicable to our friend MoneyMaker), but the underlined bit..who comes up with this kinda b***sh*t anyway? And people actually go along with it as well?

Edited September 26, 2012 by Supra_Natural

[GTAm]

Agents, private importers, individuals all made made lots of money I'm quite sure. That UML profit figure includes all vehicles. Lots of Vivas were sold to non-permit holders too. D*mos also made record profits with no permit vehicles at all. Their biggest seller is the tiny Tata truck. Other agents like C*r Pl*n and Pr*st*g* A*to made big money on permit vehicles.

[GTAm]

Agreed gtam, but if we are to have such an influx of new cars, taxes aside, we should have a sustainable outflow of cars as well. Like Japan does.

You mean like a crusher?

Well Komi, our population to cars ratio remains very very low compared to even Thailand let alone Japan. It's just that our infrastructure (roads and proper clean/efficient public transport) are severely under-developed, so we are running out of space. We need more roads and better public transport but to do this we need to earn money by developing industry and exports. Alas we are just borrowing and building roads and not really prioritizing what we need. For example I think the airport highway and the Kandy highway should have got precedence over the E01.

Cars being so expensive in our country (because of duty) it's hard to imagine people would almost ever junk their cars. I mean many many cars that are on our roads would be junk yard material in developed countries. but people are forced to keep re-using them because replacement is so expensive. A house can be built for the brand new price of most average cars in SL!

It's crazy when you think about it. Just imagine the main board of directors of a blue chip company ordering a fleet of brand new cars - Let's says Mercs. With the current duties they'll spend about 150 to 200m ( 25m avg X 6 directors)!!! Just see what a lot of money that could go for investment is spent on cars where the bulk of it goes to the most unproductive institution - the government. Shocking!

[Pericles]

Bottom line, the in demand cars that kept going up in price (Corolla et al) keep going up. The ones that didn't (Euros like BM, Audi, Koreans, et al) sink in the short term. 2nd hand.

Seems like a SSDD story, not the kinda thing that needed a new thread to discuss saying car prices are coming down.

[NPP]

OT, but seriously, that is the dumbest thing I've ever heard....Not the theory (which seems oddly applicable to our friend MoneyMaker), but the underlined bit..who comes up with this kinda b***sh*t anyway? And people actually go along with it as well?

depends on the campus. Pera is rather flooded with girls (excess supply) so it would apply.

There are unis where girls, let alone attractive ones, are scarce!

[MasterDon]

The vehicle market will crash on the 15th of October at 9:37AM.

[Supra_Natural]

The vehicle market will crash on the 15th of October at 9:37AM.

Not on the 27th of December with the rest of the world as the Mayan calendar comes to a close?

[VVTi]

Not on the 27th of December with the rest of the world as the Mayan calendar comes to a close?

You are both wrong... it will end for sure on the 22nd December at 11.37am GMT... ((

[MasterDon]

You are both wrong... it will end for sure on the 22nd December at 11.37am GMT... ((

No no my date is the real market crash.I got this info from my uncle Rajapakse.( a.k.a His excellency the president to you common peasants)

[osanda19]

@master don-what will happen on the 15th of October at 9:37AM???

[VVTi]

@master don-what will happen on the 15th of October at 9:37AM???

You got to wait and see...