Current Market Situation

[L board]

Dear Friends. Since I am on the look out for a vehicle for around Rs 3M I was doing my Sunday rounds for few weeks now and I thought of updating this forum with my first hand information.

It is imminent that the prices are heading towards a nose dive. This is obviously due to the current economic situation of the country and the sudden influx of over 40,000 vehicle to the market from special permits. The fact is that it is simply difficult to sell! Good 5-6 years back when I was hunting for a vehicle I remember I had to wake up early in the morning to get the Sunday news paper and start the hunt as soon as possible because by noon most of the good vehicles are gone. However I realized that the situation is totally different now.

Here are some of my first hand observations with current prices:

1) Freelanders (and vehicles of similar league)

I saw few Freelanders (including TD4s) being advertised repeatedly. I saw a few. Some were in good shape while few were hacked. The sellers were quoting 3.5M but they eventually agreed for 3M (for TD4s). I still didn't buy considering the over dependency on the agents and the exorbitant cost of maintenance. The ones that were advertised in the past two months still remain unsold. At this time, if you can sell a Freelander at any price, consider yourself lucky. People are obviously reluctant to buy vehciles with high maintenance costs at this time.

2) Nissan X-trails

Although this is a very popular vehicle, in the second hand market, people are struggling to sell. So many of them remain unsold for months despite repeated ads. Sellers quote 3M but you can easily close a deal for 2.6M. In fact few sellers kept calling me and virtually insisted a visit to see their vehicles to strike a deal. Although parts are freely available and maintenance is not so costly, the fuel cost puts off most buyers when it comes to a vehicle like the X-trail.

3) RAV-4

The situation is worse than the X-Trail. You should be really lucky to get rid of a RAV-4. Obviously it is less popular than the X-Trail. If the fate of the X-trails is too bad as explained above, the sitaution for RAV-4 can easily be understood. A VVti 2000/2 model can be bought for about 2.7M and I still feel it should be cheapter than that as well.

4) Honda Civic (ES8, ES5, ES1)

Most of the preface lift models (YOM prior to 2004) have a better demand and goes from anywhere between 1.8M and 2.2M. The face lift model is difficult to sell and the sellers quote 3M for them. Obviously with the current market situation who would want to pay 1M more just for few cosmetic body changes? Most of the facelift models remain unsold for weeks, if not months.l

5) Toyota Corolla and Allion

With the (undue) popularity Toyota's have in Sri Lanka, most of the Corolla's and Allions seem to be sellign with just one advertisement. A 2004/6 G grade Corolla can be bough for 3M easily. Any other grade will go for less than 3M.

6) Nissan D22 double cab

All the Nissan D22 double cabs that have been advertised for the past two months are still with the sellers. I could not find a sigle vehicle that was sold. The sellers start from a totally unrealistic 3.5M+ figures. They advertise, readvertise, change locations and advertise, keep their vehicles at car sales but still fail to sell the vehcile. Most of the double cab buyers would go for Toyota as their first preferance. So obviously Nissans have less demand. Then the price the sellers quote completely put off the buyers. Why would you spend 3M on a D22 when you can buy a LN 166 for the same price? I gave a solid offer of 3M for a D22 seller and he was after me for few days to complete the deal. Again, consider yourself lucky if you can sell a D22 for anything above 2.8M under the current market situ.

7) Toyota double cabs

Still difficult to sell. One thing that I noticed unfortunately is that most Toyota double cabs are hacked compared to D22s. LN 166 1998/2000 goes for less than 2.7M. 2001-5 sellers quote over 4M but I could not find a single seller in the past two months who managed to sell their vehciles for above 3M. Although the selles tell their stories about how valuable the LN166 is, in the current reality, people don't just spend like that! Spending anything about 3M for a vehicle is a luxury now. Sadly accept it.

The car sales guys who became friendly with me say their plight not being able to sell even two vehciles a month compared to 30+ few years back. I think their greed was also responsible for the current situation. Each time they heard of increase in import duty, they would jack up the second hand market to make super profits. At one time bloody old Pajeros and Troopers were almost hitting 3M mark. Buy a bloody 20+ year vehicle for 3M?? For what??? Now these vehicles go for less than 2.5M provided you are lucky to find a buyer. Everything that goes up must come down. In the next few months, the situation will be worse (in a way better because we will see more realistic prices). All those sellers who still have high expectations (and greed) will have to ultimately reduce the price to make a sale. Additionally there is a huge influx of vehicles from leasing companies and other small organisations (thanks to the current economy). Therefore a nose dive of prices will happen in the next few weeks. Additionally the government is planning a cut in the import duty since their revenue from importation of vehciles has drastically come down because the the number of vehicle imports have gone down drastically (the result of the greed of the givt). This will reduce the vehicle prices further.

To conclude....We are seeing the natural phenomena in front of our eyes. Our greed has brought us to this situation. Everything that goes up (without proper rational) must come down. Buyers simply should have patience and wait. You can strike real value for money deal in few months (If not weeks). Sellers, you might as well try to sell at a reasonable price now rather than wait (forget your greed) till the markets crash further. There are no signs of hope of price increase at least for the next two years. You mights as well sell for the most reasonable offer you get now rather than holding on to it just to make a bigger loss.

Please feel free to add your first hand experience to this chain. Please don't give just openions, but give first hand facts and figures.

Cheers!

Edited April 7, 2009 by L board

[Devinda_Z]

quite right L Board there has been a drop interms of the prices of certain vehicles- but even more so another dependant factor is the urgency of the sale

i'm sure you would have noticed a Volvo S 80 for just over 2 million!

...and every single day some Bank or financial institution advertises a list of vehicles for sale - all likely repossed vehicles

[isam]

Moreover, leasing companies do not cease the vehicles now! they agree for a repayment on a loan basis

[isam]

Additionally the government is planning a cut in the import duty since their revenue from importation of vehciles has drastically come down because the the number of vehicle imports have gone down drastically (the result of the greed of the givt). This will reduce the vehicle prices further.

Not quite sure on this bro. Government is dying for foreign reserves. Even the IMF loan has not hit the shores yet. I doubt government will loosen up the grip on vehicle imports. No not even for their own revenue. Last week I saw an order declaring all earnings on NRFC/RFC accounts to be tax free till 2012, thats on top of the bonus % paid in rupees on the NRFC/RFC balance.

[Supra_Natural]

Not quite sure on this bro. Government is dying for foreign reserves. Even the IMF loan has not hit the shores yet. I doubt government will loosen up the grip on vehicle imports. No not even for their own revenue. Last week I saw an order declaring all earnings on NRFC/RFC accounts to be tax free till 2012, thats on top of the bonus % paid in rupees on the NRFC/RFC balance.

See mate, the problem is, the current taxes are so high that people have just stopped buying vehicles! even mighty A_M_W with their Maruti's has seen a Massive drop in sale... So obviously when there are no buyers, there is no duty paid on cars and thus no revenue for the Chinthanaya blokes... It's true that those up there sometimes appear to have lesser intelligence than say, a buffalo, but im sure even they notice the falling revenue (I.E. Lesser cut/perks for them).... Eventually they'll get around to figuring out the reason, and MIGHT decide that a drop in taxes will ensure a continued stream of income, Instead of no income at all!

[JadeyBlitzen]

See mate, the problem is, the current taxes are so high that people have just stopped buying vehicles! even mighty A_M_W with their Maruti's has seen a Massive drop in sale... So obviously when there are no buyers, there is no duty paid on cars and thus no revenue for the Chinthanaya blokes... It's true that those up there sometimes appear to have lesser intelligence than say, a buffalo, but im sure even they notice the falling revenue (I.E. Lesser cut/perks for them).... Eventually they'll get around to figuring out the reason, and MIGHT decide that a drop in taxes will ensure a continued stream of income, Instead of no income at all!

spot on mate. i guess we are seeing the silver line in a mushroom cloud

[Ruslan]

Spot on L board, there was a article about this on Sunday Times FT section as well. and did u guys notice that so many big shot collision repair centers put advertisements repeatedly in weekly and weekend newspapers?? guess most of the people go for small joints rather than these places for damage repair these days.. i think in a way this is good for the Motor world (Not for the sellers) the prices will come down for realistic figures.. and Govt will reduce unrealistic, colossal tax figures marked on these vehicles.. sooner or later we could see less Maruti like vehicles on the road.. Or No vehicles

Edited April 7, 2009 by Ruslan

[Supra_Natural]

spot on mate. i guess we are seeing the silver line in a mushroom cloud

haha! well said mate

[Pericles]

See mate, the problem is, the current taxes are so high that people have just stopped buying vehicles! even mighty A_M_W with their Maruti's has seen a Massive drop in sale... So obviously when there are no buyers, there is no duty paid on cars and thus no revenue for the Chinthanaya blokes... It's true that those up there sometimes appear to have lesser intelligence than say, a buffalo, but im sure even they notice the falling revenue (I.E. Lesser cut/perks for them).... Eventually they'll get around to figuring out the reason, and MIGHT decide that a drop in taxes will ensure a continued stream of income, Instead of no income at all!

You have more faith in the donkeys than I do. I have a feeling they will look at the income, say not enough money coming in, and say, we'll increase that by raising taxes. And if you think they will take cuts or lesser perks whatever the situ.... Yeah, right. They'll borrow money from the IMF to maintain their perks.

[Supra_Natural]

You have more faith in the donkeys than I do. I have a feeling they will look at the income, say not enough money coming in, and say, we'll increase that by raising taxes. And if you think they will take cuts or lesser perks whatever the situ.... Yeah, right. They'll borrow money from the IMF to maintain their perks.

No machan I didnt say that they'll take lesser perks.... I meant that in the current situ, with lesser income because people aren't buying vehicles, they will be getting less of a cut of the revenue.... So they MIGHT eventually come around to realizing why the revenue has dropped (Thanks to the taxes being far too high for almost everybody), and act accordingly, for no reason other than to ensure a continuation of income....

[L board]

Ah few more things that I forgot to add to my observations. Most of the desparate sellers advertise saying "Urgent Sale", "Owner migrating", "A must go today", "Give away for the first reasonable offer" etc. You call them after one month to see that they still have the vehicles with them and the owners are still in the country

There was this funny incident with a Freelander TD4. With the first advertisement he was telling that he is selling the vehicle since he is migrating to Australia in 10 days. He was quoting 3.8M and told me that if I could buy within few days he will give it at 3.5M. I didnt bother at all because that price was rediculous. Then after two weeks he advertises again (now his earlier deadline of migration has already passed). When I called from a different telephone number (as a different buyer), he told me the same story saying in another two weeks he will be migrating to Austria for sure and therefore he is selling the vehicle in a hurry. When I gave him an offer of 3M he was ready to sell it. When I went to see the vehicle (all the way to Ja-Ela), I saw the poor state of the vehicle with torn seats and second paint. That vehicle had absolutely NO value so I pulled back my offer. However when I met him for the inspection, he told me a completely different story (not the migration story that he told over the phone). He was telling that he paid an advance to buy a land and that he needs money to settle the balance and that is why he was selling the vehicle. He was telling that he needs money within few days since the seller of the land was about to sell it to someone else since he couldn't pay the balance on time. This happened about three weeks back.

Now last week I saw the advertisement again However I did not bother to check the reason for his "urgent sale" this time. Must be a totally different story this time! I don't know why these sellers cant understand. Our market is so small. You cannot fool people like that.

[Ripper]

Spot on L board, there was a article about this on Sunday Times FT section as well. and did u guys notice that so many big shot collision repair centers put advertisements repeatedly in weekly and weekend newspapers?? guess most of the people go for small joints rather than these places for damage repair these days.. i think in a way this is good for the Motor world (Not for the sellers) the prices will come down for realistic figures.. and Govt will reduce unrealistic, colossal tax figures marked on these vehicles.. sooner or later we could see less Maruti like vehicles on the road.. Or No vehicles

on a side note...these collision repair centers really rip you off in repairs by charging crazy amounts especially when they know your insurance is paying for it. The work that they do on some repairs are not anything better than your wayside joint that does the same for half the price if not lesser.

[DevakaC]

L-Board your quite right on the current market issue. Selling a car hasn't been harder than what it is now in Sri-Lanka. Its two sided however, just as you get a lower amount when you sell, you get to pay less on what ever you buy. This however would hold truth only on the second hand market as there is no way the new vehicle prices are going to come down with the high amounts of taxes burdened upon them. From what I follow, diesel jeeps such as Prado's, Montero's, Patrol's have hung on to their prices. wonder what the reason may be.

[Ripper]

L-Board your quite right on the current market issue. Selling a car hasn't been harder than what it is now in Sri-Lanka. Its two sided however, just as you get a lower amount when you sell, you get to pay less on what ever you buy. This however would hold truth only on the second hand market as there is no way the new vehicle prices are going to come down with the high amounts of taxes burdened upon them. From what I follow, diesel jeeps such as Prado's, Montero's, Patrol's have hung on to their prices. wonder what the reason may be.

actually the older nissan patrols are pretty cheap IMHO

[madmax]

You have more faith in the donkeys than I do. They'll borrow money from the IMF to maintain their perks.

Don't forget the monKey running the show at CB is your uncle!

[Kim]

Don't forget the monKey running the show at CB is your uncle!

[ash]

Don't forget the monKey running the show at CB is your uncle!

Isn’t that too harsh???

[Pericles]

Don't forget the monKey running the show at CB is your uncle!

Technically, he's not my uncle. And he's not running the show, he's just doing a puppet act.

[Saturn]

You have more faith in the donkeys than I do. I have a feeling they will look at the income, say not enough money coming in, and say, we'll increase that by raising taxes. And if you think they will take cuts or lesser perks whatever the situ.... Yeah, right. They'll borrow money from the IMF to maintain their perks.

*Sigh* we are slowly going the way of Zimbabwe. Someday, history will look back at this country as an example of greed, stupidity, and poor personal hygiene.

[Kim]

*Sigh* we are slowly going the way of Zimbabwe. Someday, history will look back at this country as an example of greed, stupidity, and poor personal hygiene.

i will LEAVE so b4 that, and send you all pics with 'My Skyline, STI, EVO and all..!

[xXx]

i am absolutely shocked to my bones by your comments. all of you who contributed has miserably failed to grasp the grasp the bigger wider picture. truly disappointing...............

i will connect with you all with my analysis when i find bit of free time

[xXx]

i am absolutely shocked to my bones by your comments. all of you who contributed has miserably failed to grasp the bigger wider picture. truly disappointing...............

i will connect with you all with my analysis when i find bit of free time

[xXx]

L board your claim on greed leading to a price bubble is somewhat true but not entirely. Yes few people did make a quick buck by taking advantage of volatile conditions but there were genuine reasons behind the price hikes.

For instance since of 2003 import duty/taxes were increased on a yearly basis by a significant percentile. Every time the price increased a certain section of the public was ‘robbed’ from their ability to purchase an unreg vehicle. So they had no option but to turn in to registered vehicles. This trend has continued for over half a decade now and it has came to a stage that only a very limited crowd is able to afford a new set of wheels. For example back in 2002 a unreg 121 G grade can be fetched for 2mil fast forward 5 years a similar spec car cost almost 4mil. So how can an average joe breach that 2mil gap within 5 years?????

Another example is in early 2000 for 2mil one had an array of options when shopping for ‘unreg japanies’ cars. corolla 121, carina 212 si, pajero h76, nissan p12 etc were all in the 2mil mark. Now you need atleast 3mil to buy a jap brand made in singa

To make things worst within last couple of years cost of living sky rocketed, inflation went off the roof (even biased CB stats recorded a figure of 29%) and so did the interest rates (back early 2000 OD and loan interest rates were around 13% now its around 22%)

So a car sales guy for example who had to sell 10 cars to just to stay afloat a month all of a sudden had to sell 20 cars but at the same time the number of people who can afford to change their vehicles on a regular basis has decreased drastically. So the sale guy had no option but to increase the profit margins.

And every time there was a sudden flood of demand for used cars, prices of used cars shot up, simple economics.

So the moral of the story i’m trying to get at is, the burst of the pricing bubble is a direct result of the shaky ground the local economy is in right now. This has been coming for some time now. It didn’t happen overnight. Sri lankan economy was in a grave situation well before the global economic turmoil took over the world (local commodities were doing very well till second half of last year) Our leaders were simply clever enough to hide the true picture by showing thoppigala and dayata kirula.

[isam]

So the moral of the story i’m trying to get at is, the burst of the pricing bubble is a direct result of the shaky ground the local economy is in right now. This has been coming for some time now. It didn’t happen overnight. Sri lankan economy was in a grave situation well before the global economic turmoil took over the world (local commodities were doing very well till second half of last year) Our leaders were simply clever enough to hide the true picture by showing thoppigala and dayata kirula.

xXx, thanks for enlightening us from a different perspective, one that we often miss out. Just to add my 2 cents into this; Sri Lanka's economy is deteriorating at an alarming rate, say from about 3 years now. It has been deteriorating gradually, but now the rate has increased. Global recession situation has accelerated and amplified the effect even more.

Sri Lanka has long been in trouble when it comes to foreign reserves, which allows us the capacity to buy from foreign countries. Historically, SL kept foreign reserves sufficient for 6 months imports. But, this limit could not be maintained due to our high import to export ratio. Main contributors for this are the industrial imports and vehicle imports. If you look at the CB report a massive figure is spent on importing industrial raw materials. Since limiting industrial imports is a like suicide to the economy, government tried to discourage vehicle imports by jacking up the taxes.

IMHO, government is applying medicine to the foot, where the wound is in the head.

Idiotic politicos do not see that all everyone is trying to arrange their personal transport (hence, high demand for the imported personal vehicles) simply because the public transport is PIECE OF CRAP!!! So the culprit for initiating all these problems is the transport authorities who still keeps silent.

Edited April 8, 2009 by isam

[isam]

See mate, the problem is, the current taxes are so high that people have just stopped buying vehicles! even mighty A_M_W with their Maruti's has seen a Massive drop in sale... So obviously when there are no buyers, there is no duty paid on cars and thus no revenue for the Chinthanaya blokes... It's true that those up there sometimes appear to have lesser intelligence than say, a buffalo, but im sure even they notice the falling revenue (I.E. Lesser cut/perks for them).... Eventually they'll get around to figuring out the reason, and MIGHT decide that a drop in taxes will ensure a continued stream of income, Instead of no income at all!

Bro, Government is after foreign reserves now! SL, is in the brink or collapse in that front. So I doubt the quick buck profits on local currency (they can print it anytime ne )

But you never know, my experience is that in this country even the most un-predictable should be expected!