Hold Outs

June 22, 2010 (LBO) – A steep tax cut on vehicle imports in Sri Lanka has injected life into the almost comatose car trade, but some dealers are stubbornly holding onto high prices hoping that the lower tax regime will not last too long. They are appealing to the fear and greed of buyers. While some may not trust the government to maintain a pragmatic tax structure, others want to have the satisfaction of beating the system before taxes are put up again.

But with an International Monetary Fund deal keeping dollar shortage phobias at bay, and the government’s comfortable foreign reserve stock, the tax cut may be expected to last at least as long as the IMF calls the shots.

Despite the heavy advertising of vehicles at “new duty rates”, “prices slashed,” “lowest price in town,” many appear to be reluctant to part with fleets imported at higher rates.

A dealer at Bambalapitiya offers a 2006 Toyota Belta (1000cc) at 3.6 million, when his list price for a newer 2007 Toyota Belta (1300cc) car is 3.2 million rupees. Hard to imagine the nutter who will pay 400,000 rupees more for an older and less powerful car.

At Kohuwela, a dealer offers a 2-wheel drive Navara smart cab at 4.2 million rupees. Drive a little further away to M