Vehicle importers are likely to face stiff setbacks in coming months due to the credit squeeze, experts say. It was pointed out that currently there were ample stocks in the market of vehicles paid for on the old duty structure, and these would be able to hold for another minimum period of eight months to one year, vehicle importer Ashok Gadwani told the Business Times. With credit extension curtailed by banks and finance institutions following new government regulations to not extend beyond 18% of last year's total credit extended, this was likely to create an impact on future vehicle imports, he explained.
He noted that with credit already extended most institutions were likely to complete their credit limit by September or October. In this respect, these finance institutions would not be able to extend credit to consumers as a result of which most individuals would be unable to purchase vehicles on credit. This would result in drastic curtailment of imports as well since consumers would be compelled to purchase at a higher rate under the new duty structure that varies between Rs.1.2 million and 1.9 million for a 1500 cc car.
Importers would not be able to purchase increased reconditioned vehicles even after the government reversed its decision to limit imports to one year old vehicles. President Mahinda Rajapaksa on Tuesday assured reconditioned vehicle importers that the age limit would be extended and revert back to two years, from one year as previously announced. During a meeting with Vehicle Importers Association President Yoga Perera at Temple Trees, the year rule on vehicles was extended from one to two years; and commercial vehicles were extended from three and a half years to four years. |
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