MONETABRIEF – Sri Lanka’s extension of the 50 per cent surcharge on customs duty for private vehicles is seen by dealers as an opportunity to revive an otherwise lacklustre market, where pent-up demand had petered out by late last year.

Hyundai dealer Abans announced a sharp two-million-rupee reduction for their existing stocks of Creta down to 17.25 million while the locally-assembled Grand i10 was offered at a 580,000 rupee discount.

Toyota Lanka placed advertisements declaring that there had been no change in the prices of their vehicles in stock. The company noted that the popular Toyota Raize was still being sold at its 2025 price tag.

United Motors, which imports a Malaysian version of the Toyota Raize, was offering lease-rental waivers on vehicles sold at the old price.

The three-month customs duty surcharge was due to end on Saturday, but the Finance Ministry has extended it until the end of December. The additional tax was intended to reduce import demand and ease pressure on foreign-exchange reserves.

However, the unexpected extension of the surcharge comes despite the Government’s claim that foreign-exchange reserves stand at more than $6.5 billion.

Private vehicle importers were quick to declare that retail prices would rise by as much as five million rupees for a Toyota Land Cruiser, while the more modest Suzuki Wagon R could cost an additional 500,000 rupees.

Prasad Manage, president of the Vehicle Importers Association of Sri Lanka (VIASL), told reporters over the weekend that 90 per cent of the vehicles currently on the market had been imported before the surcharge was imposed on 15 May.

This means the vehicles have been languishing with dealers for more than three months without buyers, causing serious cash-flow problems for importers desperately seeking customers.

Under the import rules, dealers must pay a fine of three per cent of a vehicle’s CIF value if it is not registered within three months of import. As a result, many dealers have begun registering cars in their own names to avoid paying the additional three per cent.

There are “brand-new, zero-mileage” vehicles advertised online and in Sunday newspapers.

Manage said it was a “good opportunity” to buy vehicles already in the local market and avoid paying the customs duty surcharge that will apply to new imports.

Another importer, Indika Sampath Merenchige, said there had been hardly any sales in the past three months as buyers had been hoping for prices to decline.

“I think even after December 31, the Government will continue the surcharge and, therefore, now is the best time to buy a vehicle that was imported under the old, lower duty rate,” Merenchige told reporters. (Colombo/Aug 16/2026)