The Vehicle Importers’ Association of Sri Lanka (VIASL) has warned that prices of imported used vehicles are set to rise sharply after the removal of a 15 percent valuation reduction previously applied when calculating Customs values, the association’s Vice President and spokesperson Arosha Rodrigo said on Wednesday.

Rodrigo told reporters that the change will ripple across the market, with popular models facing steep increases. A Honda Vezel Z Play SUV could cost around Rs. 2 million more, while a Suzuki Wagon R may rise by about Rs. 700,000, he said.

The increase stems from revisions to the Customs valuation methodology. Under Gazette Extraordinary No. 1971/10 of June 14, 2016, two methods were prescribed for vehicle valuation: Section 1(A) for brand-new vehicles and Section 1(B) for all other vehicles, including used imports. Authorities have long argued that the 15 percent reduction amounted to an improper concession, allowing vehicles first registered overseas as “new” to later qualify as “used” imports and reducing government revenue.

VIASL pushed back on that framing, saying the adjustment had been introduced by the Ministry of Finance to reflect the actual transaction value of vehicles rather than inflated retail prices. The association noted that retail prices typically include dealer margins, local taxes and overheads, while bulk discounts and negotiated rates in international trade mean importers’ real purchase prices are lower. The reduction, it said, was not a special concession but a mechanism to align Customs values with actual costs borne by importers.

Higher Customs values will directly increase import duties and taxes, push consumer prices upwards and threaten the recovery of Sri Lanka’s vehicle import sector, the association warned, urging authorities to reconsider the decision. The intervention adds to a sequence of recent regulatory tightenings that have weighed on importers, including the Central Bank’s May 25 reduction in loan-to-value caps that VIASL warned would also push prices higher and the vehicle-import duty surcharge cycle that began earlier this year.

Source: Used vehicle prices to surge after 15% valuation reduction removed: VIASL — Newswire, June 17.