Used car dealers justify claim to bid for government tenders
Sri Lanka is losing a colossal sum of money by allowing only franchise motor dealers to bid for government vehicle procurement tenders as a matter of policy, used car dealers alleged at a media conference in Colombo recently.
The Vehicle Importers Association of Sri Lanka (VIASL) appealed to the Government to remove the current monopoly enjoyed by automobile franchise dealers (local agents of brand new vehicles) in bidding for government vehicle tenders.
These franchise car dealers have an unfair advantage as new vehicles imported by parallel importers or used car dealers do not receive the applicable brand new status even though the vehicle is brand new, VIASL Chairman Ranjan Peiris told journalists.
He noted that this was detrimental to their ability to pursue government tenders while the monopoly given to franchise vehicle dealers has enabled them to quote a much higher price than the market value
Due to this reason the Government is forced to spend a massive sum of money unnecessarily, he pointed out.
As parallel importers import domestic models as opposed to export models, the quality of vehicles being imported is of high quality, he said adding that they have various additional options and are rich in safety standards as well as emission standards.
All manufacturers produce the highest quality models for their domestic consumers hence customers in Sri Lanka get a better value when purchasing a vehicle from a parallel importer as opposed to buying it from an agent, he emphasised.
Clarifying the reason behind importers registering brand new vehicles and deregistering them he noted that this was mainly due to export regulations of the relevant country.
He pointed out that the engine capacity tax was mainly instituted by the Finance Ministry with an aim to prevent errors in calculating import tax based on the valuation and to overcome any revenue leakage.
Highlighting a grave disadvantage faced by parallel importers that needs rectifying, Mr. Peiris explained that as a result of the depreciation table being abolished, traders who import vehicles that are up to three years old are also required to pay the tax that is imposed on a brand new vehicle.
He called upon the authorities to urgently look into this matter on a priority basis as parallel importers routinely face a volatile business environment with regular taxation changes and depreciating exchange rates resulting in customer difficulties and delays.
Local agents of brand new cars or franchise vehicle dealers place bulk orders with principle manufacturers resulting in long delays of up to 6-18 months for vehicle delivery, he said adding that for parallel importers it only takes between two to eight weeks to import a high quality vehicle thereby minimising volatile exchange rates and changes in taxation.