Say ‘no’ to used car imports
One of the first steps that the Government at the time took in the wake of the Covid-19 pandemic was completely curtailing vehicle imports to save foreign exchange.
This was a prudent decision at that time, as vehicle imports alone cost a massive US$ 1.5 billion on average per year. This is a substantial saving, given that our foreign reserves had dwindled to an all-time low.
But with the passage of five years and the economy recovering to a great extent, the Government prudently decided to permit the import of private passenger vehicles from last month. Although there are a few companies that assemble cars locally from Completely Knocked Down (CKD) kits, many people yearn for a greater choice.
In the meantime, all local car assemblers should also be encouraged to go fully electric. Three of them already have at least one electric car in their portfolio and the others should be given incentives and concessions to take the same route.
Despite the high prices, many pre-orders have been placed for mid-range and luxury cars which are brought down as Completely Built Units (CBUs).
However, there is simply no way that we can go back to a ‘free for all’ model for car imports, where almost anyone could import a car with the correct paperwork. This is indeed how so-called ‘car sales’ blossomed in every nook and corner.
Thus the decision to allow private individuals to import only one per year is a correct move. Moreover, all the cars brought down by a particular importer have to be registered within 90 days either in a customer’s name or in the name of the importer. This will automatically limit imports by “car sales” as they would not want to run the risk of registering the extra cars in the company’s name, which generally slashes around Rs.500,000 from a car’s value.
Unlike the “car sales” which used to import hundreds of used cars in one shipment, the authorised local agents import brand new cars only on order, on the payment of a Letter of Credit (LC).
But the Government should encourage both sole agents and “car sales” to give priority to electric cars. A previous Government actually reduced import and excise duties on electric cars, but that Government itself reversed this decision in a clear case of twisted logic.
Had that decision remained in effect, we would have had at least 10,000 electric cars on the road by now, thereby alleviating the pressure on the oil import bill (US$ 5-6 billion a year) to some extent.
Concessions and incentives should be granted for the purchase of electric vehicles, within the constraints imposed by our economy. If we do not take this step, the electric revolution could pass us by.
The authorities should also negotiate with an electric car manufacturer such as Tesla or BYD to install DC Rapid Superchargers in selected locations throughout the island. If more DC Chargers are available, people will be inclined to buy electric cars. Right now, it is a chicken and egg issue, as some people prefer not to buy electric cars without the necessary infrastructure in place. Buyers should also be encouraged to install solar chargers, for which import duties can be reduced. Duty and tax concessions should be granted for all types of electric vehicle chargers.
While this newspaper has championed the cause of electric cars and called for a complete halt to Internal Combustion Engine (ICE) cars and SUVs, the reality is that our charging network is still not up to par, especially in the outstations.
Thus it may be necessary to allow the import of ICE and plug-in hybrid cars along with electric cars at least for two more years while the charging and repair infrastructure catches up. By this time, Battery Electric Vehicles (BEV) will also have hit the US$ 25,000 sweet spot, which is on par with ICE vehicles.
The entire Government fleet must eventually be converted to electric and all new purchases must essentially be electric. Converting the Government fleet will accelerate Sri Lanka’s decision to only allow the registration of electric (and possibly hydrogen fuel cell-powered) vehicles from 2035 onwards.
Only the accredited local sole agents of vehicle manufacturers must be allowed to import electric vehicles, as there are safety and repair issues that only they are equipped to handle.
Moreover, the import of ‘reconditioned’ vehicles, whether ICE or BEV, must not be allowed at any point of time. All vehicles should be less than two years old at the time of unloading at Colombo or Hambantota International Ports. Used cars require more repairs and spare parts, which adds to the forex burden.
The import of used electric cars must be strictly discouraged, as there is no guarantee about the actual condition of the battery. The Government has to formulate standards for the repair and disposal of electric car batteries.
The Government could also immediately auction any cars impounded by the Customs regardless of engine capacity and fuel type, as letting them rot out in the open serves no purpose. This way, the Government will at least earn some revenue. In any case, only a holistic approach to vehicle imports will benefit both the Exchequer and the consumer.
Finally, it is vital to build a comfortable, clean, fast and punctual public transport system to discourage car purchases and usage. Imagine the amount of fuel that would have been saved if the Malabe-Colombo LRT was already operational. Such opportunities must not be missed again.
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