ECONOMYNEXT – Sri Lanka’s unregistered car prices are sliding amid forced selling by importers and while bloated second hand car prices are also under pressure, Vehicle Importers Association of Lanka (VIAL) President Indika Sampath Merinchige was quoted as saying.
Sri Lanka opened car imports in February 2025 after macro-economists advising the then administration halted many imports in 2020 after printing money to close an ‘output gap’.
Auction prices if ‘reconditioned’ cars in Japan which were up to three years old surged due to demand from Sri Lanka, Merinchige was quoted as saying Sri Lanka’s Daily Mirror newspaper.
“We asked the government to allow the import of cars up to 5-years old because we knew there were not many cars less than 3-years old. But they did not listen.”
As a result, a large number of vehicles were initially imported at very high cost.
People who were not traditionally in vehicles had also imported cars, paying the higher auction prices, he said.
However, the pent-up demand was now slowly going away.
The Finance Ministry has also imposed a tax on unsold cars, which were kept unregistered for long periods in a mistaken belief that imports caused foreign reserve losses and not central bank rate cuts and liquidity injections.
“Initially prices of used registered cars did not go down,” Merinchige said. “But now they are also going down.
“That I think is towards the correct price. But when the price goes down people are reluctant to sell the old car buy a new one. So result sales are slowing.
“As a result, cars are piling up in sales. Due to the 3-month penalty and also to solve problems with banks, importers are selling at lower prices, at a loss.”
With Japanese auction prices also falling new stock can be imported at a lower price, analysts say.
Japanese vehicle have dropped by around 1.5 to 1.0 million rupees, Merinchige said.
An unregistered Honda Vezel Z Play 2025 SUV now sells for 23.5 million, down from 25.5 million, he was quoted as saying in Daily Mirror.
A Toyota Yaris has dropped to 10.5 million rupees from 11.5 million, a Suzuki Alto Hybrid to 7.3 million, down from 7.9 million. A Suzuki Wagon R has also fallen to 7.3 million from Rs7.8 million rupees.
This was the way demand and supply worked in a market to self-balance itself, Merinchige said.
(Colombo/Oct23/2025)
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