The recent hike in import duties levied by the Government of Sri Lanka has thrown auto makers in Indian markets in a tizzy. The hike is astronomical and will effect profits, sales and will adversely affect demand as this will put additional pressure on buyers. To counter these constraints, Maruti Suzuki India Ltd. (MSIL) has stated that they are planning to set up a car assembly plant in Sri Lanka along with a local partner.
This will be the first move out of the country by a Indian car maker. Sri Lanka is a major importer of Maruti Suzuki cars. It is a market which has grown by leaps and bounds in the past few years and a market that Maruti Suzuki is now determined to concentrate on, specially since its growing sales figures in the recent past.
In April this year, Sri Lankan Government raised import duties from 120% to 200%, a policy which has thrown Maruti cost competitiveness out of gear. The company has hence decided to set up a unit in the country through a local partner bringing in their vehicles in completely knocked down form to avoid these heavy levies.
Industrial experts are of the opinion that Sri Lanka has decided to hike tariffs for imported vehicles due to Chinese influence. Geely, the Chinese auto manufacturers have announced their first assembly plant in Sri Lanka with a $20 million investment plan with local partners Micro Cars.
In Sri Lanka, Associate Motorways Ltd, is the official imported of Maruti Suzuki cars. AMW associated itself with MSIL since 1991. They currently offer Maruti cars like Alto, Estillo, Wagon R, New 800, Swift, A Star, and Ritz. Maruti Suzuki is Sri Lanka’s best selling new car brand since 2003. AMW has showrooms in following Sri Lankan cities, Ampara, Colombo, Kandy, Kurunegala, Matara, Negombo and Ratnapura.