Sri Lanka Vehicle Sales Plunge 50% After Cyclone Ditwah

2025-12-29 04:00:18

(MENAFN- Colombo Gazette) Sri Lanka's vehicle market has recorded a sharp slowdown following Cyclone Ditwah, with sales falling by nearly 50 percent as affected customers postpone or cancel purchases, according to Ceylon Automobile Importers Association President Prasad Manage.

He said many buyers, particularly in Kandy and several other impacted areas, are no longer able to complete transactions they had already begun. As a result, importers are facing financial pressure, including a 3 percent monthly penalty on vehicles that remain unsold for more than three months.

“When your house is flooded, buying a car is no longer a priority,” Manage said, noting that some customers have requested refunds of advance payments.“People are facing difficulties, so we are returning advances where possible.”

While comprehensive industry data is not yet available, Manage said most importers are experiencing similar challenges. He added that importers themselves have been affected by the cyclone and have formally requested relief from the penalty, proposing a six-month extension period.

“We do not have the margins to absorb these penalties,” he said.“We are also paying interest on import loans, and those rates are around 10 percent.”

Sri Lanka's vehicle sector is also operating under broader economic controls, including foreign exchange and import restrictions. Critics argue that such measures stem from long-standing weaknesses in monetary policy and have contributed to instability in the currency despite periods of current account surplus.

The rupee continued to weaken in 2025, particularly after an interest rate cut in May. Although vehicle imports boosted government tax revenue earlier in the year, volumes had already begun to decline before Cyclone Ditwah struck. Importers report that both the opening of new letters of credit and overall car import volumes have slowed further, even as selective foreign exchange restrictions continue to affect private buyers.

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