Sri Lanka’s motor industry has been facing severe challenges since the onset of the pandemic with strict import restrictions, and a reduction in consumers’ purchasing power impacting sales and other revenue streams.

But with the government gradually easing import restrictions, the industry is slowly yet surely resurging. “Companies are experiencing some relief with regard to the vehicle import programme [in place] so going forward, people are expecting something positive,” noted Rohana Dissanayake.

On an LMDtv interview, the Group Chairman and Managing Director of David Pieris Holdings noted that import restrictions have given rise to new trends in the industry: “Since imports were not possible, people depended on after sales services so most companies focussed on [expanding] their vehicle service operations to the outstations.”

Adding to this, he pointed out that companies have been able to “offer better service to customers and gain numbers.”

Curtailing imports of vehicle spare parts has also transformed local businesses. “Firms were compelled to work with local industries since components had to be sourced through them,” Dissanayake elaborated, adding that this has led to “opportunities for component manufacturers, creating domestic employment opportunities.”

It is unclear when the vehicle import ban will be abolished, which is also stalling the takeoff of other emerging trends like hybrid or electric vehicles.

“Until those things happen, the industry may have to focus more on providing after sales services, gaining as much income as possible, and focussing on technology to improve efficiencies and run businesses.”

Tax hikes aren’t helping either. As Dissanayake pointed out, “tax hikes have definitely increased vehicle and commodity prices. If you are in a competitive industry, tax hikes are quite normal but what’s happened in the Sri Lankan context is the cost of living has really gone up, creating a situation where disposable incomes have gone down.”

“Earlier, people used to acquire vehicles mostly on easy payment schemes through finance companies and bank loans; but today, because instalments have gone up and disposable incomes have come down, paying rentals has become tough – which is why sales numbers have fallen,” he explained.

However, not all is doom and gloom in the motor industry. “There are a reasonable number of vehicles being exchanged as secondhand vehicles,” Dissanayake revealed.

Furthermore, Sri Lanka’s automobile component manufacturing sector is gaining momentum and becoming a foreign exchange earner. The government is supporting this positive trend and has put in place a strategic plan to establish a specialised automobile component manufacturing zone to attract foreign companies to establish joint ventures.

The Group Chairman and Managing Director of David Pieris Holdings believes that this will provide many job opportunities while enabling small businesses to garner support: “What we should be doing is encouraging local component manufacturers to produce components and look at export markets because that’s what this country requires.”

And Dissanayake highlighted how Sri Lanka also has work to do to harness the potential of electric vehicles.

He explained: “Cost saving motor transportation solutions is a requirement so electric vehicles will become very handy. What’s required is the infrastructure to service these vehicles, charge them and measure their performance.”

Sri Lanka’s motor industry stakeholders have endured many ordeals with companies shutting down, downsizing operations and reducing staff numbers. On the brighter side, he observed that businesses have “expanded their service network to focus more on after sales services” and some have ventured into other business areas or diversified.

“It’s important for any business to have a focus and commitment to do the best it can, and allow the rest to follow,” Dissanayake concluded.