Vehicle Prices Rise Due to Extension of Additional Tax: Vehicle Importers’ Association

19-Aug-2026

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Vehicle prices across all categories in the domestic market have increased significantly following the further extension of the additional tax imposed on vehicles in Sri Lanka, said Arosh Rodrigo, Vice President and Media Spokesperson of the Sri Lanka Vehicle Importers’ Association.

He made these remarks while addressing a media briefing held in Colombo on August 17.

Elaborating further, he said consumers and importers had been eagerly expecting the additional tax imposed by the Government to be removed. However, its extension for a further three months, until the end of this year, is disappointing. As a result of the tax increase, prices of several of the most popular vehicles in the market have risen by several lakhs of rupees.

The price of Wagon R-type vehicles, which previously ranged between Rs. 6.5 million and Rs. 7 million, has now increased to between Rs. 7.5 million and Rs. 8.5 million following the latest tax increase, while higher-grade models are priced at up to Rs. 9 million.

Similarly, the prices of Alto and Atrai models, which were previously around Rs. 13.5 million, have now increased to as much as Rs. 14.5 million. The price of Honda Vezel vehicles has risen from between Rs. 18 million and Rs. 18.5 million to around Rs. 19.5 million, while the latest models are being sold at between Rs. 21 million and Rs. 21.5 million.

He said the large number of new vehicles currently seen on the roads was primarily due to the substantial pent-up demand in the market following the lifting of the vehicle import ban imposed over the past five years.

He noted that, with public transport services still insufficiently developed and climate-related challenges continuing, people are seeking to purchase vehicles for their families’ safety and essential transportation needs.

However, consumers who cannot afford to purchase new vehicles without registration due to the additional tax are now turning towards registered used vehicles. Consequently, both demand for used vehicles and their prices have increased in the market.

In this difficult situation, the Government should take steps to exempt at least small vehicles from the additional tax. In addition, increasing the loan-to-value ratio for vehicle loans to 60 per cent would enable members of the public to obtain greater credit facilities and meet their vehicle requirements to some extent.

The vehicle sales sector has suffered a severe setback due to the prevailing tax structure and rising prices. Consumers are now in a position where they can consider purchasing vehicles only with the limited funds available to them.

He further pointed out that, under these circumstances, businesses in the sector are operating with considerable difficulty, with the primary objective being to sustain their operations rather than to pursue substantial profits.