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June 08, 2013 (LBO) - Sri Lanka's Kia automobile distributor which launched the 2013 Sorento sport utility model in Colombo is banking on tax slashed permits issued to state workers to sell the vehicles, an official said.
Sri Lanka's entire automobile industry was badly hit in mid 2012 after taxes were suddenly jacked up on motor vehicles twice in the wake of balance of payments pressure. Similar incidents have happened earlier.

Most distributors of brand new vehicles are depending on tax-slashed 'permits' given to state workers to keep sales up.

"The taxes do affect us, it affects the price of the vehicles but the industry has being like that," Andrew Perera, Chief Operating office, KIA Motors Lanka said.

"It has being radical where the taxes keep changing but thanks to permits we are selling a considerable amount of vehicles."

While taxes for ordinary citizens were jacked up, state workers were allowed to buy cars with taxes slashed. Elected rulers are allowed to buy taxes completely tax free.

Critics have said the discriminatory taxation in a modern republic resembles the pre-French revolution 'Royal Privilege' conditions in Europe.

The tax-slashed permits however are sold by state workers to ordinary citizens who use them to buy cars.

Meanwhile Perera said most of their customers are permit holders and it is an advantage for the customers to buy a vehicle from a permit because it's cheaper than buying a duty paid.

The company is hoping to sell 800 vehicles by the end of this year in all types of vehicles.

The company says sell around 50 - 60 vehicles a month and has sold over 3000 units with the last three years.

The KIA Sorento and Sportage SUV are among the most popular in Sri Lanka. In April 2012 just as taxes were 218 units (190 Sorentos and 27 Sportages made up of both brand new and re-conditioned) were registered, according to data from the island's vehicle registry.

By January 2013 new registrations had fallen to 22.

KIA Motors Lanka is also investing in branches and service centres in Malabe, Matara, Kurunagala and in future to Kandy to accommodate their growing customers.

The company is also eying former war affected areas in the north and east.
"We haven't gone in to those markets yet but I am sure there is potential," Perera said. "I guess with the infrastructure developing it is definitely a market we would like to look in to those areas."

KIA said the new 2013 Sorento SUV in is "smarter and safer" than its 2012 version with enhanced styling.

It features new design of the fog lamps, radiator grill, (LED) light emitting diode rear combination lamp, rear bumper and the tailgate.

The company says a full option 2013 Sorento will cost around 6.4 million rupees and is mainly target to individual customer rather than corporates due to permits.

Source