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Automobile spare part prices rocket

07 Nov 2021

  • Existing LC barriers mainly blamed for hike
  • 40 ft. container shipping cost increased fivefold
  • Suppliers request 9 months to deliver parts
  By Imesh Ranasinghe  Local automobile spare part prices have increased by 40% in the last four months, even while the unusual increase in vehicle prices following the import ban has started to settle down to pre-pandemic levels, The Sunday Morning Business learns. Speaking to us, a spokesperson from the automobile spare parts industry said that shipping prices have increased by 37-40% between the two shipment orders made in May and October this year. The increase in shipping prices, and delay of order deliveries, along with the existing barriers to open letter of credits (LC) due to the forex shortage in the country has resulted in this huge increase, the sources confirmed. Sri Lanka imports automobile spare parts from countries such as Japan, Singapore, South Korea, China, Malaysia, Indonesia, and India.  The industry spokesperson said that the shipping cost of a 40-foot container has increased from $ 2,000 to $ 10,000 during the last year. According to the Drewry World Container Index, which tracks container costs, the cost of a 40-foot container was $ 9,669.47 as of 28 October.  Sources also said that some spare parts are ordered from Japanese companies, which have requested a nine-month delivery period for the order due to limited trade movement following the shipping price increase. Moreover, the price increase in spare parts, as well as other imported material, was also due to the coal shortage that has been ongoing since September, as there were power cuts in China affecting the manufacturing industry, which resulted in delayed delivery of shipments. However, according to international media reports, the coal shortage in China has been solved, with the number of Chinese provinces with significant power shortages falling to two in mid-October, down from 18 at the start of the month. This was after state intervention – with increased coal imports and financial assistance to local manufacturers. The price increase is also contributed towards by price increases in steel, aluminum, stainless steel, plastics, copper, and fuel. When contacted, an official of the Consumer Affairs Authority (CAA) said they have received a very low number of complaints about the spare part prices. Vehicle Importers’ Association of Sri Lanka (VIASL) President Indika Sampath Merenchige said that while automobile spare part prices have increased, motor vehicle prices have gone down after their unusual hike in prices. For example, the price of the Maruti Suzuki Wagon R 2018 model, which was somewhere between Rs. 3.3-3.5 million prior to the import ban, increased to about Rs. 6 million, but current prices have stabilised between Rs. 4.8-5.9 million depending on the mileage. Merenchige said the reason for this decrease could be due to the statement by the Central Bank Governor in allowing vehicle imports, and also due to various news that were circulating about possible moves by the Government to allow vehicle imports. In October, Central Bank Governor Ajith Nivard Cabraal said that the Government would allow the importation of vehicles if taxes were paid in US dollars. Meanwhile, Trade Minister Bandula Gunawardena told The Sunday Morning Business last week that he has requested a relaxation of the ban on vehicle imports through the upcoming Budget, while adding that discussions are ongoing with relevant stakeholders in order to come to a feasible solution.


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