Lanka Ashok Leyland says has adequate vehicle stocks to plough ahead despite import controls

Lanka Ashok Leyland PLC said it has adequate vehicle stocks to continue to serve the market and also to meet any sudden uptick in demand in the near term, as the government keeps a lid on vehicle imports to preserve foreign exchange and also to buy space to develop a robust public transport system in the country. The assembler and importer of Ashok Leyland buses, trucks, truck chassis, spare parts, power generators and accessories, had an inventory worth Rs.3.8 billion by end-June, of which close to 90 
percent was vehicles.      

“Our healthy inventory position stands to benefit us as the government has imposed import restrictions. We believe that our strong position will help us respond 
quickly to any pockets of demand across the island in the near term,” Lanka Ashok Leyland CEO Umesh Gautam said in his annual review 
of operations.    Lanka Ashok Leyland is the market leader in the public bus transport sector in Sri Lanka, serving both the state-owned Sri Lanka Transport Board (SLTB) and private sector.  The company also carries out repairs and restoration of commercial vehicles, including body fabrication on goods and 
passenger chassis. The company earned revenues of Rs.504.5 million in new vehicle sales during the three months to end-June 2020, compared to Rs.996.5 million in the comparable period, last year. 

Sri Lanka currently has a vehicle stock sufficient for the next two years, as the country was flooded with mostly substandard quality passenger vehicles during 2015-2019, said Secretary to President Dr. P.B. Jayasundera, in a recent television interview. However, most of which could be consisting of pre-owned vehicles, as the brand-new vehicle importers continue to lament over the import ban, since they are running out of stocks. Both the pre-owned and brand-new vehicle importers thrived for years, particularly since the end of conflict in 2009, as vehicle imports shot up due to lower interest rates and eased import duties. The myopic policy put the development of public transport system in the country a top national priority, on the back burner. According to data, total passenger kilometrage significantly declined by 22.7 percent in respect of public bus transport and 2.2 percent in respect of private bus transport to 12 billion kilometres and 54.2 billion kilometres, respectively, in 2019, compared to the year before. Further, despite the total number of buses owned by the SLTB increased by 4.3 percent to 7,251, the average number of buses operated by the SLTB declined by 2.8 percent to 5,079 in 2019. Also, the total number of buses owned by the private sector declined by 0.3 percent to 19,979 in 2019, from 20,030 in 2018, showing that the industry is declining as people rapidly shift to personal vehicles. The private bus owners for years have been saying that their industry viability is confronted with an existential risk.

In a sign that the present government has recognised the significance of a more synchronised and sustained development of both the public and private transport sectors, it assigned a state ministry for ‘Vehicle Regulation, Bus Transport Service and Train Compartments and Motor Car Industry’.

The need for liveable cities and a people-friendly transport system has been a dire need for Sri Lanka for decades but successive governments conveniently neglected it for political gains, as vehicle imports were used as a mechanism to lure voters by manipulating import duties. 

In tandem, free market ideologists have also called for unrestricted importation of vehicles, with scant regard for negative externalities it could bring, given the present situation in the road infrastructure and economy.