Vehicle registrations slump threatening govt.’s revenue plans

Sri Lanka’s vehicle registration slumped to a 36-month low in the month of June, as the activity in the economy turned sluggish with the fallout of the Easter Sunday attacks amid slowing credit and higher non-performing loans (NPLs). 

Total vehicle registrations in June fell to 26,201 units, from 32,635 units a month ago and 39,084 units a year ago, the data compiled by Colombo-based equity brokerage and research house JB Securities showed. The sharp decline was led by two-wheelers, which fell to 21,416 units, from 27,508 units in May and 26,175 units a year ago. Registration of mini-trucks also fell to 99 units in June, from 136 units in May and 394 units 12 months ago.

According to JB Securities Managing Director Murtaza Jafferjee, crowding out of unregistered vehicles by the resale of repossessed registered vehicles, stemming from the rising NPLs, could be the key reason for the slump in the two-wheeler and mini-truck registrations during June.

He also said the focus of banks to recover loans rather than giving out new loans and the low consumer and business confidence due to the fallout of the Easter attacks may also have played a role in the sharp decline in registrations.  

Jafferjee pointed out that if lower registrations persist in the coming few months, it could jeopardise the government’s revenue streams, which is already hit by the slowdown in the economy, due to the Easter Sunday attacks.

“The budget estimate is for Rs.240 billion in taxes from this sector. If the current run rate continues, the Treasury will struggle to even get 60 percent of this figure, i.e. a miss of Rs.96 billion,” Jafferjee cautioned. 

Although vehicle registrations is a close proxy to the vehicle imports to the country, in most vehicle categories there is a lag of around 30 days between the date of imports and registration.
Meanwhile, total car registrations recorded 1,580 units in June, down from 1,816 units in May and significantly down from 6,819 units 12 months ago.

Brand-new car registrations recorded 222 units in June, down from 291 units in May and 992 units 12 months ago. 

Small cars accounted for the bulk of them, recording 185 units or 83 percent. Imports from India and Japan accounted for 45 percent and 41 percent of units, respectively. 
Pre-owned cars recorded 1,358 units in June, down from 1,525 units in May and significantly down from 5,827 units 12 months ago. 

Small cars accounted for the bulk of them recording 1,303 units (96 percent). Toyota was the segment leader, accounting for 832 units (61 percent) with 734 Vitz units, followed by Suzuki with 324 units and 180 Wagon R units. 

Premium brands recorded 66 units in June, down from 93 units in May and significantly down from 227 units 12 months ago. 

New cars accounted for 66 units with Mercedes Benz recording 28 units, among which 23 were C Class units. Pre-owned premium car registrations recorded 35 units — seven Mercedes Benz units, out of which six were C Class units, six BMW 6 units, out of which four were 3 Series units and 22 Audi units – 16 units of A1 and five units of A3.

Under notable premium car registrations in June, there was a Lamborghini Avantandor SV. JB Securities said it may have been imported into the country sometime back and was only registered recently. 

Meanwhile, electric car registrations recorded seven units in June, up from six units in May but down from 10 units 12 months ago. Nissan Leaf accounted for six of these units.

Hybrids recorded 340 units in June, down from 458 units in May and significantly down from 3,638 units 12 months ago. Motorcars accounted for 328 units, down from 431 units in the previous month. Suzuki accounted for the bulk of them, recording 284 units. 

SUV registrations recorded 289 units in June, down from 303 units in May and significantly down from 637 units 12 months ago. Brand-new accounted for 160 units and the balance 129 units were pre-owned. 

Small crossovers, less than 1,500cc engines, accounted for 266 units. MG, which is a crossover and an affordable vehicle, accounted for 84 units, followed by Toyota with 38 units, Mitsubishi with 31 units and Honda with 28 units. 

In the premium SUV segment, Range Rover accounted for 12 units, of which, nine were Range Rover Sports units, 23 Audi Q2 and Q3 units and five BMW units. 

Three-wheeler registrations recorded 821 units in June, marginally down from 892 units in May and significantly down from 2,050 units 12 months ago. Bajaj maintained its category leadership with a 93 percent share.

Bus registrations recorded 40 units in June, down from 66 units in May and significantly down from 177 units 12 months ago. Imports from India accounted for 83 percent of units. Interestingly, in the second half of 2017, bus registrations were around 300 units a month.