Sri Lanka Dimo says vehicle sales volumes double

Oct 06, 2010 (LBO) - Sri Lanka's Diesel and Motor Engineering Company, agents for Mercedes Benz and Tata vehicles, says monthly volumes have doubled to 1,000 units from a year earlier following an economic upturn and cuts in vehicle taxes.

The firm's hottest selling vehicle at the moment is 'Dimo Batta', a small truck made by India's Tata which has taken an emerging small entrepreneur market by storm.

"People like banana farmers, small bakers are buying these vehicles," Dimo chief Mohan Pandithage told LBO.

"It is creating a new entrepreneur class."

The truck powered with a 700 cubic centimeter engine is rated to carry a payload of 750 kilograms but vehicle owners are reporting that they are carrying 1.5 to 2.0 tonnes of goods on the truck, officials said.

The truck is priced around 830,000 rupees and has a mileage of 22 kilometres a litre and operating costs are estimated to be about 3.0 rupees kilometer in Sri Lanka.

Dimo is now selling more than 800 Dimo Batta trucks around the country. About 50 to 60 are sold in the former war-torn north and the east of the island and about 100 in the Colombo district around the capital.

Though commercial vehicles for businesses are relatively lightly taxed, Sri Lanka's state taxes personal vehicles at high rates keeping them out of the reach of ordinary people.

State workers are also given tax slashed vehicles and lawmakers get tax free cars, worsening the oppressive nature of the tax regime, undermining just rule of law and equal treatment of citizens.

But earlier this year the state slashed car taxes, creating an import boom and making cars accessible to more people.

Industry officials say taxes on a 1500 cc engine petrol driven car was brought down from around 330 percent to 190 percent and diesel cars to about 330 percent from 500 percent.

Diesel cars are taxed at a higher rate to discourage their use. In Sri Lanka, diesel, mainly used by business, is subsidized compared to petrol which is used for personal transport.

Pandithage said the sale of cars was also up including up market Mercedes Benz vehicles.

Last year the firm had sold about 6,000 units including commercial vehicles or around 500 units a month. But now unit sales had increased to about 1,000.

The 71 year old firm signed a deal with state-run Sri Lanka Insurance to provide a special insurance policy for its customers. Dimo will tow a vehicle which has met with an accident, and repair it with original parts. The insurance firm will settle the claim directly with Dimo.

The firm also sells Chrysler and Jeep brands from the US, Mahindra and Mahindra vehicles from India.

source - www.lbo.lk