The Motor Industry is in a very sad state mainly attributed to the blunders made by the policy makers, asserted industry expert and Past President Ceylon Motor Traders Association (CMTA) Reeza Rauf. In an interview with Daily News Motor Rauf requested policy makers to come to a consensus with stakeholders to protect the industry for its survival and implement government policies maintaining a level playing field.
Excerpts of the interview
Q: What is your perspective of the motor industry today?
Whilst we understand the present pandemic situation has affected the motor industry in the recent past I have to give you a very short answer to this: it is precarious and is in a very sad state mainly attributed to the blunders made by the policy makers.
Q: What are the consequences importers face due to the import ban?
The consequences are immense as an industry which raked in one of the highest tax revenue to the government has collapsed from the government's revenue point of view, from the industry’s point the legitimate importers investments are huge and its long term planned with providing large amounts of job opportunities locally and helping trained technicians/ mechanics to seek employment opportunities internationally. Difficulty in running the business, unable to recover overhead costs, retrenchments, lost job opportunities for the younger generation .
Q: What are your suggestions to revive the industry?
Today It is not about reviving the industry, it's about surviving, It is common sense that the transport industry plays a pivotal role in a country's development. If this is hampered the development is also affected. The Automobile industry needs long term planning, huge investments in terms of setting up infrastructure, training manpower with long term steady policies for its survival, you cannot compare it with imports of onions and potatoes and change policies overnight. If you look back into history you will find almost at every budget the custom duties and import categories are changed sometimes drastically which puts the industry in very unstable situations. Our suggestion is to come to a consensus with the stakeholders to protect the industry for its survival and implement government policies maintaining a level playing field.
Q: How has the corona pandemic affected the livelihoods of the motor stakeholders?
Definitely yes, this phenomena is not only confined to Sri Lankas, but is a global problem but the lesson to be learnt is that as an industry we are more affected and put into more difficulty due to wrong and adhoc policy decisions taken unlike in other countries.
Q: What do you expect at this moment from the government?
Have a clear and long term policy and avoid adhoc and short term policy decisions which have been happening from time to time. In order to overcome the present crisis situation of the legitimate vehicle importers at least allow imports on a quota system,
What are the relief and concessions the industry needs at this juncture?
As an industry we don’t need concessions but allow us to import the vehicles ordered and LC’s established prior to the import ban. Also ensure that we are allowed to carry on our businesses in a manner that we can sustain and justify our investments and to take care of our employees.
Q: How have these stringent measures affected your relationships with vehicle manufactures?
This has affected us very badly as we have gone against the international business norms, and as a nation we have lost our credibility and we have lost our recognition as a country to do reliable business, the most shocking is that we were not allowed to import vehicles for LC’s already established with the sudden import ban and this has made manufactures lose confidence and faith on us. When imports are allowed the future imports will see additional cost as manufactures will insist on Confirmed LC’s
Q: How will the non imports affect development activities in the country?
An efficient transport system is essential be it passenger or commercial for development of the country as this will help minimise downtime, inefficiency of ageing vehicles is a hindrance and also cost more to maintain
Q: What are the social impacts of the prohibition of vehicle imports?
Past records show that almost 70% of vehicles purchased are on borrowings, the reason being we don’t have a efficient and comfortable public transport system, due the ban of imports the used vehicle market has artificially skyrocketed which doesn’t reflect the actual residual value this also can result in high cost on insurance premiums, end of the day the common man has to face the brunt of it creating a total imbalance in the market.
Q: Will there be a relaxation to import curbs by the government?
I can't see the light at the end of the tunnel, nor are we getting a decent reply from the authorities in this regard , we are basically kept in the dark
Q: How has the pandemic and ban affected your business?
The pandemic has definitely affected the business from all angles. Manufacturers are facing short supply of components and there are delays in production, the costs have shot up with escalated production and freight cost. However we are mostly affected by the import ban
Q: How are you planning to adjust to the new normal?
We are shifting our focus to pre owned vehicles and after sales and repair of vehicles with value added services with adapting or accommodating multi brands. As distributors this is not the ideal way of doing business but we have no choice but to be forced into it for our survival.
Q: What are your thoughts on introducing EV (Electric Vehicles) ?
Whether we like it or not we will have to accept this as the future of automobile is turning into EV. Having said that, we need to carefully study the impact before making any hasty decisions. Even though a couple of manufactures have EV vehicles it is still in its initial stages. Certain developed countries in Europe have begun to go full EV in the next 10 to 20 years. The shifting is not going to be that easy, the point to note is the price against the ICE (internal combustion engines) vehicles.
EV are far more expensive and can we really afford it being a third world country, the question is are we ready with the infrastructure with charging points. Do we have sufficient renewable energy for charging rather than depending on thermal power. We need to allocate time for training technicians, disposal/recycling of batteries etc. If sudden policy changes come in without proper study and analysing the repercussions to the industry and to the nation would be detrimental.
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