Wheels .. wherever you live you need wheels if you want to have a good life! While Sri Lanka has an excellent public transport system in terms of network and availability, its still not at the level of comfort that it needs to be to really live without your own wheels.

With the growing move towards making Colombo a walking city and with apartment life on the uptick, more people will indeed opt to go without a car. Honestly with the wide availability of taxis its quite doable, but lets assume you really want your own set of wheels!

Yes I do! OK so how do I get about it?

Firstly, go new or not-so-new is the question!

Unlike many countries, Sri Lanka allows import of used vehicles too. That’s a policy that was started with economic liberalizaton in the late 70s and continues to date. The latest rules are that vehicles have to be less than two years old but other than that pretty much anything can be imported from anywhere. Of course there are taxes and if you really (really?) want to import a left-hand-drive car you can do that too. (Why you’d want to do that is a separate question.)

How much does it cost?

Prices of brand new cars in Sri Lanka are very high due to the duty charges and other taxes applied on vehicle imports to Sri Lanka, especially when compared to the US and Europe. The high duty is a way of controlling the influx of vehicles to already congested roads and managing foreign currency reserves.

Car prices can range anywhere from Rs 1.5-2.5 million for low end (Tata Nano, Maruti Alto), Rs 3.5-6.0 million for mid range (Suzuki Swift, Toyota Prius, Toyota Allion) and Rs 9 million and upwards for luxury cars such as BMW, Audi, Mercedes Benz. (Last verified in May 2013.)

The duty applied on vehicles can be reduced using car permits that are issued to government workers. In the 2013 budget, the government legalised the transfer of such permits making it possible for anyone to use a permit when buying a car. Permits come in different value ranges, but the most popular permit is the “$25k+$5k” permit, which can be used to import a vehicle up to $30,000 in value. This permit currently sells in the market for Rs 1-1.5 million. (Last verified in May 2013.)

Used cars are of course cheaper but not by that much. Car prices do not drop much over time due to a combination of currency devalation and tax increases. As a result, even a two year old car costs quite a bit compared to what a two year old car would cost in other markets relative to the price of a new car.

In practical terms you might be able to save Rs. 1-2 million when buying a used
car vs. a new car.

How do I buy one?

Buying directly from authorized agent: Depending on the car, there could be a wait period involved in this approach. You can apply a permit that you buy separately from a permit broker when ordering the vehicle.

Buying from a third party dealership: You can buy a vehicle that a dealer has already brought in to the country. This can be more convenient as there will be no waiting period for the delivery of the vehicle and the dealer would have already obtained the permit when bringing down the vehicle. However, you would end up paying a slightly higher price than if you brought down the vehicle through the authorised agent for the particular brand of vehicle.

Vehicles can also be bought on the second hand market through dealers or directly from the seller through postings on different sites or the newspaper classified section.

Some of the main sites where you can find information about cars for sale or details about dealerships:

Insurance

Bumper to bumper insurance for a Rs 5 million car would range around Rs 50,000 per year. There are many reputed insurance companies that provide packages with varying benefits. Banks in Sri Lanka have tie ups with major insurance companies as part of their premier customer perks, which provide discounts on auto insurance.

Leasing

There are multiple banks and finance companies that would let you lease a vehicle. The going rates are around 2.5% of the value per month. Which means, if your car is worth 1 million, you would have to pay Rs 25,000 per month. There are many leasing companies that provide vehicle leasing.

One thing to watch out for with vehicle leases is that there may be a significant early payment penalty. That means if you decide to sell the car before the lease is paid off, you may still have to pay interest for the whole period! Be careful and look for a loan or financing option that does not strictly bind you to completing the lease!

Resale value

During the past 10 years, cars in Sri Lanka have not depreciated in face value (and increased in some cases) due to continuous increases in duty and tax rates (except for a few instances, where rates were reduced temporarily). However, given interest rates (see banking section) and inflation, it cannot be considered an investment.

Car rentals

There are multiple car rental companies in Sri Lanka that rent on a monthly basis. A low end car such as a Suzuki Alto will cost around Rs 40k per month, while mid range cars such as Toyota Allion would cost Rs 90k and upwards. Longer term rates can be negotiated.

Driving conditions and laws

Roads in Colombo are maintained well, except for the occasional pothole. Most roads in the city center are one way, which has helped significantly reduce traffic congestion. However, rush hour traffic could be bad, taking 30 minutes to go a distance of 5km. Drivers tend to stick to their lane and in general drive in a very civilized manner, compared to 10 years ago.

You would see a heavy presence of traffic police in the city at any given time. During weekend nights, you will see a lot of checkpoints to catch drunk drivers. Police use balloon based breathalyzers to identify if a driver is under the influence. The police officer can also
produce someone they suspect is under the influence to the nearest local government medical officer. If the suspect refuses to be seem by the medical officer, they are considered to be under the influence. Speed limits within the city are not enforced, yet when driving out of Colombo, you would see a lot of traffic police waiting to catch speeding motorists.