Sri Lankan used-car importer mulls assembly of Chinese cars

June 21, 2007(LBO) - One of Sri Lanka's largest used vehicle importers plans to import small cars from China and strike a deal with a big Chinese automaker to assemble vehicles locally, an official said.
Sterling Automobiles, which claims to import half the reconditioned vehicles to the country from Japan, has just launched a brand new truck range from First Automotive Works (FAW) of China, after becoming its agent in Sri Lanka

But officials say they want to move a step further.

“We are at the moment on the discussion table with First Automotive Works to assemble vehicles locally,” C. Molligoda, Chairman of Sterling Automobiles (Pvt) Limited, told LBO.

“We will be able to come to an agreement this year itself.”

The local firm wants to build a factory to start assembling small vehicles and sports utility vehicles (SUV).

It aims to exploit an import duty advantage as finished vehicles attract higher import duty than importing parts which can be assembled in local plants much cheaper.

Sterling Automobiles hope to bring down the prices through importing parts and adding value through assembling in Sri Lanka.

“This will give us a huge duty charge advantage and we will be able to bring the prices of SUVs and small cars at least within the reach of the middle class,” says Sriomal De Silva, Marketing Consultant of Sterling Automobiles.

Sterling Automobiles also expects to import small cars through FAW in the near future Small cars have a high demand in the Sri Lankan market because of severe traffic congestion caused by too many vehicles on its narrow roads.

Sterling Automobiles says that they will be able to compete with competitors such as Indian cars.

"Our pricing will be on par with other small cars in the market but we will be able to give more facilities and technologically advanced vehicles to the consumer,” De Silva said.

FAW has started their local sales with four truck models. These already have seen considerable demand and now will be sold through Sterling Automobiles, officials said.

FAW in China also provides manufacturing support to leading brands such as Toyota, Mazda, Volkswagen and Daihatsu and has plants located over 20 countries across the globe.

Sterling Automobiles says it would provide an island-wide breakdown support service in addition to their other services such as quick leasing facilities and warranty for their customers.

“This service will be very fast since we are sending a team rather than bringing the vehicle down. We will also provide replacement vehicles in case it cannot be repaired in a hurry,” De Silva said.