AI Overview
As of October 2025, second-hand vehicle prices in Sri Lanka have dropped significantly, falling between Rs. 1 million and Rs. 1.5 million for certain models over the last month
. This decrease is driven by a combination of reduced import auction prices from Japan and slowing domestic demand.
Factors causing the price decrease
- Reduced Japanese auction prices: The cost of importing reconditioned vehicles has decreased, allowing importers to bring in stock at a lower price. The Vehicle Importers' Association of Lanka (VIAL) has confirmed this trend, stating that vehicles are arriving at a reduced cost.
- Slowed consumer demand: After an initial rush following the lifting of import bans in February 2025, consumer enthusiasm has waned. This is attributed to high taxes and inflated prices, leading to a build-up of inventory for dealers.
- Forced stock liquidation: Importers are reportedly selling stock at lower prices, and sometimes at a loss, due to a new Finance Ministry rule that imposes a 3% penalty on unregistered vehicles held for more than 90 days. This has forced dealers to sell quickly to improve cash flow.
- Release of detained vehicles: A recent gazette notice now allows importers to clear vehicles previously held at customs by paying a duty and bank guarantee. This action is likely to increase market supply and further drive down prices.
- Market normalization: After a long import ban, the market for new and used vehicles is starting to normalize as initial pent-up demand subsides.
According to the VIAL, key models have seen notable price reductions since September:
- Honda Vezel Z Play 2025: Fell to Rs. 23.5 million from Rs. 25.5 million.
- Toyota Yaris: Dropped to Rs. 10.5 million from Rs. 11.5 million.
- Suzuki Alto Hybrid: Reduced to Rs. 7.3 million from Rs. 7.9 million.
- Suzuki Wagon R: Decreased to Rs. 7.3 million from Rs. 7.8 million.
An additional factor influencing used car prices is the changing market landscape:
- Preference for EVs and new Chinese cars: The market is seeing a surge in electric vehicles (EVs) and new, affordable Chinese gasoline vehicles. Many buyers are now prioritizing factors like battery life over traditional Japanese reconditioned models, which were once dominant.
- Competition from new vehicles: The influx of newer, feature-packed vehicles puts downward pressure on the prices of older, traditional fuel-powered cars.
