Devjyot Goshal, Uditha Jayasinghe

COLOMBO, (Reuters) – Car parts suppliers in Sri Lanka’s capital city of Colombo receive a steady stream from customers searching for side mirrors to fit Suzuki’s compact Wagon R.

This scramble for the basic product highlights the rising economic risk for South Asian countries as their imports plummet, their foreign reserves fall and they face a possible sovereign default.

Given its low running cost, Suzuki’s five-seater, compact vehicle is very popular in Sri Lanka. In a country with high rates of road crashes, there have been approximately 30,000 sales of these cars in four years. Replacement side mirrors can be found in many spare parts shops located in Nugegoda.

Supun Deshak stated that Wagon R parts are in high demand and everyone wants them.

Problem is, importers have difficulty finding car parts as they are not considered essential imports by government rules. These imports were created to preserve dwindling foreign currency reserves following the outbreak of coronavirus.

From $7.5 billion in January 2020, reserves have dropped to $2.36 trillion. The government has a $4 billion debt obligation this year. Local banks often are unable to supply dollars needed by importers.

“The biggest concern right now is the difficulty in importing spare parts for maintaining the existing fleet of vehicles,” said Yasendra Amerasinghe, chairman of the Ceylon Motor Traders Association (CMTA), which represents the country’s major vehicle importers.  

The CMTA projects that imports for car parts are likely to fall by about 30% in value this fiscal year compared to levels pre-pandemic. This is mainly because of recent foreign currency shortages.

Five Colombo-based auto dealers said to Reuters that they were aware of the fact that spare parts are in limited supply. There is only a tiny amount imported from overseas, which drives up local costs.

Dealers said that thieves are looking for quick cash to steal side mirrors from popular models such as the Wagon R and sell them in a vibrant grey market.

According to dealers, Wagon R mirrors have seen a 35% increase in price from the pre-pandemic level and now cost at least $30,000.

SECOND-HAND CAR PRICE SURG

Second-hand car prices have risen due to the economic crisis in Venezuela, which is now its worst for a decade.

In March 2020 almost all imports of cars were stopped. The government also stopped imports of non-essential goods such as airconditioners and refrigerators in its attempt to address financial difficulties.

The CMTA stated that this has increased the price of certain second-hand cars by over 100%. Sri Lanka has no local mass production of cars.

A Wagon R used costs about 5 million Rupees ($24.752) which is more than the 2.8million rupees a brand-new vehicle in 2018. This figure was reported by Virann, Vice Chairman, CMTA.

The spares market is under pressure as more car owners try to take advantage of the increase in prices but also to improve their car’s condition. Musthaq Nazeer from Azka Auto Supply said that while there are small shops filled with lights and car mirrors, this has added to the pressure on the spares marketplace.

Global disruptions in the automotive supply chain add an additional layer of problems. The CMTA has requested that the government classify spare car parts as an important item to boost imports.

De Zoysa stated that “every distributor is out of many, several key parts.” On a daily basis, we turn away customers.”