United Motors to set up assembling plant soon

Sri Lankan vehicle distributor- United Motors Lanka PLC is to commence operations of its local vehicle assembling plant in order to be entitled for a 35 per cent tax cut.
Chairman of United Motors Lanka PLC, Ranjith Fernando, speaking to TBL, said that the move was vital as imported vehicles were not competitive in the local market, price-wise.
“We are going to set it up soon. We will be launching two well-renowned Chinese brands, synergising with Mitsubishi. This will be a Board of Investment (BoI) project set up in our own premises at Orugodawatte. Furthermore, we have obtained the franchise for Asia, which will give us a huge leverage in promoting the brand,” Fernando said.
Fernando said that imported vehicles were not competitive due their prohibitive prices. The CIF (cost, insurance and freight) cost of a Pajero imported is a mere Rs. 3mn when compared with Rs. 18mn, a purchaser has to pay when buying from the local market.
Last year, the UML’s subsidiary- Unimo Enterprises Limited (UEL) introduced two new products- light commercial vehicles under JMC brand and Zoyte SUV and UML says that the decision to introduce them was strategic as it has obtained a license to assemble vehicles in Sri Lanka. The annual report of UML adds that the plant has been installed and will become operational in the financial year 2009/10.
Local assembly of vehicles with a minimum of 30 percent value addition in the country will qualify for tax benefits UML says would reduce the prices of vehicles as much as 35 percent. Plant operators are hopeful that with a 15 percent component of locally manufactured batteries, tyres, etc and 15 per cent salary component the project is entitled for the tax concession.
Although Unimo Enterprices Ltd. Introduced light truck in partnership with Jiangling Motors Co Ltd of China and Nomad compact SUV manufactured by Zotye Automobile Co. Ltd (China), both fell short of the anticipated volume of sales resulting in losses.
Due to the rise in prices of vehicles triggered by high import taxes and the abrupt discontinuation of the issue of import permits to public sector employees, the company’s vehicle sales volume plummeted by 55 percent from the previous year. Truck sales which had reached a record high in 2007/ 08 dropped by 45 percent partly due to effects of the escalation of the war and consequent loss of markets in the North and East. (SF)