Shortage of Suzuki mirrors reflects Sri Lanka’s growing economic crisis

COLOMBO, Feb 18 (Reuters) – Auto parts dealerships in Colombo, Sri Lanka’s main city, are receiving a steady stream of customers looking for what is fast becoming a hot commodity in the island nation – side mirrors for Suzuki’s compact R Wagon.

The scramble for the humble commodity highlights growing economic risks for the South Asian country as imports plummet, foreign exchange reserves plummet and a possible sovereign default looms.

Suzuki’s square five-seat vehicle is extremely popular in Sri Lanka, given its low running costs. With some 30,000 cars sold over the past four years in a country that has relatively high traffic accident rates, replacement side mirrors are commonly sought after in spare parts stores dotted around the suburbs of Nugegoda.

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“Everyone is looking for Wagon R parts,” said Supun Deshak, a salesman at a neighborhood store where storefronts are filled with reconditioned parts.

The difficulty is that importers are struggling to source auto parts as they are considered non-essential imports under rules set by the government to save dwindling foreign exchange reserves after the coronavirus pandemic.

Reserves fell to $2.36 billion from $7.5 billion in January 2020. At the same time, the government faces around $4 billion in debt this year, and local banks are often unable to provide the dollars that importers need.

“The biggest concern at the moment is the difficulty of importing spare parts to service the existing fleet of vehicles,” said Yasendra Amerasinghe, president of the Ceylon Motor Traders Association (CMTA), which represents major importers. of vehicles in the country.

The CMTA estimates that imports of auto parts will fall by about 30% in value this fiscal year, compared to pre-pandemic levels, mainly due to the shortage of foreign exchange in recent months.

Five Colombo car dealers told Reuters many spare parts were already out of stock, with only a trickle of new stock coming in from overseas, pushing up local prices.

Compounding the problem, thieves are looking to make a quick buck by stealing side mirrors from popular models like the Wagon R to sell them in a thriving gray market, dealers said.

The price of refurbished Wagon R mirrors has jumped more than 35% from pre-pandemic levels to at least 30,000 Sri Lankan rupees ($148.5) per piece, dealers said.

USED ​​CAR PRICES SOAR

The economic crisis facing the country – its worst in a decade – has also triggered an escalation in used vehicle prices.

Almost all car imports were banned in March 2020, followed by a halt to imports of other non-essential goods like air conditioners, refrigerators and video game consoles, as part of the government’s bid to cope. to the financial crisis.

This has driven up the cost of some used vehicles by more than 100%, the CMTA said. Sri Lanka does not mass produce cars locally.

A used Wagon R currently costs around 5 million rupees ($24,752), well above the 2.8 million rupees of a new vehicle in 2018, said CMTA Vice Chairman Virann De Zoysa.

This adds further pressure on the aftermarket, as many car owners seek to take advantage of rising prices but first try to spruce up their vehicle with aftermarket parts, Musthaq Nazeer said. Azka Auto Supply, a small store full of mirrors and headlights.

As disruptions to the global auto supply chain add another layer to the problem, the CMTA said it has called on the government to classify auto spare parts as an essential item, along with certain foods and medicines, to boost imports.

“Each distributor is made up of very many key elements,” said De Zoysa. “We are turning away customers daily.”

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Reporting by Devjyot Ghoshal and Uditha Jayasinghe; edited by Jane Wardell

Our standards: The Thomson Reuters Trust Principles.

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