Sri Lanka’s vehicle market is undergoing a significant transformation just months after the government lifted its long-standing vehicle import ban in February 2025.
While many anticipated a surge in Japanese reconditioned vehicles flooding the market, the actual outcome has surprised industry insiders. Instead, electric vehicles (EVs) and brand-new Chinese-manufactured cars are dominating sales, leaving traditional used Japanese car dealers struggling to adapt, according to several vehicle sales centre owners.
Since the relaxation of the import ban, over 14,000 vehicles have entered the country, generating approximately Rs. 165 billion in tax revenue, according to data from Sri Lanka Customs.
However, what stands out is the composition of these imports. Rather than the familiar second-hand Toyotas and Hondas, electric vehicles—particularly from Chinese brands such as BYD and MG—are gaining popularity. Consumers are increasingly factoring in more than just the initial purchase price, showing greater interest in long-term value and sustainability.
The Vehicle Importers Association Lanka (VIAL) has advised the public to proceed with caution when purchasing electric vehicles. VIAL President Indika Sampath Merenchige noted that while EVs have surged in popularity following the import policy shift, buyers now face emerging concerns.
He highlighted that, apart from a few well-established global EV manufacturers, a large influx of lesser-known Chinese electric vehicles entered the market almost immediately. According to him, many of these vehicles have depreciated by Rs. 2–3 million soon after purchase. However, EV dealers have denied these claims, asserting that such criticism stems from traditional car dealers’ frustration over lost market share.
Simultaneously, brand-new vehicles—mainly from Chinese manufacturers—are capturing attention with their sleek designs, modern features, and competitive pricing.
In contrast, Japanese reconditioned cars, once the top choice among Sri Lankan buyers, are seeing slower sales. Although the exact number of used Japanese vehicles imported is not publicly disclosed, a shipment of 196 vehicles—including popular models such as Toyota Land Cruisers and Hilux pickups—was cleared in March.
Despite their arrival, many of these used vehicles remain unsold. Sales centre owners report that customers are increasingly turning to newer models or switching entirely to EVs.
“Previously, customers came in asking for a five-year-old Prius or a Vitz. Now, the questions are about battery life and charging times,” said one Colombo-based car dealer.
According to the Vehicle Importers’ Association, approximately 75% of the initial 7,000 imported vehicles have been sold. However, the report does not clarify whether those were predominantly Japanese reconditioned models.
