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Sri Lanka’s automotive sector is expected to face a slowdown, as the weakening rupee and ongoing consumer concerns over fuel costs weigh on vehicle demand.
“If the market were operating normally, we could see at least a 15–20% decline in sales due to the fuel crisis and rising vehicle prices,” said Mahen Thambiah, Chairman of Kia Motors Lanka, during a media event on April 7. The event also marked the opening of Kia’s new 2,700-square-foot showroom at the Altair high-rise in Colombo, debuting the Kia Tasman double cab pickup alongside its latest electric and hybrid models.
After the initial surge in vehicle purchases following the reopening of imports, sales have begun to moderate. New vehicle registrations, which reached 55,365 units in January 2026, fell to 51,682 units in February. Thambiah explained that this adjustment was expected, noting that current exchange rate pressures are now the main barrier to new imports.
“Customs rates are now at 320, up from 310. For a car priced around US $30,000, that’s an increase of roughly one million rupees, which will inevitably reduce demand,” he said. “People are cautious about spending in this environment.”
The broader economic context adds further uncertainty. Sri Lanka’s economy heavily depends on foreign worker remittances, which reached a record US $8.076 billion in 2025. Thambiah warned that any significant drop in these inflows could have serious consequences for vehicle sales and the wider economy.
Turning to electric vehicles (EVs), the new Altair showroom features Kia’s latest EV lineup, including the EV3, EV5, EV6, and EV9. While higher fuel prices have increased interest in EVs, Thambiah emphasized that hybrids remain the more practical choice for most consumers in the short term.
“Hybrids are currently the preferred option, offering a balance of efficiency and affordability,” he noted. He also highlighted long-term concerns around EV battery replacement costs, suggesting that widespread adoption may take several years as the technology matures.
Kia is therefore positioning its product range to include both hybrid and electric models, ensuring that customers have access to fuel-efficient options while the local EV market develops.
