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Mar 08, 2012 (LBO) - Sri Lanka's automobile sales are expected to dip in 2012 with pent up demand being met and rapidly rising interest rates, Tilak de Zoysa, deputy chairman of Associated Motorways, the island's largest auto dealer said.
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Sri Lanka's rupee also dipped from 110 to around 120 rupees in the second week of February pushing up the price of imported cars.
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AMW, which has the agency for India's Maruti, the island's best-selling brand and also Japan's Nissan is estimated to have around a half of the country's brand new vehicle market.

De Zoysa said vehicles sales were steady up to February but they were now expecting a dip with lease rates also going up sharply.

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"About 80 percent of the new cars are sold on lease," he said.

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Sri Lanka's lease and hire purchase rates which were around 16 - 17 percent had now increased to 20 to 22 percent, finance sector officials say.

Sri Lanka's interest rates came under pressure from around September 2011 when the Central Bank started to sell dollars to intervene in forex markets draining liquidity from the banking system to defend a peg that came under pressure from high credit growth.

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Though the interventions were sterilized with liquidity injections (printed mone

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