United Motors is expanding its assembly of Chinese-made Zotye Nomad sport utility vehicles (SUV) in Sri Lanka taking advantage of tax concessions being offered to locally assembled vehicles, a senior official of the company said. This is undertaken by a subsidiary Unimo Enterprises Ltd (UEL) at a plant at Orugodawatte which will increase its production to 100 units by October from 40 units at present, he said.
The Zotye group is one of the leading small and medium sized jeep manufacturers in China. Locally assembled vehicles are exempted from excise duty and prices will reduce by around Rs.500,000 per unit compared to the imported vehicle, he said.
“ it has become more feasible to market assembled products due to the tax concessions offered versus the higher taxation applied on imported vehicles,” the company said separately in a media release on its results for the first quarter of the 2012-13 year.
The official said that under the extension plan of the company, the number of assembled vehicles would further increase to 150 by December.
Unimo is also planning to export these vehicles to countries in the region under free trade agreements with those countries, he disclosed.
The Zotye is imported in Semi Knocked Down (SKD) form and assembled incorporating more than 30 % local value addition, as per the requirements set out by the Ministry of Industries. Body trimmings, paint, tyres, battery, seats, radiator and badges are all sourced locally. The company continues to search for more local suppliers with a view to increasing the share of local components, he said.
Meanwhile United Motors’ group post-tax profits rose sharply to Rs. 968 million in the 1st quarter. Group turnover increased Rs 6.2 billion, the company statement said.
Chanaka Yatawara, CEO/Executive Director was quoted in the statement as saying that the performance was due to a combination of factors including, a diverse portfolio of vehicles including several brands of commercial vehicles which are not affected by the tax increase, income from the permit operation, healthy margin management by changing the marketing mix, low borrowings due to improved reserve situation and tight costmanagement.
“However the remaining three quarters would be more challenging due to the weaker rupee, restrictions imposed on credit granted by leasing and financial institutions, the increased tax on vehicles, etc. Keeping these concerns in mind the group will pay more attention to expanding its after sales service capabilities to cater to the large amount of vehicles sold by the group in 2010 and 2011,” Mr Yatawara said.