Auto-import reform could lower prices

New regulations were approved by the Knesset Finance Committee last week.

By RON FRIEDMAN
February 21, 2010 05:43
2 minute read.
gambling car seizure

gambling car seizure. (photo credit: Israel Police)

 
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New regulations that enable Israelis to import cars and motorcycles made by foreign manufacturers through more than one importer will increase competition and reduce prices, especially for luxury vehicles, auto industry experts say.

Until now, each manufacturer could market their vehicles only through a single licensed importer. Under the new regulations, in theory, every importer could import another company’s cars.

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The new regulations were approved by the Knesset Finance Committee last week.

“The regulations mean that if importers can find vehicles for cheaper prices through large-scale dealers and want to pass the savings on to the consumer, they have permission to bring them into the country and market them separately,” said Nitzan Avivi, deputy editor of Auto magazine, which specializes in the Israeli automotive sector.

The reform would open the door to new players in the market and put pressure on established importers to lower prices and improve services, he said.

“On the service side, we might see more willingness on the part of the importers to allow clients to take cars out for test drives,” Avivi said. “We might see more effort by the sales staff to be courteous. We’ll likely see more models become available and more flexibility on the vehicle’s available features.”

“Up until now, the importers could afford to be complacent about sales, knowing they had little competition,” he said. “There was a ‘take it or leave it’ attitude. I assume that’s going to change now that customers can decide to ‘leave it’ more readily.”

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Consumers could expect to see discounts, but not on the most popular, standard models, Avivi said.

“I estimate we’ll see price reductions mostly on vehicles from the higher echelons,” he said. “The prices for Mazda 3s won’t fall, but we may see prices drop on vehicles like the Honda Accord. The higher you go, the more room there is to play with the price.”

Established importers would likely see competition from two main players: leasing and rental companies and private import agents, Avivi said.

“Large leasing companies that buy fleets of 500 or 1,000 units may find it more beneficial to buy from external dealers than from the licensed importers,” he said.

Leasing companies have a long and complicated history with importers and may not want to see too many changes in the status quo, Avivi said.

“The private import agents, who functioned as quasi-importers, might see this as an opportunity to better establish themselves,” he said.

Israel Vehicle Importers Association president Yaki Enoch said the established importers welcomed the new regulations.

“We are in favor of opening up the market and have no doubt that we will find ways to make the best of it,” he said.

Due to Israel’s high taxes on cars, manufacturers offer the importers the cheapest prices possible, sometimes the cheapest in the world, Enoch said.

“I highly doubt anyone will be able to offer most vehicles at lower prices,” he said. “I find it hard to believe it will be worth it to compete with us in the NIS 100,000-200,000 bracket.”

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