The level of car imports grew just 2.1 percent in 2006 as buyers prepared for changes in the pricing models and tax levels affecting the market from January.
The Israel Tax Authority reported Tuesday that 139,800 passenger vehicles were brought into the country last year, compared to 137,000 in 2005. Vehicle imports declined by 2% in 2005 from the previous year, the ITA said.
Effective January 1, the authority lowered the vehicle purchase tax from 89% to 84%, the second reduction in a process which will see the rate reach 72% by 2010.
The latest reduction, coupled with a decision to update the pricing models in January 2007 instead of May as in other years, were the influencing factors causing prospective car buyers to put their purchasing plans on hold, the ITA said.
"Potential car buyers waited to see how much the tax reduction would influence the prices of different car models," the ITA said, adding that updates to the pricing groups, which would bring about a decline in car prices by a considerable amount, also had an affect.
As a result, December imports dropped 55% compared to the parallel month 2005, going against the traditional trend of high sales at the end of the year.
The ITA also reported that imports of commercial vehicles grew 11.9% to 14,701 in 2006, while two-wheelers rose 18.1% to 12,380 units and trucks and tractors increased 11.1% to 7,411 for the year.
The total value of vehicle-related imports, including parts, grew 0.9% to NIS 6.8b.