The number of vehicles is set to rise 25% to 2.5 million by 2010 from two million at the end of 2004, a survey carried out for the Transportation Ministry stated.
In addition, the level of motorization among Israelis is expected to increase to 332 private vehicles per 1,000 citizens from 296.7, the ministry said on Wednesday.
The number of vehicles quadrupled from 525,000 after 1979, growing 6.5% a year in the 1980s but slowing to 5.8% in the following decade and slumping to 2.7% by 2004. During the wave of immigration in Israel between 1992 and 2004, the number of vehicles rose 72% in total, compared with a 32% increase in the population. Annual growth is expected to recover to 3.6% by 2010.
Despite the increases, the level of motorization in Israel is low compared with many European countries, even those whose gross domestic product is below that of Israel. In Cyprus, there are 408 vehicles per 1,000 citizens, in Portugal 378, in the Czech Republic 357 and in Greece 339.
The ministry attributed Israel's low rate of motorization to the high tax rate on cars. Israelis pay purchase tax of 95% on imported cars and value added tax of 16.5%, while in Europe the average tax rate is 30%. However, the Finance Ministry recently unveiled plans to cut purchase tax on cars in Israel to 72% by 2010.