2011 was a record year for sales in Israel's automobile market. Approximately 226 thousand new vehicles were delivered last year, representing growth of about 4% in comparison with the number of deliveries in 2010. But despite the growth in sales, last year was not easy for the publicly traded car importers. Almost all suffered erosion in profitability, and some even posted heavy losses.
Kamor Ltd. (TASE: KMOR), which imports BMW cars, and Japanauto Ltd. (TASE:JPNT.B1), which imports Subarus, recorded the sharpest deterioration. Each posted losses of tens of millions of shekels. The largest of the five listed importers, Delek Automotive Systems Ltd. (TASE: DLEA), importer of Mazda and Ford vehicles, saw substantial deterioration in most measures last year, while Carasso Motors Ltd. (TASE: CRSO), importer of Renault and Nissan vehicles, was the only one that maintained its profit level, as its sales rose 20%.
Lat year's record sales are thought unlikely to be repeated this year. Data from the first quarter of 2012, indicating a decrease of 6.5% in vehicle sales, reinforce this estimate, as does the cloud of the recommendations in the Zelekha report on competition in the automotive market. The implications of those recommendations are still not clear.
Here are the main figures for the industry over the past year:
The aggregate net profit for the five importers in 2011 was NIS 176 million, compared with NIS 611 million in 2010, representing a fall of 71%. The main cause was the fall in profits at Delek Automotive, in its first year under the ownership of Gil Agmon, who completed his acquisition of the company at the end of 2010. The Mazda and Ford importer's profit last year was NIS 126 million, still the highest profit among the five listed companies. .
The rise in the value of the Japanese yen was a large factor in the decline in Delek Automotive's profits, raising the company's financing costs and diminishing its competitiveness. At the same time, the company suffered from a sharp drop in popularity of the models it sells.
Japanauto lost NIS 71 million in 2011. Japanauto is in a particularly bad situation. Only last week, the Subaru importer, controlled by Gad Zeevi, reported that its bondholders had rejected a proposed debt settlement and were threatening legal action against it.
Japanauto's auditors appended a "going concern" qualification to their report on the company's latest financials, which showed declining sales and increasing costs, doubling its losses in 2011. Over a period of three years, the accumulated losses amount to NIS 150 million.
Kamor also pulled the collective results downwards, reporting an annual loss of NIS 83 million, mostly recorded in the fourth quarter, due to a provision for doubtful debts as part of the cleaning out of the stables carried out on the change in ownership.
The picture was partly balanced out by Universal Motors (UMI) of the Kardan NV (TASE: KRNV;AEX:KARD) group, importers of General Motors vehicles (Chevrolet , Buick , Cadillac , Isuzu and more). Its profits fell only 8% in 2011, to NIS 108 million.
Also on the positive side was importer of Renault and Nissan vehicles Carasso Motors Ltd. controlled by the Carasso family. The company, floated on the stock exchange last year, recorded a negligible decrease of 1% in its profits, to NIS 97 million.
Vehicle deliveries by UMI rose 26.4% in 2011, to 18.2 thousand. Most of the sales were of Chevrolet vehicles, more than 15 thousand, an all-time record for the brand in Israel. It enjoyed a good year globally too.
UMI benefitted from a trend of rising sales of super-mini cars in Israel. The Chevrolet Spark took third place in this segment, with sales of approximately 3,500 cars. But despite the improvement in sales, which brought UMI a market share of 7.5%, compared with 6.3% in 2010, the change in the sales mix and the introduction of small cars hit the profitability of the company, so that profits slid back.
Another company that benefitted from a change in buyers' tastes was Carasso, which increased the number of cars sold by 15% to 18.5 thousand. Most of the improvement was recorded in the Nissan brand, with sales of approximately 3,400 Juke cars and 2,300 of the new version of the Micra.
Delek Automotive suffered from its weakness in the mini segment. The company recorded a drop of 23% in the number of vehicles sold to less than 33 thousand, and saw its market share fall from 19% to 14%. Mazda vehicles sales fell by 33%, to 21.2 thousand, while sales of Ford vehicles improved 7%, to 11.6 thousand.
Delek Automotive's dominance again pulled the aggregate sales of the publicly traded importers downwards. In a year of record vehicle deliveries, their total sales fell 6.5% to 74 thousand.
Published by Globes [online], Israel business news - www.globes-online.com - on April 15, 2012
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