An investigation by "Globes" has found that main car importers will not lower prices on new cars in January 2014, despite the appreciation of the shekel against import currencies. The current shekel-yen exchange rate is 28% lower than in November 2012, the shekel-dollar exchange rate is 9% lower, and shekel-euro exchange rate is 3.5% lower.
However, car importers say that other factors have offset the appreciation of the shekel. One of these factors is the reduction in the green taxes break in the fourth quarter of 2013, which raised the effective purchase tax rate by several percent on widely-sold models that cost between NIS 60,000 and NIS 160,000.
Car importers say that the rise in prices on many popular models caused by the measure has been largely absorbed by the appreciation of the shekel this year. Importers also claim that manufacturers have raised CIF (cost, insurance, freight) prices in recent months to compensate for the crisis in the European car market and the rise in production costs.
A large importer told "Globes", "At the moment, manufacturers prefer allocating production to more profitable markets for them, beginning with the American market, where there is strong demand right now. The manufacturers have little interest in allocating cars to the Israeli market, which is characterized by low profit margins." He added, "Exporters are calling for the weakening of the shekel. It is therefore difficult to adopt a long-term price policy based solely on exchange rates."
Vehicle industry sources also note that despite the shekel's massive appreciation against the yen, in practice only a fraction of new models are imported from Japan and linked to the yen. Most models are linked to the dollar and euro, where the change in exchange rates has been less. For example, most Toyota models imported to Israel are assembled in Turkey, France, and the UK. Most Honda models imported to Israel are assembled in Turkey and UK, most Nissan models are assembled in the UK and India, and most Suzuki models are assembled in Hungary and India.
Industry sources add that the price advantage derived from the exchange rate with import currencies are already indirectly included in the large discounts for leasing companies and are passed on to their customers through low leasing costs. Private customers also receive new cars at large discounts on the list price.
Published by Globes [online], Israel business news - www.globes-online.com - on December 11, 2013
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