22% of new cars sold in Israel are Chinese

New cars awaiting export from China credit: Shutterstock
New cars awaiting export from China credit: Shutterstock

Deteriorating relations between Israel and China over Gaza have not affected consumer behavior as Israelis snap up Chinese made electric cars.

Relations between Israel and China has deteriorated in recent months. The official media in China has adopted an unsympathetic tone towards Israel and Chinese government spokespeople are highly critical of Israel's actions. T a worrying security rapprochement between China and Iran, which was reflected in the meeting between the defense ministers of the two countries at the Shanghai Cooperation Organization Conference in Kazakhstan last month.

But judging by the car sales figures in Israel for the first four months of 2024, published last week, the negative atmosphere has not affected imports from China or consumer behavior. Between January and April, deliveries of Chinese-made vehicles continued to break records. China strengthened the gap over Korea and Europe at the top of the table of deliveries by country, with a total of 24,534 Chinese-made vehicles delivered in 2024, 22% of all deliveries and an increase of about 12% compared with the corresponding period last year. This is while all vehicle deliveries fell 14.8% in Israel since the beginning of the year, compared with the corresponding period of 2023.

The majority of Chinese vehicle sales in the first quarter of the year are from inventory that arrived in the last quarter of 2023, before the tax increase. According to customs data in China, electric vehicle exports from there to Israel shrank by 51% in the first quarter of 2024, however, the industry estimates that this is a necessary phenomenon in light of the massive inventories amassed last year "at the expense" of imports in the first quarter.

An exceptional phenomenon worldwide

The inroads made by Chinese cars in Israel, one out of every five sales, is unusual compared with other developed Western countries. The EU is currently considering taking significant steps to curb imports of Chinese electric vehicles, due to the Chinese government's anti-competitive policy in which it subsidizes local manufacturers.

Deducting the import to Europe of Tesla vehicles, which are manufactured in China, sales of vehicles made in China in the EU were less than 2.5% of the new vehicle sales last year. Even in Spain, which is currently the largest market for Chinese vehicles in the EU, the rate last year hovered around 4%.

Some argue that the car sales figures reflect a "natural" process due to the accelerated transition of the Israeli car market to electric vehicles. In the first quarter of 2024, the delivery records of electric vehicles in Israel were also broken, with 27,000 deliveries, 25.6% of all sales and up 35% compared with the corresponding period last year.

Since the Chinese manufacturers are almost the only ones able to offer electric vehicles today with specifications suitable for the Israeli mass market in the NIS 140-180,000 price range, they are taking advantage of the growing demand for electric vehicles.

But the 'natural' process argument does not hold water. Firstly, the penetration rate of Chinese brands in the electric car market in Israel in the first quarter was about 42% (not including Tesla), which is a completely unusual figure compared with the Western world. In the EU, the penetration rate of electric vehicles made in China, not including Tesla, is about 10%.

Secondly, in Israel significant numbers of Chinese-made vehicles with internal combustion engines (gasoline and plug-in models) are also sold. Admittedly, Chinese representation in this segment is limited, and mainly includes Chery's off-road vehicles and WEY and "Link & Co" plug-in models. But this comprises 5% of all deliveries. Later this year, it may even gain momentum thanks to new models made in China with plug-in engines, which are expected to arrive here.

Published by Globes, Israel business news - en.globes.co.il - on May 6, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

New cars awaiting export from China credit: Shutterstock
New cars awaiting export from China credit: Shutterstock
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