The Israel Motor Vehicles Importers Association warns that the planned reform in auto imports is liable to have “negative and destructive consequences on both the industry and consumers,” and that there is no guarantee that it will lower prices.
A ministerial team for removing obstacles to car imports met last week with auto importers and other concerns interested in entering the industry. The Motor Vehicles Importers Association asserts that not enough time has passed since the last removal of import barriers for changes to occur in the market.
The importers claim that they have operated for years under a regime of tight supervision, orders, guidelines, and procedures, and have spent hundreds of millions of shekels in complying with them. The Motor Vehicles Importers Association therefore does not believe that it is unacceptable for “a collection of interested parties to penetrate the market with a minimal investment, selling cars quickly and randomly to consumers, without consideration for the future, camouflaged as an opening of the market.”
The Motor Vehicles Importers Association said that defective cars might be imported, “in which case the burden of providing service to customers for parallel imports will fall on the official importers, who, as representatives of the manufacturers, will have to address the problems of car purchasers.”
On Thursday, representatives of the Belilios group, which is interested in importing cars, and three parties at interest met with the ministerial team, under the auspices of the Federation of Israeli Chambers of Commerce. Among others, representatives of the Israeli Car Rental Association attended the meeting.
The Israeli Car Rental Association said that the auto leasing companies regarded themselves as potential parallel importers, but said that a general opening of the market to parallel imports would be accompanied by a sharp drop in new car prices. The Israeli Car Rental Association asserted that this would greatly reduce the value of the leasing companies’ vehicle fleets, which constituted most of their financial capital.
The Israeli Car Rental Association proposes addressing this problem through a mechanism for opening the market to parallel imports gradually over five years, with import quotas increasing gradually each year by a proportion of the quantity of vehicles imported during the preceding year.
The Israeli Car Rental Association is also asking that the definition of countries of origin for parallel import be changed. They want permission to import vehicles purchased in bulk at reduced prices on their behalf by the international car leasing companies, which the Israeli companies represent in Israel. This is the first time that the car leasing companies have publicly announced that they are considering becoming players in the auto import market.
Representatives of Shlomo Car Rentals, which controls New Kopel (TASE: NKPL), told the ministerial team that it was planning parallel auto imports from the US, and asked that the regulations currently preventing this be abolished. Industry sources believe that Shlomo plans to import mostly Japanese and European cars manufactured in the US.
Published by Globes [online] - www.globes.co.il - on January 20, 2004