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The cars have arrived, the discounts are gone


The Israeli market broke records of madness and irrationality in the past year. The lack of cars, the decreased competition, the promotions that have disappeared, the 0 km market that has disappeared and the phenomenon of coffee shops, are just some of the phenomena that have emerged in the Israel of 2022. All these factors have caused Israeli consumers to put reason aside, forget about discounts and rush

Just before its year ends, whoever looks at the local car market with their eyes will discover a general madness.

no less.

This year we actually discovered that the Israeli consumer, resists an inexplicable impulse to buy, and will meet any demand and price set by the importer, the leasing companies and even the private sellers in the second hand market.

What made the Israeli consumer put logic aside and take part in this game?

Well, there are quite a few answers to that.

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There are no cars, there are prices

The corona virus has been with us for almost 3 years and there is no doubt that it has dealt a huge blow to the global automotive industry.

The results of the already told story is a decreasing inventory and a rising price.

At the same time, even after the closures ended and we started to get back to normal, it seems that there are factors in the market that are enjoying the current profit tension, the one that makes it possible to sell less and earn more.

Even when the first encouraging positive signs arrive overseas, it seems as if the local market prefers to nurture the crisis and maintain the high price level.

Bel Neta, the prices of vehicles at the factory gate are indeed higher than before, especially electric models.

Despite the recovery the crisis in the chip industry is still here and so are problems in the supply chain.

And that's before we even touched on the heavy taxation imposed on cars in Israel.

But alongside all these, you can still see local examples where it is difficult to explain the increase in price.

Compared to manufacturers that clearly allocate fewer vehicles to the Israeli market in view of the global difficulties and most European manufacturers fall under this definition, there are some that do not really place such restrictions in front of the local representative offices.

And these not only managed to maintain their strength, but also sell more.

Bottom line, under more or less real crisis distress, all importers will make their cars more expensive this year.

Yes, for one reason, because it is possible.

First hand, 0 km, no discounts

In recent years, the main competition in the new car market has been concentrated on the "0 km leasing" models, which offered a new car with manual registration and no km, at discounts that usually ranged from 8% to 20% of the official importer's price list.

This discount, in exchange for losing a hand in the car license (Owner 01), created a real and discounted option for purchasing a new car.

When the inventory problems began during 2021, the car importers recognized an opportunity to "bring the customers home", by significantly reducing the supply of cars to the leasing companies, and selling the cars at full price in the showrooms under the auspices of the crisis atmosphere.

The little that the vehicle fleets received, they preferred to transfer to the more profitable rental, operational and private leasing services, which also benefited from significant price increases and compensated for the decrease in sales.

From the annual market of tens of thousands of "0 km" cars, not much is left this year.

This year it is only a few thousand cars.

The few popular models that are still offered in the 0 km market are sold at negligible discounts, which often made the deal unprofitable.

Bottom line, today we are witnessing a situation where the importers and the leasing companies are enjoying the same situation: the private customers have returned to the showrooms of the importers and are paying full price, and the leasing companies are compensating for the decrease in sales volumes at high prices in their main branches of activity.

The order clerks

The high demand for Tesla models, the company's frequent price increases in Israel and long waiting times, created a new situation in which the price of a used Tesla was tens of thousands of shekels higher than its new price.

This is how independent entrepreneurs who brought us the world of coffee shops discovered.

The shrewd traders ordered cheap, sold high and stories that surfaced on social media told of easy profit.

The price jumps opened up the possibility of a profit of tens of thousands of shekels on each order, and thus an entire industry developed.

The new dealers simply place orders for several models at the same time (a total of NIS 2,000 in advance), wait patiently for several months, and when the time for delivery and full payment for the vehicle arrives, they advertise the "right" to purchase the vehicle with immediate delivery and at an exorbitant price.

The trend developed to other models such as the Geely Geometric C, Hyundai Ioniq 5 and others that were offered during the year at sky-high prices and usually with the loss of the vehicle license.

With inventory and without account

If until the Corona era, the parallel import offered a slightly cheaper alternative to the official importers, the global inventory problems also affected this industry and the companies operating in it moved to focus mainly on the import of luxury models where the profit is significantly higher.

Here the offers also began to sometimes hide the true (and rather high) price of the vehicle and focused on advertising luxury models with an achievable low return score.

In the past year, the companies also began to focus on popular models that are not yet marketed by the official importers, and these were equipped at extremely high prices, since the consumer has no ability to compare the price with that of the official imported ones.

This is how the new Honda Civic is currently offered for NIS 200,000, the new Kia Niro Hybrid for NIS 215,000, the Honda City for NIS 149,000, and the electric Dacia Spring for NIS 129,000.

All these are prices significantly higher than the reasonable value of these vehicles.

Going for a used one

Here, too, they did not hide in the rows of the year.

Those who tried their luck in the used market and asked to purchase a used car at a reasonable price, found a relatively thin supply here as well.

A lack of usability that results, among other things, from the extension of the operational leasing contracts in the vehicle fleets, beyond the usual 3 years.

This trend is also rooted in the lack of news stock.

The car sales advertisements of the leasing companies were replaced by "cars wanted" ads, which pushed the prices of used cars up.

In this case as well, dealers rushed to purchase wanted cars at or close to the list price, and a moment later offered them at prices significantly higher than the list price.

Not only sought-after electric cars were sold at high prices, even those who tried to purchase used models last year such as the Skoda Kodiaq, Mitsubishi Outlander and Toyota Rav 4, for example, discovered market prices that were dramatically higher than the official price list, sometimes even NIS 20,000 more, for preserved vehicles.

The high prices, by the way, did not only characterize the car lots, but also the private customers who tried to cash in on their used car,

the trend of rising prices

In recent months, it seems that the car market has begun a cooling process.

Factors such as rising prices, the crisis in high-tech, the rise in interest rates affecting financing returns and the impending economic slowdown are gradually leading to a slowdown in activity in the automobile market as well.

Although the doubling of the tax on electric models this coming January temporarily causes higher sales compared to previous years, we can hope that the market will signal a return to sanity at the end of 2023.

One can also hope that the new Chinese brands will do their real job - to offer a cheaper alternative compared to the old manufacturers.

The same brands flooded the market with thousands of cars last year, but it should be said here too - they were not ashamed to raise prices whenever the atmosphere allowed it.

Towards the end of a year, it can be agreed that all the significant players in the market adapted to the situation and, despite lower sales, maintained profitability and showed creativity on their way there.

From a purely business point of view, they receive a commendable grade.

In contrast, Israeli consumers, from a pure consumer point of view, demonstrated a lack of creativity and unwise consumerism to say the least.

Over a quarter of a million new cars were sold here, "in a crisis year", of any type, at any price.

An absolute dream that is the dream of every seller.

were we wrong

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Source: israelhayom

All news articles on 2022-12-29

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News/Politics 2023-08-04T08:53:51.983Z

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