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The corona?

A light blow on the wing: The Tax Authority's report on the Israeli car market

Not the closures, not the recession and not the political instability: A survey of the tax authority's car market reveals the numbers behind the bump in new cars. In the shadow of the Israeli climate crisis, they discovered hybrid cars - and fell in love with them.

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Keenan Cohen

Thursday, 18 November 2021, 11:00 Updated: 11:40

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Although there is no one who would not qualify back for 2020 and does not even ask for a refund for it, when it comes to selling a new car in Israel, relative to other industries that will take years to rehabilitate them if at all, the Corona was a slight blow to the wing.

Revenue from taxation on new vehicles accounts for a quarter of the state's revenue from vehicles, and this mainly means that the oiled mechanism of the fund's enrichment continued to work excellently even in that bad year.

How excellent?

Here are some numbers about the lucrative money machine called importing a car to Israel: This is the entry into the country in 2020 ten billion and 275 million shekels - in the corona of an intermittent open economy, of grants and hundreds of thousands of workers in the Knesset. This is a decrease of only NIS 3.5 billion from 2016 - the peak year of the Israeli car market.

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To the full article

A leap that tells a story.

Land Rover (Photo: Rami Gilboa)

Part of the explanation for this lies in a small figure that tells a big story - the average purchase tax for a car in Israel rose from about NIS 34,000 in 2016 to about NIS 36,500 in 2020, and the average customs percentage also rose from 2.8% to 3.4%.

In other words, Israelis may have bought fewer cars in 2020, but put a higher amount into the country for each of them.

It tells another story, about the excellent year that passed on the luxury brands: not only the old trio of BMW, Mercedes and Audi, but also brands like Land Rover that saw a significant jump in sales this year, Porsche that closed a very successful year and others.

Our roads may be congested every year, but the social gaps in this column of cars are actually widening.

Connect to electricity

In the last three years, Israelis have discovered the electric and hybrid cars that are charged in the socket, and fell in love with them - this is one of the interesting trends that emerges in the report, in connection with the discourse on the climate crisis.

In 2004, there were only two hybrid models in Israel (Honda Civic IMA), which sold a total of 11 units and the cheapest model was NIS 163,000.

In 2020, there were 209 registered models in Israel with alternative propulsion (hybrid or electric), which sold 51,462 units and the cheapest price was NIS 84,900.

By the first half of 2021 we were already almost sticking to that number with 49,983 units.

From a negligible rate of 0.6% in 2008, hybrid cars climbed to 20.3% of all new cars in 2021, and electric cars that a decade ago scratched the tenth of a percent from the bottom, reached 2.6%.

We fell in love.

Hybrid vehicle charged socket (Photo: Rami Gilboa, Rami Gilboa)

But it has to be said honestly, it was not the melting glaciers and polar bear welfare that propelled Israeli customers and the institutional vehicle market into the arms of these cars, it was mainly the economic incentive given to these cars by the state with benefits that reduced the purchase tax on them. Also, for the vehicle fleets was also the low fuel consumption that led more and more companies to choose them as a vehicle attached to their employees.

By the way, as far as hybrid cars are concerned, from January 2022 their purchase tax will be compared to that of regular petrol cars, ie from 50% to 83%, a move that should cost cars like Kia Niro, Hyundai Ionic, Toyota Corolla and others, in a way that makes them irrelevant completely. Absurdly, after years of progressing in a green and positive direction, it is precisely a polluting petrol car that will become cheaper. Apparently the state also has a limit to how much revenue it is willing to lose for the environment.

More and more cars are equipped with advanced safety systems sponsored by the Tax Benefit Incentive (Photo: Manufacturer's website, Manufacturer)

The main thing is health

Another revolution that started quite a few years ago and continues to roll is the one concerning the safety systems that our cars have.

In 2013, tax incentives were introduced for advanced vehicle safety systems, the scores given to cars ranging from 0 for a car that does not meet the minimum threshold and up to 8 for a car equipped with most systems.

Unlike airbags or seat belts, these are such safety accessories whose function is not to reduce injury in the event of an accident, but to warn and even prevent accidents even before they occur.

At least in this area, the taxation, the competition between the car manufacturers, the reduction of the cost of these systems and the emphasis given to the importance of having these safety accessories in reviews and road tests have done their thing.

In 2012, just before the introduction of tax incentives, 96.9% of vehicles were set at safety level 0. As of 2020, this number has dropped to only 8.7%.

In addition, 64% of the cars met the requirements for a score of 5 or higher.

If it's a Gippon, white and with a sunroof - Israelis will buy it (Photo: Keinan Cohen, Keinan Cohen)

Gippon, white, with sunroof

Not that we need the report of the Tax Authority to know what the color preferences are in the cars of the people of Israel, for that you can just go down to the nearest parking lot or just look at the cars around you in a traffic jam.

When it comes to colors, customers seem to know only three - white, gray and black.

These three together make up 92.5% of all vehicles that hit the roads.

The white color leads with 48.5%, 31% were in gray and 13% in black.

Here there are also differences between private ownership and vehicle fleet ownership, segmented by type of ownership among private individuals, this trinity was 90.1% and for vehicle fleets it stood at 96.4%.

A trend that has changed in the last decade, or rather intensified in the last decade, has been the mass influx towards Jeeps and crossovers.

While in 2010 the sedan cars were the majority in the market with 47%, and later in 2012 the hatchback and station wagon cars were the majority with 52%.

These were the Jeeps that recorded the most significant increase, from 6% in 2010 to 44%, as of the first half of 2021, when it was mainly leasing companies and vehicle fleets that continue to purchase the "regular" cars in large numbers as well as the mini segment (with Cars like the Kia Picanto, Hyundai i10) and the Super Mini (with cars such as the Seat Ibiza and Hyundai i20).

It turns out that the Israeli customer is also falling in love with what was once a status symbol and today is becoming an increasingly common item - the sunroof.

In the years 2007-2005 the rate of cars equipped with it was 9% of all new cars, in 2020 the number was already 25% and in the first half of 2021 - 27%.

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