Hyundai makes a commitment: a sweeping discount on the Korean models

After the approval of the trade agreement with South Korea, under which a 7% tariff reduction will be applied to vehicles manufactured in the country, Hyundai declares that it will sell a line of models in Israel

Kenan Cohen

09/28/2022

Wednesday, September 28, 2022, 7:21 p.m. Updated: 8:01 p.m.

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Will the discount remain in the future? (Photo: Keinan Cohen)

In a market that has learned in recent years to see the prices only go up and up, a 7% price reduction in a model line is real news.

Even if it may prove to be a short-lived joy.

The South Korean parliament approved the trade agreement with Israel today.

As part of it, the 7% customs duty on products imported or exported to South Korea will be abolished.

However, even though the two major Korean manufacturers Hyundai and Kia are two of the largest car brands in the Israeli market, the effect of the cancellation of the customs duty may be relatively marginal due to several reasons.

First, the benefit only concerns cars manufactured in South Korea, that is, models such as Hyundai Tucson, i10 and i20 produced by the company in Europe or Kia Sportage and Exide do not meet the conditions for these benefits at all.

The second point is that some of the models that will be affected by the benefit such as the electric Hyundai Ioniq 5 and Hyundai Kona are expected to become more expensive at the beginning of next year due to the change in the green tax.

which may reduce the discount.

Ionic 5, entitled to a benefit (Photo: Keinan Cohen)

Hyundai's announcement is unusual as it is done in coordination with the manufacturer.

As a rule, the relationship between the car importers and the manufacturers is based on negotiations regarding the price at which the manufacturer sells the car to the importer.

Among the other considerations that are taken into account, there is also the issue of local taxation, the local discount of 7% does not disappear from the manufacturers' eyes and the fear was that they would take advantage of the situation in order to raise the price and thus offset the discount.

And while Kia is in no hurry to announce what the pricing policy will be after the order goes into effect in December, Hyundai announces that: "The benefit of lowering the customs duty will be fully passed on to customers."

Regarding the prices of electric cars, the importer admits that the effect of the discount will be short-lived, but there it is already the state that gives a benefit with one hand and pays it with compound interest with the other hand (taxation on electric cars is expected to increase from 10% to 20% and the maximum benefit amount will decrease From 75 to 60 thousand shekels.

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Also on sale: Hyundai Staria (Photo: Keinan Cohen)

And there is another reason why this statement should be taken with due caution.

The timetables of this agreement are very problematic when it comes to the car.

Its entry into force as mentioned will be in December, that is, only cars manufactured in December and later will be eligible for this discount.

On the other hand, in January, unless there is an unexpected change, we will see increases in car prices apart from the green tax, so the "window" for these cheap prices may be very small.

The models to which the price reduction will apply are, as mentioned, the concern's models produced in Europe, where the Hyundai in question is the Bonyo, Kona, Sonata, Santa Fe, Palisade, Staria, Elantra and Ionique 5. In

Genesis, the discount applies to all models of the manufacturer, starting with the G70 and up to the G80 and GV80 as well as the electric GV60.

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