Israel - Automotive Aftermarket Parts and EquipmentIsrael - Automotive Parts

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Overview
The automotive industry in Israel is solely dependent on imports, given that the country has no local manufacturing base of its own. U.S. market share remains flat at 2.6%. The majority of imports are from Europe and Asia. The top four brands in Israel are: Hyundai, KIA, Toyota and Skoda. The average age of vehicles is 6.5 years and the rate of motorization is 384 vehicles per 1,000 residents.

U.S. Vehicle Exports to Israel (2017)

Units	# of units / $U.S. value
Total new passenger vehicles / light trucks	1,860
Total medium / heavy duty	4,298
Total auto parts imports (million)	$23.4

Top 5 U.S. Automotive Parts Exports to Israel by HS Code (in $U.S.)

HS Code	Description	2016	2017
870840	Gear Boxes	2,115,246	2,362,343
870829	Body Parts	2,540,643	2,299,477
870830	Brakes	1,730,843	1,667,018
870893	Clutches	402,961	1,211,266
870891	Radiators	4,828,859	814,261

Key local/domestic figures

	2016	2017
Total Number of Vehicles	3.3 million	3.4 million
New Car Sales (units)	286,728	218,276

In the past five years, the Government of Israel has implemented changes to regulation designed to increase competition in the automotive sector. In May 2013, the Government of Israel adopted what is known as the “Zelekha Committee” recommendations. The key elements of the reform were to allow “micro importers” to import up to 20 vehicles a year (including used vehicles), to allow parallel imports of commercial vehicles (in addition to already approved parallel imports of private vehicles), to minimize or eliminate unique Israeli standards, to increase acceptance of U.S. standards, and to reduce the Ministry of Transport (MOT) capital requirements for import licenses. Despite these changes, which have allowed new importers to enter the market, limited adoption of U.S. standards remains a trade barrier in the automotive sector and U.S. market share remains flat.

Additionally, the cost of car ownership in Israel is still steadily on the rise. Factors driving up the cost include high sales tax on vehicles and gasoline and the cost of replacement parts and repairs. Despite OECD recommendations, taxes on new cars in Israel are among the highest in the world: 83% sales tax and 17% VAT, which industry sources blame as the main factor preventing the car market from reaching its full potential. In 2009, the Government of Israel introduced the “Green Grade” program providing tax incentives on imports of electric vehicles and hybrids in order to help reduce carbon emission gases, but in a move to raise declining state revenues, the Ministry of Finance has "raised the bar" on discounts allowed for more fuel-efficient 'green cars', meaning cars that previously qualified will no longer qualify under the new regulations, further raising the price of cars.

The domestic aftermarket industry in Israel is characterized by the following factors:

OEMs: Several manufacturers in Israel assemble the final automotive product. These include buses, military vehicles and others (trailers, containers, fire-extinguishing vehicles, vehicle conversion).
Tier 1 aftermarket suppliers: Over 60 Israeli companies manufacture aftermarket products for the automotive industry. These include spare parts and accessories such as batteries, ventilation and air-conditioning systems, fleet management systems, air brake diaphragms, electric starters and alternators, seals, thermostats, gears, gear pumps, bearings and motor valves, filters and more.
Tier 1 OEM suppliers: Over 50 Israeli companies supply components to OEMs and Tier 1 suppliers worldwide, using advanced technologies to manufacture various types of components. These technologies include forging, high-pressure ink injection, metal injection, coating and reinforcement, rubber injection, etc.

Leading Sub-Sectors
Car security and anti-theft devices: anti-theft electronic systems, locking devices.
Car body: bumpers, radiator grills, hood and trunk lids, wings, front and rear lamps (i.e. the parts most vulnerable in car accidents). Service parts: disc brake pads, shock absorbers, front suspension parts, filters for oil and lubrication, air conditioning parts.
Replacement service parts: tires, fan belts, water hoses, water pumps, brake components, engine and transmission components, electrical components, undercarriage items that need replacing at the end of the warranty period.

Vehicle accessories: car care products, polish, wax, upholstery spray water-coolants (Glycol) for radiators.
Electronic accessories: TV screens for the rear seats, GPS systems, sound systems etc.

Universal lubricants: well-known brand names of high-grade oils, lubricating, glycol, wax. The market demands well-known brand names.

Opportunities
Israeli importers are always on the lookout for quality products at competitive prices – usually in that order. Partnering up with a reputable local representative who has excellent contacts in the industry, proven reliability, loyalty, technical suitability and after-sales service capability is a key factor to success in selling and maintaining a continued presence in the Israeli market. U.S. companies need to be aggressive in their pursuit of business opportunities and maintain an active in-country presence. The most common approach used by exporters is to obtain a local importer/distributor. Distributors will import on their own account, carry sufficient stock to satisfy ongoing demand or to use for demonstration, maintain their own sales organization, supply spare parts and maintain a service division, if applicable.

For additional information, please contact Commercial Specialist Naama Altman at: naama.altman@trade.gov.

Web Resources

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