Imported cars - Nir Kafri  - 07122011
Imported cars. They cost you more than a fleet would pay. Photo by Nir Kafri
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The Zelekha Committee on auto industry reform will be recommending caps on the discounts that car importers can give the giant car leasing companies, which are their biggest clients.

The committee, headed by Yaron Zelekha, a former accountant general from the Finance Ministry, is mandated with stimulating competition in Israel's car market - from car imports and spare parts to garage work.

The committee is taking aim at the vast gap between prices to consumers and prices to the leasing companies. If importers insist on low prices for leasing companies, they'll have to reduce the price to households as well, Zelekha recommends.

The committee intends to set a maximal difference between the highest price the import may charge households, and the lowest price for the same car to a leasing company. Either the discounts to the car fleets will dissipate, or the clout of the car fleets will (willy-nilly ) be harnessed for the good of the consumer, the committee figures.

As things stand, households "subsidize" the discounts for the fleets, the committee said.

Since the leasing companies buy at low prices, and the listing prices for used cars are inflated, the fleets sometimes sell off second-hand vehicles (usually after three years ) for as much as - or more - than they paid in the first place.

The leasing companies have been accused of keeping the list prices of used cars high, in order not to depreciate the value of their fleets. The one who pays the price? You guessed it: the consumer.

Don't hold your breath for change, though. The Zelekha committee, which is also considering changes in the way cars are taxed, faces an uphill battle against Knesset lobbyists.