Leasing firms slash prices to unload inventory of used cars

Buyers are putting off investments in the uncertain economic climate, and the market for used cars is at a standstill, according to knowledgeable sources in business. These days, buying a second or third family car is no easy decision.

The standstill has also hurt leasing companies, which want to unload their stock before acquiring newer models come January. All of the large companies have embarked on sales campaigns: Shlomo Sixt has been advertising its "two years free" campaign now for two months, offering a number of 2007 models at 2005 list prices. The offering applies to models like the Hyundai Getz and Renault Megane, and a "one year free" deal is offered for more popular models like Mazda 3 and Toyota Corolla. Discounts are also available on car insurance. Avis is offering discounts of 25%, plus a promise of a trade-in and payment terms of 60 payments.

Discounts of 5% to 18% on a variety of models are being offered by Alber, which will throw in a free back-up detector device as well. Avis is offering discounts of 18% to 25%, along with a two-year warranty on their cars. Eldan is willing to provide financing of up to 85%, and is offering a special deal on insurance as well. Auto Center, the sales arm of Herz, is trying to attract customers with a discounts of up to 25%. KalAuto is also offering financing of up to 70% at prime interest rate.

But none of this is apparently sufficient to attract buyers. A large leasing company recently rented parking lots to store its stock of cars that will go on the market in January, because many buyers are expected to wait until then, hoping that prices will fall.

One senior manager in the sector, however, chose to point an accusing finger at the high prices appearing on the widely referred to price list for used cars, appraiser Levy Yitzhak's Blue Book. "His prices are unreasonable," said the manager. "If I take off 10%-20% I can sell easily, but his price list is stalling the market."