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For several weeks now, 40,000 brand-new cars have been in storage at the ports of Eilat and Ashdod. There is no one in Israel who is going to buy them. In the meantime, the importers continue paying storage fees and are in fact thinking about re-exporting the vehicles abroad. The leasing market has been affected, too, absent any cash flow. In fact, leasing companies have been selling some of their fleet, under conditions that used-car dealers are unable to match.

Last week, Ruhi Ruhanna, who manages a used car lot in Carmel City, said, "The leasing companies killed us. They sell cheaply, to finance new acquisitions. This practice hurts the owners of used-car lots." Ruhanna said he has been selling at a loss for a month and a half already in order to survive.

Importers of new cars have also been offering their customers incentives and benefits. "We have been giving discounts of between NIS 11,000-20,000," says Eli David, the CEO of Japanauto, which imports Subaru vehicles. Surprisingly, he believes car prices will rise in the near future. "Everyone will start making calculations and the prices will rise. The currency exchange rates have risen with respect to the shekel and we will have to raise prices in order to contain the damage." David maintained that importers would be forced to raise their prices, even if demand remains low. "It is better to earn a shekel than to lose tens of thousands," he concluded.

According to the Israel Vehicle Importers Association Web site, the period of September-October 2008 saw a 45-percent drop in the delivery of new vehicles to buyers, compared to the same period last year. However, one should not forget that the holidays, which mostly fell in October, may have affected the drop.