Customers received 72,000 new cars during the first five months of 2007, according to a report published by the Israeli Vehicle Importers Association (IVIA). This is 24 percent more than the comparable figure for 2006, which stands at 58,000.
In May alone, customers received 23,000 new vehicles - about 31 cars every hour. If this record pace is maintained, 275,000 new cars will be purchased this year - well more than the annual average of 150,000.
IVIA chair Yaki Enoch said the market had been stagnant for eight months, starting in November 2006, due to uncertainty about the length of the model year. Sales picked up immediately after the issue was resolved.
Another reason for the sharp increase in vehicle sales is the debate over the leasing reform.
The issue is not a high priority for Prime Minister Ehud Olmert, who took over the finance ministry when Abraham Hirchson stepped down as a result of criminal investigations against him.
"Any delay could go on forever," Enoch said.
Yoav Hefetz, VP marketing at Delek Motors, the importer of Mazda and Ford, echoed Enoch's analysis.
The market rallied after an extended slowdown "apparently because the leasing reform is no longer on the agenda," he said.
Sources in the sector say that seven out of every ten new vehicles are purchased by large fleets.
The increased demand for new vehicles is being spurred on by the brisk market for used cars, due to the and the retirement of aging cars from fleets. The entire market has followed suit.
The political situation in the region in late 2006 has had an effect as well, Hyundai CEO Dan Orenstein said.
"The war in Lebanon slowed sales, and the sharp increase early this year is compensation for last year," he said.
Reduced taxes on new vehicles and the steady climb in the standard of living are also factors, he said.
According to the report, Mazdas are the most widely sold vehicles in Israel, with 10,700 in the first five months of the year, compared to 8,700 during the same period last year.
The fastest growing market is for Daihatsus, with an increase of 171 percent. Daihatsu delivered 3,597 new vehicles, compared to 1,325 in the same period last year.
In spite of the increased number of new car deliveries, Seat and Opel have nevertheless registered dramatic drops in sales, of about 30 percent.