Competition Drives Down Cost of Car Repairs in Israel

The entry of several new garage chains into the Israeli market has given consumers more options for maintaining and fixing their vehicles. TheMarker explores how much owners can expect to save.

The average cost of car repairs has gone down 10% over the last five years, according to figures released two weeks ago by Gama Management and Clearance. Over the next five years, costs are expected to drop even more substantially as the field becomes more competitive.

Until now, Israeli drivers faced two options for maintaining or repairing their vehicles. They could take their car to a licensed manufacturer garage, which uses original parts, making this option more expensive, but also more professional and reliable.  The other alternative was to use a general garage which is cheaper, since spare parts are not original, meaning performance is potentially compromised. The gap between expensive but reliable versus cheap but questionable is now being bridged by three garage chains setting up shop in Israel. Two are licensed outlets of established European chains that base their operations on global spare parts manufacturers, Bosch Car Service and Magnetti-Marelli’s Checkstar. These two companies supply quality spares to car makers at lower prices than the ‘originals’ sold by manufacturers.  The third chain belongs to Hertz leasing, which decided to open its garages to a wider public, using the large size of its fleet to enable it to reduce the price of spare parts.

Two months after the opening of these new garages, we examined whether their prices are indeed lower, and whether drivers benefit from the competition. We compared three standard maintenance jobs and two common repairs at general garages, manufacturer garages and the new chains.  We chose cars that were between five and seven years old, when manufacturer warranties have expired and drivers must choose between garages.

The first comparison was for a 2007 Toyota Corolla after 90,000 km on the road, by which time it needs a change of oil, brake fluid and some filters. We compared the costs of changing spark plugs. At Toyota, this cost NIS 1,131, compared to NIS 1,146 at Checkstar, and NIS 1,046 at Bosch. A general garage charged NIS 872, with Hertz garage being the cheapest at NIS 620. This price differential stems from the cost of spare parts. Checkstar suggested using simple plugs costing NIS 91, while Bosch offered iridium plugs, which last much longer, for NIS 432.

When we requested a price quotation for a 90,000 km maintenance job on a 2008 Mazda 2, the cheapest one was actually at Bosch, for NIS 512, with the Mazda garage only slightly higher, at NIS 527. The general garage in this case was the most expensive, demanding NIS 700 for parts and labor.

The best offer for routine maintenance on a 2006 Hundai Getz was from Hertz, at NIS 450. The most expensive offer was from Kolmobile (serving Hyundai), which charged NIS 1,178, more than twice than Hertz. Bosch and a general garage asked for NIS 805 and NIS 700, respectively, for the same service.

What about unexpected repairs needed when something goes wrong and there is no time to compare prices? The cost of these kind of repairs also varies widely among different garages. For example, going to Checkstar to fix the steering wheel will cost you NIS 595 with non-original parts and NIS 1,395 with original parts. Bosch and Hertz charge NIS 1,161 and NIS 1,205, respectively. Going to the Mazda garage will take no less than NIS 2,096 out of your wallet.

An additional common problem is engine overheating, which requires changing the radiator. In a 2006 Hyndai Getz, this will cost you NIS 697; at the Hertz garage, NIS 1,019 at Bosch; and NIS 1,379 at Hyundai --  twice as much as at the leasing chain garages. Most of the expense derives from the cost of the radiator itself.  Kolmobile uses originals, costing NIS 1,185, but a compatible one at Bosch costs NIS 705, similar to the price at Checkstar.

In most cases, prices were highest at manufacturer garages, significantly more than at the newer chains. The reason for this is that spare parts make up the biggest component of profits. Importers make 30% on spare parts, compared to only 10% on the cars themselves. Importers claim that, according to Ministry of Transportation regulations, they are obliged to stock large quantities of spare parts for many models, increasing their expenses. However, when faced with new competition, they too reduced prices. Garages also make much of their profits from spare parts, since labor costs are more or less the same everywhere. Soon garages will be required to post all prices on the Internet, and offer different parts, based on quality.

Hertz turned out to be the cheapest in most but not all comparisons. The wide variation in prices also stems from the complexity of some repairs and services. Choosing more expensive oil or replacing an additional filter can greatly alter the final bill. This should be considered when comparing prices. It is recommended that consumers get a written estimate that includes all parts and labor. The variation in prices also reflects the fact that we are only at the beginning of this new competitive era. Bosch has just one garage and Hertz only six to date, and not all of Checkstar’s 23 garages carry their brand name.

Ofer Vaknin
Gama Management