Car Importers Earn More Fixing Cars Than Selling Them

Daniel Schmil
Eran Azran
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Send in e-mailSend in e-mail
Daniel Schmil
Eran Azran

A week after TheMarker revealed the astronomical markups on imported replacement parts for cars, a review of the companies' financial reports found that car importers earn three times more from their garages than they do from importing and selling vehicles.

The publicly traded importers had gross profits averaging 30% on their garage operations, compared to only 10% to 15% on vehicle imports. For example, the reports of Delek Auto, controlled by Gil Agmon, found that the company had revenues of NIS 4.6 billion in 2010. Of that figure, 91% was from vehicle imports, and the remaining 9% - NIS 418 million - was from repairs.

That year, the company had gross profits of NIS 548 million. Of that, NIS 129 million was from the repair operations. This indicates that while the company's gross profits on vehicle imports was only 10%, its profits on repairs were 30% - three times higher.

In other terms, while repairs brought in only 9% of revenues, they were responsible for 25% of gross profits.

While some importers have sharply reduced their prices for spare parts in the past several months, this does not indicate an overall trend. However, it is more proof of just how profitable this sector is.

For instance, the price for a Mazda 5 motor cover was slashed from NIS 4,587 to NIS 1,517, a reduction of 67%. The price of an oil filter for a Volkswagen Golf was cut from NIS 3,200 to NIS 1,230, which is 62% less. Mitsubishi automatic window motors went down from NIS 1,686 to NIS 668.

Prices aren't going down across the board. They're dropping mostly for parts that are facing new competition from alternative importers.

"I have to have millions of shekels of spare parts for all the models," one importer said. "But unofficial importers can import only the parts that are financially worthwhile. ... I have to sell the other parts at a high price in order to maintain the supply," he said.

Last week, TheMarker reported that the markups on some spare parts could be as much as 2,500% more than the import price.

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