Viewpoint / Drive to Nowhere

The industry of car importers does not arouse a great deal of consumer confidence. Ostensibly, their profit is not enormous - 15 to 25 percent of the car's price. Yet the companies are netting hundreds of millions of shekels a year.

Superficially, the sector is competitive: You don't have to buy a Toyota or Mazda. But just try to buy a Mitsubishi straight from the manufacturer in Japan. You will most likely be told that Mitsubishi has an exclusive agreement with an importer in Israel, in this case Colmobil. Go buy from it, Mitsubishi will probably say, though theoretically its interest should lie in selling to anybody who'll buy.

So the competition is between manufacturers, not local suppliers. The importers quash any nascent competition raising its head, not only over cars but over spare parts, too. Sony has an exclusive agreement with a distributor in Israel, Isfar, so why can't Mitsubishi do the same thing?

The enormous tax - 128 to 144 percent of the car's base price - also nullifies the intent of competition, because it leaves such a small component (the distributor's profit) open to competition. Between 80 and 90 percent of what you pay for a car is actually tax and the manufacturer's take, leaving only the remainder open to competition.

It is also hard to compete with the services the licensed importers offer, which include garage service, an inventory of original spare parts, and reliable guarantees lasting years. Even if the quality of the services they supply can be annoying to consumers, they won't forgo them even to get a discount on the car.

Besides, the importers argue there is competition between them. If the Mitsubishi importer, for instance, raises the price of his cars to increase profits, buyers will simply go somewhere else.

It is therefore doubtful whether Israel's car importing sector will ever become more competitive, because the carmakers won't cooperate or because of the onerous tax. Yet cars aren't Playstation consoles. They are a huge component of consumption and every effort should be made to lower prices.

The very exclusivity that the carmakers give the importers gives room for hope. Israeli consumers won't buy a car from a competing importer unless the price is right, of the car and the parts, too. And even a 5 percent discount on a product that costs NIS 100,000 and more is a lot. And if importers start improving service in order to attract buyers, well, we can be happy.