Israel Automotive Market

1. Israel Automotive Market Commercial Specialist Alan Wielunski

2. Israel In the Geopolitical Landscape Turkey Syria Lebanon Tunisia Iraq Iran Morocco Israel Jordan Kuwait Algeria Libya Egypt Bahrain Saudi Arabia Qatar U.A.E Oman Yemen Copyright US Commercial Services 2009

3. Israel In the Geopolitical Landscape Turkey Syria Lebanon Tunisia Iraq Iran Morocco Israel Jordan Kuwait Algeria Libya Egypt Bahrain Saudi Arabia Qatar U.A.E Oman Yemen Copyright US Commercial Services 2009

4. Israel In the Geopolitical Landscape Turkey Syria Lebanon Tunisia Iraq Iran Morocco Israel Jordan Kuwait Algeria Libya Egypt Bahrain Saudi Arabia Qatar U.A.E Oman Yemen Copyright US Commercial Services 2009

5. Israel In the Geopolitical Landscape Turkey Syria Tunisia Lebanon Iran Morocco Israel Jordan Iraq Kuwait Algeria Libya Egypt Bahrain Saudi Arabia Qatar U.A.E Oman Yemen Copyright US Commercial Services 2009

6. Israel In the Geopolitical Landscape Turkey Syria Lebanon Tunisia Iraq Iran Morocco Israel Jordan Kuwait Algeria Libya Egypt Bahrain Saudi Arabia Qatar U.A.E Oman Yemen Copyright US Commercial Services 2009

7. Israel In the Geopolitical Landscape Turkey Syria Tunisia Lebanon Iraq Iran Israel Morocco Jordan Kuwait Algeria Libya Egypt Bahrain Saudi Arabia Qatar U.A.E Oman Yemen Copyright US Commercial Services 2009

8. Israel In the Geopolitical Landscape Turkey Syria Lebanon Tunisia Iraq Iran Morocco Israel Jordan Kuwait Algeria Libya Egypt Bahrain Saudi Arabia Qatar U.A.E Oman Yemen Copyright US Commercial Services 2009

9. Major Economic Indicators • Capital: Jerusalem • Population: 7.4 million • Currency: New Israeli Shekel (NIS) • Language: Hebrew • GDP: USD$199 billion • GDP Real Growth Rate: 4% • GDP per capita: $27,355 • Total Exports: $80.4 billion • Total Imports: $84.1 billion Copyright US Commercial Services 2009

10. Major Economic Indicators • The U.S. is Israel's largest single country trade partner, despite heavy European competition. • Israel – U.S. commerce has grown seven fold since signing a Free Trade Agreement in 1985. • Nearly all tariffs on trade between the U.S. and Israel have been eliminated since 1995. Copyright US Commercial Services 2009

11. Israel and its major trading partners Europe USA China Israel India Copyright US Commercial Services 2009

12. Israel and its major trading partners Europe USA China Israel India $ 12B Copyright US Commercial Services 2009

13. Israel and its major trading partners Europe USA China Israel India $7.1B Copyright US Commercial Services 2009

14. Israel and its major trading partners Europe USA China Israel India $16 B Copyright US Commercial Services 2009

15. Israel and its major trading partners Europe USA China Israel India $11B Copyright US Commercial Services 2009

16. Israel and its major trading partners Europe USA China Israel India India $7B Copyright US Commercial Services 2009

17. Israel and its major trading partners Europe USA China Israel India India $2.3B Copyright US Commercial Services 2009

18. Israel and its major trading partners Europe USA China Israel India E.U USA Asia Other Countries Source: Israel Central Bureau of Statistics Copyright US Commercial Services 2009

19. Market Overview • There are 2.3 million cars on Israeli roads today • 3.8% are made in the United States and the balance from Europe (46.6%) and Asia (49.6%), Japan 38.7% and South Korea 10.9%. • Total imports of aftermarket products in 2008 amounted to $420 million • $23 million was from the U.S., Germany ($63 million), Japan ($45 million), France ($18 million), Italy ($23 million), China ($55 million) and the balance from Korea and Taiwan. Copyright US Commercial Services 2009

20. Market Overview • Six years ago new legislation was passed by the Anti-Trust Authority to stop car importers from forcing garages and car owners to use only OEM parts, but to-date this has not succeeded. • American spare parts are recognized for their high quality although over the years Israel has progressively adopted European standards as the bulk of cars being imported are from Europe and the Far East. • Another important development was the introduction of Israel's Green Tax reform, which went into effect on August 2, 2009. The reform sets tax incentives aimed at reducing vehicular air pollution. Copyright US Commercial Services 2009

21. Market Entry • Partnering up with a good local representative who has good contacts in the industry, proven reliability, loyalty, technical suitability and after-sales service capability is a key factor to success in selling and maintaining a continued presence in the Israeli market. U.S. companies need to be aggressive in their pursuit of business opportunities and maintain an active in-country presence. • The most common approach used by exporters is to obtain a local importer/distributor. Distributors will import on their own account, carry sufficient stock to satisfy ongoing demand or to use for demonstration, maintain their own sales organization, supply spare parts and maintain a service division, if applicable. Copyright US Commercial Services 2009

22. Main Competitors • The majority of cars in Israel are from Europe and the Far East. • Israelis in general and leasing companies in particular that are the main buyers, prefer compact, reliable and fuel efficient vehicles. With it has come a flood of Asian made aftermarket products, which are far cheaper than American and European products. • Historically these products were far more inferior but over the years their quality has greatly improved making it more difficult for American products to compete in this very price sensitive market. Copyright US Commercial Services 2009

23. Current Demand • Car security and anti-theft devices: anti-theft electronic systems, locking devices, •  Car body: bumpers, radiator grills, hood and trunk lids, wings, front and rear lamps (i.e. the parts most vulnerable in car accidents). •  Service parts: disc brake pads, shock absorbers, front suspension parts, filters for oil and lubrication, air conditioning parts, •  Replacement service parts: tires, fan belts, water hoses, water pumps, brake components, engine and transmission components, electrical components, undercarriage items that need replacing at the end of the warranty period. Copyright US Commercial Services 2009

24. Current Demand • Vehicle accessories: car care products, polish, wax, upholstery spray •  Water-coolants (Glycol) for radiators •  Electronic accessories: TV screens for the rear seats, GPS systems, sound systems etc. • Universal lubricants: well-known brand names of high-grade oils, lubricating, glycol, wax. The market demands well-known brand names. Copyright US Commercial Services 2009

25. Non-Tariff Barriers to Trade • Despite the existence of an FTA between the United States and Israel, the Ministry of Transportation (MoT) has imposed non-tariff barriers, which limit the use of American made OEM products to vehicles made according to US standards only. • The MoT has also introduced new labeling requirements requiring all spare parts to include the state where the product was made in, in addition to the country of origin. CS Israel and the U.S.Trade Representative are engaging the MoT in an effort to reverse these restrictions on American made products. Copyright US Commercial Services 2009

26. Thank You! alan.wielunski@mail.doc.gov