22% of new cars sold in Israel are Chinese

Relations between Israel and China have deteriorated in recent months. China's state media has adopted an unsympathetic tone toward Israel, and Chinese government spokesmen are strongly critical of Israel's actions. There is a worrying security rapprochement between China and Iran, which was reflected in the meeting between the defense ministers of the two countries at the Shanghai Cooperation Organization conference in Kazakhstan last month.

But judging by car sales figures in Israel for the first four months of 2024, published last week, the negative atmosphere did not affect imports from China or consumer behavior. Between January and April, deliveries of Chinese-made vehicles continued to break records. China has strengthened the gap between Korea and Europe at the top of the deliveries table by country, with a total of 24,534 Chinese-made vehicles delivered in 2024, or 22% of total deliveries and an increase of about 12% compared to the corresponding period last year. year. This is while deliveries of all vehicles have decreased by 14.8% in Israel since the beginning of the year, compared to the corresponding period in 2023.

The majority of Chinese car sales in the first quarter of the year came from inventory that arrived in the last quarter of 2023, before the tax hike. According to customs data in China, exports of electric cars from there to Israel decreased by 51% in the first quarter of 2024, but the industry estimates that this is a necessary phenomenon in light of the huge inventories that were accumulated last year “at the expense.” Imports in the first quarter

An exceptional phenomenon worldwide

The success of Chinese cars in Israel, with one in five sales, is extraordinary compared to other developed Western countries. The European Union is currently considering taking important steps to limit imports of Chinese electric cars, due to the Chinese government's anti-competitive policy through which it supports local manufacturers.

Discounting imports of Tesla cars made in China to Europe, sales of cars made in China in the European Union are less than 2.5% of new car sales last year. Even in Spain, which is currently the largest market for Chinese cars in the European Union, the rate last year was around 4%.

Some believe that car sales numbers reflect a “natural” process due to the Israeli car market’s rapid shift to electric cars. In the first quarter of 2024, electric vehicle delivery records were also broken in Israel, with 27,000 deliveries, i.e. 25.6% of total sales and an increase of 35% compared to the corresponding period last year.

Since Chinese manufacturers are almost the only ones able to offer electric cars today with specifications suitable for the mass Israeli market in the price range of 140-180 thousand shekels, they benefit from the growing demand for electric cars.

But the “natural” process argument does not hold up. First, the penetration rate of Chinese brands in the electric car market in Israel in the first quarter was about 42% (not including Tesla), which is quite an unusual figure compared to the Western world. In the European Union, the penetration rate of electric cars made in China, excluding Tesla, is about 10%.

Secondly, large numbers of Chinese-made vehicles with internal combustion engines (gasoline and plug-in models) are also sold in Israel. Admittedly, Chinese representation in this segment is limited, and mainly includes Chery off-road vehicles and additional WEY and Link & Co models. But this represents 5% of all births. Later this year, it may gain momentum thanks to new models made in China with additional engines, which are expected to arrive here.

Published by Globes, Israel Business News – en.globes.co.il – on May 6, 2024.

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